Exhibit 10.14
EXECUTION COPY
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INVESTMENT AGREEMENT
By and Among
ANHEUSER-XXXXX COMPANIES, INC.,
ANHEUSER-XXXXX INTERNATIONAL, INC.
and
ANHEUSER-XXXXX INTERNATIONAL HOLDINGS, INC.
and
GRUPO MODELO, S.A. DE C.V.,
DIBLO, S.A. DE C.V.
and
CERTAIN SHAREHOLDERS THEREOF
Dated as of June 16, 1993
TABLE OF CONTENTS
-----------------
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 2
II. TERMS OF THE SUBSCRIPTION OF SERIES P-C SHARES AND
THE PURCHASE AND SALE OF INITIAL DIBLO COMMON SHARES
2.1 Subscription of Series P-C Shares
and Purchase and Sale of the Initial
Diblo Common Shares. . . . . . . . . . . . . 7
2.2 The Closing. . . . . . . . . . . . . . . . . 8
2.3 Purchase Price . . . . . . . . . . . . . . . 8
2.4 Deliveries at the Closing. . . . . . . . . . 8
III. REPRESENTATIONS AND WARRANTIES OF THE G-MODELO
SIGNATORIES
3.1 Capital Stock of G-Modelo. . . . . . . . . . 11
3.2 Capital Stock of Diblo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 13
3.3 USA Export . . . . . . . . . . . . . . . . . 15
3.4 Power and Authority; Effect of Agreement . . 16
3.5 Investments. . . . . . . . . . . . . . . . . 17
3.6 Organization; Assets . . . . . . . . . . . . 17
3.7 Financial Information. . . . . . . . . . . . 18
3.8 Undisclosed Liabilities; Absence of
Certain Changes. . . . . . . . . . . . . . . 19
3.9 Title and Related Matters. . . . . . . . . . 20
3.10 Patents, Trademarks, Etc.. . . . . . . . . . 20
3.11 Litigation . . . . . . . . . . . . . . . . . 22
3.12 Compliance with Laws . . . . . . . . . . . . 22
3.13 Tax Matters. . . . . . . . . . . . . . . . . 23
3.14 Shareholder Agreements . . . . . . . . . . . 24
3.15 Consents . . . . . . . . . . . . . . . . . . 25
3.16 Environmental Matters. . . . . . . . . . . . 25
3.17 Absence of Certain Changes or Events . . . . 26
3.18 Material Contracts . . . . . . . . . . . . . 26
3.19 Employee Benefits; Employment Contracts. . . 27
3.20 Real Property. . . . . . . . . . . . . . . . 28
3.21 Tied House Prohibitions. . . . . . . . . . . 29
3.22 Insurance. . . . . . . . . . . . . . . . . . 29
i
IV. REPRESENTATIONS AND WARRANTIES OF A-B, A-BI AND
THE INVESTOR
4.1 Corporate Power and Authority; Effect
of Agreement . . . . . . . . . . . . . . . . 30
4.2 Consents . . . . . . . . . . . . . . . . . . 31
4.3 Availability of Funds. . . . . . . . . . . . 31
4.4 Management of G-Modelo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 31
V. COVENANTS OF THE PARTIES
5.1 Access to Information. . . . . . . . . . . . 32
5.2 Further Assurances . . . . . . . . . . . . . 33
5.3 Filings; Tax Returns . . . . . . . . . . . . 34
5.4 Internal Reorganization. . . . . . . . . . . 35
5.5 Election of A-B Director . . . . . . . . . . 36
5.6 Environmental and Safety Laws. . . . . . . . 36
5.7 USA Export Agreement . . . . . . . . . . . . 37
5.8 Consummation of Public Offerings;
Registration of Shares . . . . . . . . . . . 37
5.9 Dividend Policies. . . . . . . . . . . . . . 38
5.10 Equity Participations. . . . . . . . . . . . 41
5.11 Operation of G-Modelo. . . . . . . . . . . . 41
5.12 Government Officials . . . . . . . . . . . . 41
5.13 Sale of Series C Shares to Employees . . . . 42
5.14 Real Estate Transfers. . . . . . . . . . . . 42
5.15 Technical Committees . . . . . . . . . . . . 42
5.16 Failure by the Investor to Acquire
all Diblo Option Shares. . . . . . . . . . . 43
VI. TRANSFER, SALE AND PURCHASE RIGHTS
6.1 General. . . . . . . . . . . . . . . . . . . 44
6.2 Offer to Sell; Right of First Refusal. . . . 45
6.3 The Investor's Option to Purchase
Shares of G-Modelo Capital Stock . . . . . . 49
6.4 The Investor's Option to Purchase
Diblo Common Shares. . . . . . . . . . . . . 52
6.5 Consequences of Failure to Convert
Series P-C Shares. . . . . . . . . . . . . . 54
6.6 Restriction on Dispositions to
Competitors. . . . . . . . . . . . . . . . . 59
6.7 Restrictions on Acquiring Series C
Shares . . . . . . . . . . . . . . . . . . . 59
6.8 Extension of Time Periods. . . . . . . . . . 59
ii
VII. BOARDS OF DIRECTORS; VOTING
7.1 Boards of Directors. . . . . . . . . . . . . 60
7.2 Corporate Actions. . . . . . . . . . . . . . 62
VIII. CONDITIONS TO THE INVESTOR'S OBLIGATIONS
8.1 Representations, Warranties of the
G-Modelo Signatories . . . . . . . . . . . . 68
8.2 No Prohibition . . . . . . . . . . . . . . . 68
8.3 No Action. . . . . . . . . . . . . . . . . . 69
8.4 HSR Act. . . . . . . . . . . . . . . . . . . 69
8.5 Certificates . . . . . . . . . . . . . . . . 69
8.6 Opinion. . . . . . . . . . . . . . . . . . . 69
IX. CONDITIONS TO THE G-MODELO SIGNATORIES' AND THE
BANAMEX TRUST'S OBLIGATIONS
9.1 Representations and Warranties of A-B,
A-BI and the Investor. . . . . . . . . . . . 69
9.2 No Prohibition . . . . . . . . . . . . . . . 70
9.3 No Action. . . . . . . . . . . . . . . . . . 70
9.4 HSR Act. . . . . . . . . . . . . . . . . . . 70
9.5 Certificates . . . . . . . . . . . . . . . . 70
9.6 Opinion. . . . . . . . . . . . . . . . . . . 70
X. INDEMNIFICATION
10.1 The Controlling Shareholders', G-Modelo
and Diblo Indemnification. . . . . . . . . . 71
10.2 The Investor's Indemnification . . . . . . . 71
10.3 Conditions of Indemnification. . . . . . . . 72
10.4 Remedies Cumulative. . . . . . . . . . . . . 73
XI. TERMINATION PRIOR TO CLOSING
11.1 Termination. . . . . . . . . . . . . . . . . 73
11.2 Procedure and Effect of Termination. . . . . 74
XII. DISPUTE RESOLUTION
12.1 Arbitration. . . . . . . . . . . . . . . . . 75
12.2 Business Disagreements . . . . . . . . . . . 76
XIII. MISCELLANEOUS
13.1 Survival of Representations, Warranties
and Covenants. . . . . . . . . . . . . . . . 78
13.2 Entire Agreement . . . . . . . . . . . . . . 78
iii
13.3 Successors and Assigns . . . . . . . . . . . 78
13.4 Counterparts . . . . . . . . . . . . . . . . 79
13.5 Interpretation . . . . . . . . . . . . . . . 79
13.6 Amendment and Modification . . . . . . . . . 79
13.7 Waiver of Compliance; Consents . . . . . . . 79
13.8 Broker's Fees. . . . . . . . . . . . . . . . 80
13.9 Expenses . . . . . . . . . . . . . . . . . . 80
13.10 Notices. . . . . . . . . . . . . . . . . . . 80
13.11 Governing Law. . . . . . . . . . . . . . . . 82
13.12 Public Announcements . . . . . . . . . . . . 82
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 83
EXHIBIT A -- Capital Stock of G-Modelo as of
Closing
EXHIBIT B -- Calculation of G-Modelo Free Cash
Flow
EXHIBIT C -- Procermex Pricing Policies
EXHIBIT D -- Opinion of Xxxxxxxxxxx Y Steta, S.C.
EXHIBIT E -- Opinion of Xxxxxxx X. Xxxxxxx, Esq.,
Senior Associate General Counsel of
Anheuser-Xxxxx Companies, Inc.
EXHIBIT F -- Opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx
EXHIBIT G -- Opinion of Xxxxx, Xxxxxx-Xxxxxxx y
Muggenburg
SCHEDULES
---------
Schedule 3.2(a)
Schedule 3.2(c)
Schedule 3.10
Schedule 3.11
Schedule 3.17
Schedule 3.18
Schedule 3.19
iv
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT, made and entered
into as of this 16th day of June, 1993, by and among
ANHEUSER-XXXXX COMPANIES, INC., a Delaware corporation
("A-B"), ANHEUSER-XXXXX INTERNATIONAL, INC., a Delaware
corporation ("A-BI"), ANHEUSER-XXXXX INTERNATIONAL HOLD-
INGS, INC., a Delaware corporation (the "Investor"), and
the other signatories hereto set forth on the signature
pages of this Investment Agreement (such signatories
other than the Option Trust and the Banamex Trust are
hereinafter referred to collectively as the "G-Modelo
Signatories");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Srs. Xxxxxxxx Xxxxxxxxx R., Xxxxx
Xxxxxxxxxxxxxx, Xxxxxxx Xxxx R., Xxxx Xxxxxxx-Xxxxxxx y
P. and Xxxxxxxx Xxxx M. have transferred and caused each
of the other shareholders (collectively, the "Controlling
Shareholders") of Diblo, S.A. de C.V., a Mexican corpora-
tion ("Diblo"), to transfer to Grupo Modelo, S.A. de
C.V., a Mexican corporation ("G-Modelo"), approximately
75 percent of the issued and outstanding shares of capi-
tal stock of Diblo, in exchange for 169,701,202 common
shares of G-Modelo; and
WHEREAS, the Controlling Shareholders have
caused each of Consorcio Distributivo, S.A. de C.V., a
Mexican corporation ("Consorcio"), and Expansion Inte-
gral, S.A. de C.V., a Mexican corporation ("Expansion"),
to merge into Diblo, which is now the owner of all of the
outstanding shares of capital stock of all of the former
subsidiaries of Consorcio and Expansion which the latter
two owned prior to such merger; and
WHEREAS, A-B and the Controlling Shareholders
desire to create an association or joint venture to
conduct and expand G-Modelo's and Diblo's current busi-
nesses, which shall be managed by the Controlling Share-
holders, with the participation of A-B, A-BI and the
Investor as provided in this Agreement; and
WHEREAS, in furtherance of and in consideration
for the creation of such association or joint venture,
the Investor desires, among other things, (i) to sub-
scribe and fully pay for 20,323,498 shares of Series P-C
Convertible Preferred Stock, no par value (the "Series P-
C Shares"), of G-Modelo, representing all of the autho-
rized Series PC Shares of GModelo, which Series P-C
Shares represent in excess of 10 percent of the total
outstanding capital stock of G-Modelo and which shall be
part of G-Modelo's Class II capital stock, and (ii) to
purchase from Banco Nacional de Mexico, S.A., as Trustee
of the Trust (the "Banamex Trust") established under the
Trust Agreement dated as of November 28, 1991, as amended
and restated on June 11, 1993 (the "Banamex Trust Agree-
ment"), among the Controlling Shareholders and the Trust-
ee of the Banamex Trust, and the Trustee of the Banamex
Trust desires to sell to the Investor, 24,329,922 shares
(the "Initial Diblo Shares") of Series B Common Stock, no
par value (the "Diblo Series B Shares"), of Diblo, which
Initial Diblo Shares represent in excess of 10 percent of
the total outstanding capital stock of Diblo and which
shall be part of Diblo's Class II capital stock;
NOW, THEREFORE, in consideration of the forego-
ing premises and the respective representations, warran-
ties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, and
intending to be legally bound hereby the parties do
hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Capitalized terms used herein shall have the
meaning ascribed to them in this Article I unless such
terms are defined elsewhere in this Agreement.
1.1. A-B. "A-B" shall have the meaning set
---
forth in the first paragraph of this Agreement.
1.2. A-BI. "A-BI" shall have the meaning set
----
forth in the first paragraph of this Agreement.
1.3. Amended Diblo By-laws. "Amended Diblo
---------------------
By-laws" shall mean the By-laws of Diblo as amended and
provided to the Investor pursuant to Section 2.4(b)(v).
1.4. Amended G-Modelo By-laws. "Amended
------------------------
G-Modelo By-laws" shall mean the By-laws of G-Modelo as
amended and provided to the Investor pursuant to Section
2.4(b)(v).
2
1.5. Banamex Trust. "Banamex Trust" shall
-------------
have the meaning set forth in the fourth preamble of this
Agreement.
1.6. Banamex Trust Agreement. "Banamex Trust
-----------------------
Agreement" shall have the meaning set forth in the fourth
preamble of this Agreement.
1.7. Closing. "Closing" shall mean the com-
-------
pletion of the purchase and sale of the Series P-C Shares
and the Initial Diblo Shares.
1.8. Closing Date. "Closing Date" shall mean
------------
the date on which the Closing occurs.
1.9. C&L. "C&L" shall mean Despacho Xxxxxxx
---
Xxxxx Alatriste, S.C., the Mexican affiliate of Coopers &
Xxxxxxx, independent certified public accountants for
G-Modelo and the G-Modelo Corporations or such other
Mexican affiliate of a "Big 6" international accounting
firm appointed by the G-Modelo Board of Directors to
audit the accounts of G-Modelo and the G-Modelo Corpora-
tions.
1.10. Consorcio. "Consorcio" shall have the
---------
meaning set forth in the second preamble of this Agreement.
1.11. Controlling Shareholders. "Controlling
------------------------
Shareholders" shall have the meaning set forth in the
first preamble of this Agreement.
1.12. Control Trust. "Control Trust" shall
-------------
mean the trust established under the Control Trust Agree-
ment.
1.13. Control Trust Agreement. "Control Trust
-----------------------
Agreement" shall mean the agreement dated as of June 11,
1993, among the Controlling Shareholders, A-B and Banco
Nacional de Mexico, S.A., as Trustee for the Control Trust.
1.14. Diblo. "Diblo" shall have the meaning
-----
set forth in the first preamble of this Agreement.
1.15. Diblo Series A Shares. "Diblo Series A
---------------------
Shares" shall be the Class I authorized shares of Series
A Common Stock, no par value, of Diblo.
3
1.16. Diblo Series B Shares. "Diblo Series B
---------------------
Shares" shall have the meaning set forth in the fourth
preamble of this Agreement.
1.17. Diblo P-C Shares. "Diblo P-C Shares"
----------------
shall mean the Class II authorized shares of Series P-C
Convertible Preferred Stock, no par value, of Diblo.
1.18. Encumbrances. "Encumbrances" shall mean
------------
all liens, claims, options, security interests or other
encumbrances of any character whatsoever.
1.19. Expansion. "Expansion" shall have the
---------
meaning set forth in the second preamble of this Agree-
ment.
1.20. Free Exchange Rate. "Free Exchange
------------------
Rate" shall mean the average of the U.S. dollar/Mexican
Peso free exchange rates for the sale of U.S. dollars
based on the amount of money to be converted quoted by
Banco Nacional de Mexico, S.A. and Bancomer, S.A. at
10:00 a.m. on the date of payment for which such free
exchange rate is being used.
1.21. G-Modelo. "G-Modelo" shall have the
--------
meaning set forth in the first preamble of this Agree-
ment.
1.22. G-Modelo Corporations. "G-Modelo Corpo-
---------------------
rations" shall mean Diblo and the other Subsidiaries of
G-Modelo.
1.23. G-Modelo Signatories. "G-Modelo Signa-
--------------------
tories" shall have the meaning set forth in the first
paragraph of this Agreement.
1.24. Heads of Agreement. "Heads of Agree
------------------
ment" shall mean the Heads of Agreement dated as of March
24, 1993, among A-B, A-BI, G-Modelo, Diblo and certain
Controlling Shareholders.
1.25. HSR Act. "HSR Act" shall mean the
-------
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
4
1.26. Initial Diblo Shares. "Initial Diblo
--------------------
Shares" shall have the meaning set forth in the fourth
preamble of this Agreement.
1.27. Internacionales. "Internacionales"
---------------
shall mean Cervezas Internacionales, S.A. de C.V., a
Mexican corporation and a Subsidiary of Diblo.
1.28. Investor. "Investor" shall have the
--------
meaning set forth in the first paragraph of this Agree-
ment.
1.29. LRMI. "LRMI" shall mean the Law and
----
Regulations to Promote Mexican Investment and Regulate
Foreign Investment.
1.30. Mexican GAAP. "Mexican GAAP" shall
------------
mean Mexican generally accepted accounting principles.
1.31. Mexican Pesos. "Mexican Pesos" shall
-------------
mean New Mexican pesos as of the date of this Agreement.
1.32. Option Shares. "Option Shares" shall
-------------
have the meaning set forth in Section 6.3.
1.33. Option Trust. "Option Trust" shall mean
------------
the trust established under the Option Trust Agreement.
1.34. Option Trust Agreement. "Option Trust
----------------------
Agreement" shall mean the agreement dated as of June 11,
1993, among the Controlling Shareholders and Banco
Nacional de Mexico, S.A., as Trustee for the Option
Trust.
1.35. Person. The term "person" shall mean
------
and include an individual, a partnership, a joint ven-
ture, a corporation, a trust, an unincorporated organiza-
tion and a government or any department or agency there-
of.
1.36. Prime Rate. "Prime Rate" shall mean the
----------
rate published by the New York City Branch of Citibank,
N.A. as its prime rate on the date on which interest is
to begin to accrue.
5
1.37. PW. "PW" shall mean Price Waterhouse,
--
independent certified public accountants for A-B and its
Subsidiaries or such other "Big 6" international account-
ing firm appointed by the A-B Board of Directors to audit
the accounts of A-B and its Subsidiaries.
1.38. Real Estate Trust. "Real Estate Trust"
-----------------
shall mean the trust established under the Real Estate
Trust Agreement.
1.39. Real Estate Trust Agreement. "Real
---------------------------
Estate Trust Agreement" shall mean the agreement dated as
of January 22, 1993, among Diblo and Banco Nacional de
Mexico, S.A., as Trustee of the Real Estate Trust.
1.40. Related Person. "Related Person" shall
--------------
mean when used in reference to any other Person any
Person who owns or holds ten percent or more of the
outstanding capital stock of such other Person or is an
officer, director or sole administrator of such other
Person or in the case of a natural Person, his spouse,
his or his spouse's children (including by adoption), his
siblings (including half and step siblings), his estate
and any trust entirely for the benefit of any one or more
of himself or any of the foregoing individuals.
1.41. Series A Shares. "Series A Shares"
---------------
shall mean the Class I and Class II authorized shares of
Series A Common Stock, no par value, of G-Modelo.
1.42. Series B Shares. "Series B Shares"
---------------
shall mean the 71,376,124 Class II shares of Series B
Common Stock, no par value, of G-Modelo authorized for
issuance upon conversion of shares of G-Modelo capital
stock as provided in the Amended G-Modelo By-laws.
1.43. Series C Shares. "Series C Shares"
---------------
shall mean the 40,646,995 authorized Class II shares of
Series C Non-Voting Stock, no par value, of G-Modelo.
1.44. Series P-C Shares. "Series P-C Shares"
-----------------
shall have the meaning set forth in the fourth preamble
of this Agreement.
1.45. Subsidiary. The term "Subsidiary" when
----------
used in reference to any other Person shall mean (x) any
corporation of which 50 percent or more of the outstand-
6
ing capital stock is owned, directly or indirectly, by
such other Person, or (y) any corporation of which out-
standing securities having ordinary voting power to elect
a majority of the members of the Board of Directors of
such corporation are owned, directly or indirectly, by
such other Person, or (z) any Person or entity, directly
or indirectly, controlling, controlled by or under common
control with such other Person.
1.46. USA Export. "USA Export" shall mean
----------
Extrade, S.A. de C.V., a Mexican corporation formed by
certain Controlling Shareholders prior to Closing as con-
templated in Section 2.4(b)(ii).
1.47. U.S. GAAP. "U.S. GAAP" shall mean
---------
United States generally accepted accounting principles.
1.48. Other Definitional Provisions. Whenever
-----------------------------
the context so requires, each of the neuter, masculine or
feminine forms of any pronoun shall include all such
forms. When used in this Agreement, the phrase "to the
Controlling Shareholders' best knowledge after due inqui-
ry" shall mean the collective knowledge of all of the
Controlling Shareholders after at least one of the Con-
trolling Shareholders has made due inquiry of one or more
employees or representatives of G-Modelo or a G-Modelo
Corporation who has access to or knowledge of the infor-
mation being sought. When used in this Agreement, the
phrase "consolidated after-tax net earnings" of G-Modelo
calculated in accordance with Mexican GAAP shall mean
"utilidad xxxx consolidada."
ARTICLE II
TERMS OF THE SUBSCRIPTION OF SERIES
P-C SHARES AND THE PURCHASE AND SALE OF
INITIAL DIBLO COMMON SHARES
---------------------------------------
2.1. Subscription of Series P-C Shares and
-------------------------------------
Purchase and Sale of the Initial Diblo Common Shares.
----------------------------------------------------
Upon the terms and subject to the conditions of this
Agreement, at the Closing (i) G-Modelo shall sell to the
Investor, and the Investor shall subscribe and purchase
from G-Modelo, the Series P-C Shares and (ii) the Trustee
of the Banamex Trust shall sell to the Investor, and the
Investor shall purchase from the Banamex Trust, the
7
Initial Diblo Shares (which shall be "ex" the previously
declared dividend that is referred to in clause (iv) of
paragraph (b) of Section 2.04).
2.2. The Closing. The Closing of the transac-
-----------
tions contemplated by this Article II shall take place at
the offices of G-Modelo, Xxxxxx Xxxxxxx 400, 19th Floor,
Colonia Xxxxx xx Xxxxxxxxxxx, 00000 Xxxxxx, D.F., com-
mencing at 11:00 a.m. (Mexico time) on the date hereof
provided that all of the conditions to the parties'
obligations set forth in Articles VIII and IX have been
satisfied or waived or such other place, time and date as
the Controlling Shareholders and the Investor may mutual-
ly agree upon. All matters at Closing shall be consid-
ered to take place simultaneously and no delivery of any
document shall be deemed complete until all transactions
and deliveries of documents are completed.
2.3. Purchase Price. The aggregate purchase
--------------
price to be paid by the Investor for the Series P-C
Shares (the "Series P-C Purchase Price") shall be 207.225
million United States dollars and the aggregate purchase
price to be paid by the Investor for the Initial Diblo
Shares (the "Diblo Purchase Price") shall be 270 million
United States dollars. Payment of the Series P-C Pur-
chase Price and the Diblo Purchase Price shall be made at
the Closing by the Investor in immediately available
United States funds.
2.4. Deliveries at the Closing.
-------------------------
(a) Deliveries by the Investor. At the
--------------------------
Closing, the Investor or A-B shall deliver or cause to be
delivered the following:
(i) the Series P-C Purchase
Price to G-Modelo and the Diblo Purchase Price
to the Banamex Trust;
(ii) copies of a duly executed
amendment to the Distribution Agreement dated
as of the Closing Date between A-B and Interna
cionales (the "Internacionales Distribution
Agreement"), providing, among other things,
that, subject to the terms and conditions
thereof, for so long as the Investor owns ten
per cent or more of the total outstanding shares of
8
G-Modelo capital stock, Internacionales shall
continue to be the exclusive distributor of X-X
xxxxx in Mexico;
(iii) the opinions referred to in
Section 9.6; and
(iv) any other documents, in-
struments and writings required to be delivered
by the Investor at or prior to the Closing
pursuant to the terms of this Agreement.
(b) Deliveries by the G-Modelo Signato-
----------------------------------
xxxx, the Banamex Trust and the Option Trust. At the
--------------------------------------------
Closing, the Controlling Shareholders, the Banamex Trust
and the Option Trust shall deliver or cause to be deliv-
ered the following:
(i) stock certificates repre-
senting the Series P-C Shares registered in the
name of the Investor and the Initial Diblo
Shares, duly endorsed in the name of the Inves-
tor;
(ii) a certificate of the appro-
priate officer of Diblo certifying (A) the
completion of the transfer to USA Export of the
exclusive rights of Diblo for the export of
G-Modelo beers to the United States upon the
terms set forth in the agreement between USA
Export and the applicable G-Modelo Corporations
(the "USA Export Agreement"),(B) the Certif-
icate of Incorporation and By-laws of USA Ex-
port and (C) the USA Export Agreement as in
effect on the Closing Date duly executed by the
parties thereto;
(iii) a certificate of an appro-
priate officer of G-Modelo certifying (x) the
exact amount of the dividend declared out of
the consolidated after-tax net earnings of G-
Modelo calculated in accordance with Mexican
GAAP, which dividend will be 484,440,235.90
Mexican Pesos which is the Mexican Peso equiva-
lent of 155.4 million United States dollars
based upon an agreed Free Exchange Rate of
3.1170 Mexican Pesos per United States dollar
9
for this purpose, (y) the date of declaration
of such dividend and (z) the date of payment of
such dividend (which shall be payable to G-Mod-
elo's shareholders of record on the date of
such declaration);
(iv) a certificate of an appro-
priate officer of Diblo certifying (x) the
exact amount of the dividend declared out of
the consolidated after-tax net earnings of
Diblo calculated in accordance with Mexican
GAAP, which dividend will be 645,920,325 Mexi-
can Pesos based upon an agreed Free Exchange
Rate of 3.1170 Mexican Pesos per United States
dollar for this purpose, (y) the date of dec-
laration of such dividend, and (z) the date of
payment of such dividend (which shall be pay-
able to Diblo's shareholders of record on the
date of such declaration);
(v) a copy of the Amended G-Mo-
delo By-laws as in effect on the Closing Date
certified by the Secretary of G-Modelo and the
Amended Diblo By-laws as in effect on the Clos-
ing Date certified by the Secretary of Diblo;
(vi) Powers of Attorney granting
one or more of the Controlling Shareholders the
power and authority to act on behalf of those
Controlling Shareholders who have executed this
Agreement by power of attorney, which Control-
ling Shareholders together with the Controlling
Shareholders who have directly executed this
Agreement own or control at least 99 percent of
the capital stock of G-Modelo;
(vii) the opinion referred to in
Section 8.6;
(viii) copies of the duly executed
Control Trust Agreement, the Banamex Trust
Agreement, the Option Trust Agreement and the
Real Estate Trust Agreement, in each case as in
effect on the Closing Date;
(ix) Designation as Trustee
Delegate authorizing the representative of
10
Banco Nacional de Mexico, S.A. on behalf of each of
the Banamex Trust and the Option Trust to execute
the Banamex Trust Agreement and the Option Trust
Agreement, respectively, and this Agreement and of
the Control Trust to execute the Control Trust
Agreement; and
(x) any other documents, in-
struments and writings required to be delivered
by the G-Modelo Signatories, the Banamex Trust
or the Option Trust at or prior to the Closing
pursuant to the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE G-MODELO SIGNATORIES
------------------------------
Each of the G-Modelo Signatories, jointly and
severally, represents and warrants to A-B, A-BI and the
Investor as follows:
3.1. Capital Stock of G-Modelo.
-------------------------
(a) Other than as set forth on Exhibit A,
there are no authorized, issued or outstanding securities
of G-Modelo. The Series A Shares and the Series C Shares
are owned of record as set forth on Exhibit A, free and
clear of all Encumbrances, except as set forth in this
Agreement. All of the Series A Shares and the Series C
Shares have been duly and validly authorized and issued,
and all of such shares, other than those Series C Shares
held in G-Modelo's treasury for issuance to the public in
accordance with Section 5.8 or to executive employees of
the G-Modelo Corporations in accordance with Section
5.13, are fully paid and nonassessable, and, upon payment
for the treasury shares in connection with such issuanc-
es, such treasury shares will be outstanding, fully paid
and nonassessable. The Series B Shares have been duly
and validly authorized for issuance upon conversion of
shares of G-Modelo capital stock pursuant to the Amended
G-Modelo By-laws, are free of pre-emptive rights and none
of such shares have been issued. The Series P-C Shares
have been duly and validly authorized and, upon payment
therefor as provided in this Agreement, will be validly
issued and outstanding, fully paid and nonassessable.
11
Except as provided in this Agreement, the Control Trust
Agreement and the Option Trust Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of G-Modelo, including any right of
conversion or exchange under any security or other in-
strument. Each of the persons listed on Exhibit A has
good and marketable title to the shares listed next to
such person's name on Exhibit A, and the Investor will
receive good and marketable title to the Series P-C
Shares, free and clear of all Encumbrances, except as set
forth in this Agreement.
(b) Upon the conversion, if any, by the
Investor of the Series P-C Shares into Series B Shares
pursuant to the terms of the Series P-C Shares, the
Investor will receive good and marketable title to the
Series B Shares free and clear of all Encumbrances,
except as set forth in this Agreement.
(c) Upon the purchase of the Option
Shares at the Option Closing (as such term is defined in
Section 6.3) pursuant to Section 6.3, the Investor or its
authorized designee, if any, will receive good and mar-
ketable title to the Option Shares free and clear of all
Encumbrances, except as set forth in this Agreement.
(d) Upon the purchase of Series A Shares
at a Purchase Right Closing (as such term is defined in
Section 6.2) pursuant to Section 6.2, the Investor or its
authorized designee, if any, will receive good and mar-
ketable title to such Series A Shares free and clear of
all Encumbrances, except as set forth in this Agreement.
(e) Except as provided in this Agreement,
the Control Trust Agreement and the Amended G-Modelo By-
laws, the Control Trust is not a party to any subscrip-
tion, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement with respect to
the sale, delivery or transfer of the Series A Shares
held by the Control Trust, including any right of conver-
sion or exchange under any security or other instrument.
Except as provided in this Agreement, the Option Trust
Agreement and the Amended G-Modelo By-laws, the Option
Trust is not a party to any subscription, option, war-
rant, call, right, contract, agreement, commitment,
12
understanding or arrangement with respect to the sale,
delivery or transfer of the Series A Shares held by the
Option Trust, including any right of conversion or ex-
change under any security or other instrument. Each of
the Control Trust and the Option Trust has good and mar-
ketable title to the Series A Shares held in trust by it,
free and clear of all Encumbrances, except as set forth
in this Agreement.
3.2. Capital Stock of Diblo and the G-Modelo
---------------------------------------
Corporations.
------------
(a) The authorized capital stock of Diblo
is variable with a minimum fixed capital of 1,428,804,61-
4.20 Mexican Pesos and a variable capital, which as of
the Closing Date, equals 1,122,188,515.70 Mexican Pesos.
The total capital is divided into (i) 226,268,273 shares
of Diblo common stock, all of which shares are issued and
outstanding, 169,701,206 of which shares are designated
as Class I Diblo Series A Shares which represent the
minimum fixed capital and 56,567,067 of which shares are
designated as Class II Diblo Series B Shares and (ii)
17,030,940 Diblo P-C Shares, all of which shares are
issued and outstanding and are designated as Class II
shares and which together with the Class II Diblo Series
B Shares represent the variable capital. The Diblo Series
A Shares and the Diblo Series B Shares (collectively, the
"Diblo Common Shares") and the Diblo P-C shares are owned
of record as set forth on Schedule 3.2(a). All Diblo
Common Shares have been duly and validly authorized and
issued, are fully paid and nonassessable, and are owned
of record as set forth on Schedule 3.2(a) free and clear
of all Encumbrances, except as set forth in this Agree-
ment. All Diblo P-C Shares have been duly and validly
authorized and issued, and upon payment therefor immedi-
ately after the Closing will be fully paid and nonassess-
able, and are owned by G-Modelo free and clear of Encum-
brances. Other than the Diblo Common Shares and the
Diblo P-C Shares, there are no authorized, issued or out-
standing securities of Diblo. Except as provided in this
Agreement and the Banamex Trust Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of Diblo, including any right of con-
version or exchange under any security or other instru-
ment. Each of G-Modelo and the Banamex Trust has good
13
and marketable title to the Diblo Common Shares and, in
the case of G-Modelo, the Diblo P-C Shares owned by it,
and at the Closing the Investor will receive good and
marketable title to the Initial Diblo Shares, free and
clear of all Encumbrances, except as set forth in this
Agreement.
(b) Upon the purchase of the Diblo Option
Shares at the Diblo Option Closing (as such terms are
defined in Section 6.4) pursuant to Section 6.4, the
Investor or its authorized designee, if any, will receive
good and marketable title to the Diblo Option Shares free
and clear of all Encumbrances, except as set forth in
this Agreement.
(c) For each of the G-Modelo Corpora-
tions, Schedule 3.2(c) identifies (i) the names of the
directors or sole administrator, as the case may be, (ii)
the authorized capital for such corporation, divided
between minimum fixed capital and variable capital, (iii)
the number of such shares which are issued and outstand-
ing, together with the number of treasury shares, if any,
and (iv) the names of all record holders of such issued
and outstanding shares (indicating the number of shares
owned). Each of the G-Modelo Corporations has good and
marketable title to the shares of capital stock of the G-
Modelo Corporations owned by it, free and clear of all
Encumbrances. All of the shares of capital stock of the
G-Modelo Corporations are duly and validly authorized and
issued, fully paid and nonassessable. Except as provided
in this Agreement, there is no subscription, option, war-
rant, call, right, contract, agreement, commitment,
understanding or arrangement with respect to the issu-
ance, sale, delivery or transfer of any of the shares of
the capital stock of the G-Modelo Corporations, including
any right of conversion or exchange under any security or
other instrument. As promptly as practicable, the Con-
trolling Shareholders agree to identify the relationship,
if any, of the shareholders, the directors or the sole
administrator of the G-Modelo Corporations identified on
Schedule 3.2(c) to Srs. Xxxxxxxx Xxxxxxxxx R., Xxxxx
Xxxxxxxxxxxxxx, Xxxxxxx Xxxx R., Xxxx Xxxxxxx-Xxxxxxx y
P. or Xxxxxxxx Xxxx M. and to provide such information to
A-B.
(d) Except as provided in this Agreement
and the Banamex Trust Agreement, the Banamex Trust is not
14
a party to any subscription, option, warrant, call,
right, contract, agreement, commitment, understanding or
arrangement with respect to the sale, delivery or trans-
fer of the Diblo Series B Shares held by the Banamex
Trust, including any right of conversion or exchange
under any security or other instrument. The Banamex
Trust has good and marketable title to the Diblo Series B
Shares held in trust by it, free and clear of all Encum-
brances, except as set forth in this Agreement.
3.3. USA Export. All of the shares of capital
----------
stock of USA Export are duly and validly authorized and
issued, fully paid and nonassessable and owned of record
and beneficially by certain of the Controlling Sharehold-
ers. Except as provided in this Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of USA Export, including any right of
conversion or exchange under any security or other in-
strument. All of the exclusive rights of Diblo for the
export of G-Modelo beers to the United States have been
transferred to USA Export. USA Export had all requisite
power and authority (corporate or otherwise) to execute,
deliver and perform the USA Export Agreement and to
consummate the transactions contemplated thereby. The
execution, delivery and performance of the USA Export
Agreement by USA Export and the consummation by USA
Export of its obligations thereunder have been duly
authorized by all necessary corporate action and no other
corporate proceedings on the part of the Board of Direc-
tors or shareholders of USA Export is necessary to autho-
rize the USA Export Agreement or to consummate the trans-
action contemplated thereby. The USA Export Agreement
has been duly and validly executed and delivered by the
G-Modelo Corporations which are parties thereto and USA
Export and constitutes the valid and binding obligation
of each of them, enforceable against each of them in
accordance with its terms. None of A-B, A-BI, the Inves-
tor or any of their respective affiliates has any owner-
ship interest in USA Export or ability to influence or
control any of the policies or decisions of the Board of
Directors or management of USA Export.
15
3.4. Power and Authority; Effect of Agreement.
----------------------------------------
(a) Each of the G-Modelo Signatories has
all requisite power and authority (corporate or other-
wise) to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The
execution, delivery and performance by the corporate
G-Modelo Signatories of their obligations under this
Agreement and the consummation by them of the transac-
tions contemplated hereby have been duly authorized by
the Board of Directors and shareholders, as applicable,
of each corporate G-Modelo Signatory, and no other corpo-
rate action or proceeding on the part of such corporation
or its shareholders is necessary to authorize this Agree-
ment or the consummation of any of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by the G-Modelo Signato-
xxxx and constitutes the valid and binding obligation of
each of the G-Modelo Signatories, enforceable against
each of them in accordance with its terms.
(b) One or more of the Controlling Share-
holders has full legal power and authority to act on
behalf of those Controlling Shareholders who have exe-
cuted this Agreement by power of attorney, which Control-
ling Shareholders together with the Controlling Share-
holders who have directly executed this Agreement own or
control at least 99 percent of the capital stock of G-
Modelo.
(c) As of the date hereof, a majority of
the members of the technical committees of the Control
Trust, the Banamex Trust and the Option Trust are Con-
trolling Shareholders or will otherwise be bound by the
terms of this Agreement.
(d) The execution, delivery and perfor-
xxxxx by the G-Modelo Signatories of this Agreement and
the consummation by the G-Modelo Signatories of the
transactions contemplated hereby does not and will not,
with or without the giving of notice or the lapse of
time, or both, (i) violate any law, rule or regulation to
which any G-Modelo Signatory or any of its respective
assets is subject, (ii) violate any order, writ, injunc-
tion, judgment or decree applicable to any G-Modelo
Signatory or any of its respective assets or properties,
or (iii) conflict with, or result in a breach of or
16
default under, or give rise to any right of termination,
cancellation or acceleration under (A) any term or condi-
tion of the Certificate of Incorporation, the By-Laws, or
other similar charter documents, of any corporate G-Mode-
lo Signatory, or (B) any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or
material lease, license, agreement or other material
instrument to which any G-Modelo Signatory is a party or
by which any of them or any of their respective assets
may be bound; except with respect to clauses (i), (ii)
and (iii)(B) above, for violations, conflicts, breaches
or defaults which in the aggregate would not materially
hinder or impair any G-Modelo Signatory's ability to
consummate the transactions contemplated hereby.
3.5. Investments. The corporations, partner-
-----------
ships, joint ventures or other entities in which G-Modelo
or any of the G-Modelo Corporations has, or pursuant to
any agreement will have, individually or in the aggre-
gate, directly or indirectly, the right to acquire by any
means, an equity interest or investment exceeding ten
percent of the equity capital thereof (other than the
G-Modelo Corporations) (the "G-Modelo Investments"), in
the aggregate, are not material to the business, assets,
operations, prospects or financial condition of G-Modelo
and the G-Modelo Corporations, taken as a whole.
3.6. Organization; Assets.
--------------------
(a) Each of G-Modelo, the G-Modelo Corpo-
rations and USA Export is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and each has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as
now being conducted. G-Modelo, the G-Modelo Corporations
and USA Export are each duly qualified or licensed and in
good standing to do business in each jurisdiction in
which the property owned, leased or operated by such
corporation or the nature of the business conducted by
such corporation makes such qualification necessary,
except where the failure to be so qualified or licensed
and in good standing would not have a material adverse
effect on the business, assets, operations, prospects or
financial condition of G-Modelo, such G-Modelo Corpora-
tion or USA Export, as the case may be. The Controlling
Shareholders have heretofore delivered to the Investor
17
complete and correct copies of the Certificate of Incor-
poration and Amended By-laws (or other similar charter
documents), as currently in effect, of G-Modelo and
Diblo. The Controlling Shareholders have heretofore made
available to the Investor complete and correct copies of
(i) the stock registry book and (ii) the Certificate of
Incorporation and By-laws (or other similar charter
documents), as currently in effect, of each G-Modelo
Corporation (other than Xxxxxx Industrial, Eurocermex,
Iberocermex, Procermex, Inc., a Texas corporation ("Proc-
ermex"), Desarrollo Inmobiliario Siglo XXI, S.A. de C.V.
and Arena Silica de Mexico, S.A. de C.V.). Each of the
Amended G-Modelo By-laws and the Amended Diblo By-laws
has been duly and validly authorized, is in full force
and effect and is enforceable in accordance with its
terms.
(b) The assets currently owned by or
leased to G-Modelo and the G-Modelo Corporations, direct-
ly or indirectly, include all of the assets and proper-
ties, whether tangible or intangible, real, personal or
mixed, used in connection with, or that relate to or are
necessary for G-Modelo and the G-Modelo Corporations to
conduct their business and operations in all material re-
spects as presently conducted. The assets reflected on
the G-Modelo Balance Sheet or acquired by G-Modelo or a
G-Modelo Corporation after the date of the G-Modelo
Balance Sheet are in all material respects in good work-
ing condition for the conduct of the business and opera-
tions of G-Modelo and the G-Modelo Corporations, ordinary
wear and tear excepted.
(c) As of the Closing Date, (i) the only
assets of G-Modelo are 169,701,202 Diblo Series A Shares,
17,030,940 Diblo PC Shares, cash and marketable securi-
ties; (ii) G-Modelo has no liabilities other than liabil-
ities incurred in connection with the transactions con-
templated by this Agreement; and (iii) G-Modelo conducts
no business or operations except in connection with the
transactions contemplated by this Agreement and except
for investing activities with respect to the cash and
marketable securities owned by it.
3.7. Financial Information. The Controlling
---------------------
Shareholders have previously furnished to the Investor:
(a) audited consolidated balance sheets and the related
audited consolidated statements of income, changes in
18
stockholders equity and changes in the financial position
(including the related notes) of G-Modelo and subsidiar-
ies for the fiscal years ended December 31, 1992 and
December 31, 1991 and of the G-Modelo Corporations for
each of the four fiscal years ended December 31, 1991,
December 31, 1990, December 31, 1989 and December 31,
1988 accompanied by the auditor reports thereon (collec-
tively, the "Audited Consolidated Financial Statements"),
and (b) the unaudited consolidated balance sheet and the
related unaudited consolidated statements of income of
G-Modelo and subsidiaries for the two months ended Febru-
ary 28, 1993 (collectively, the "Unaudited Consolidated
Financial Statements" and together with the Audited
Consolidated Financial Statements, the "Consolidated
Financial Statements"). The audited consolidated balance
sheet of G-Modelo and subsidiaries for the fiscal year
ended December 31, 1992 is hereinafter referred to as the
"G-Modelo Balance Sheet." The Consolidated Financial
Statements (i) were prepared from the (A) books and
records of G-Modelo and the G-Modelo Corporations in the
case of the Audited Consolidated Financial Statements for
the fiscal year ended December 31, 1992 and the Unaudited
Consolidated Financial Statements and (B) from the books
and records of the G-Modelo Corporations in the case of
the Audited Consolidated Financial Statements for other
four fiscal years, which books and records accurately
reflect in all material respects the accounts and trans-
actions recorded therein, (ii) present fairly the xxxxx-
cial position, results of operations, changes in stock-
holders equity and changes in financial position of
G-Modelo and its subsidiaries as of and for the periods
in which they relate, and (iii) have been prepared in
accordance with Mexican GAAP consistently applied through-
out the periods covered, except as otherwise noted
therein and except that the Unaudited Consolidated Xxxxx-
cial Statements are subject to any normal and recurring
adjustments which may arise from the audit of the fiscal
year ended December 31, 1993. The consolidated books and
records of G-Modelo and its subsidiaries reflect that as
of December 31, 1992, G-Modelo and the G-Modelo Corpora-
tions had cufine (Cuenta De Utilidad Fiscal Xxxx) in an
aggregate amount equal to 2,216,147,495 Mexican Pesos.
3.8. Undisclosed Liabilities; Absence of
-----------------------------------
Certain Changes. Neither G-Modelo nor any G-Modelo
---------------
Corporation has any liabilities or obligations of any
nature, secured or unsecured (absolute, accrued, contin-
19
gent or otherwise and whether due or to become due),
except liabilities and obligations which are fully re-
flected, reserved against or disclosed in the G-Modelo
Balance Sheet or the notes to the Audited Consolidated
G-Modelo Financial Statements and except for liabilities
and obligations incurred in the ordinary course of busi-
ness and consistent with past practice since December 31,
1992. Except as contemplated by this Agreement, since
December 31, 1992 there has not been any material adverse
change in the business, assets, operations, prospects or
financial condition of G-Modelo and the G-Modelo Corpora-
tions, taken as a whole.
3.9. Title and Related Matters. Except with
-------------------------
respect to the Patent and Trademark Rights (as defined in
Section 3.10 and as to which the representations in
Section 3.10 shall apply) and Real Property (as defined
in Section 3.20 and as to which the representations in
Section 3.20 apply): the G-Modelo Corporations have good
and marketable title, free and clear of all Encumbrances,
to (a) all properties and assets (personal, tangible,
intangible and mixed) reflected in the G-Modelo Balance
Sheet or acquired after the date thereof by such corpora-
tions, and (b) all other material properties and assets
owned by G-Modelo and the G-Modelo Corporations, except
in each case for (i) any of such properties or assets
sold or otherwise disposed of in the ordinary course of
business, (ii) liens for current taxes not yet due or
which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been
established and disclosed in writing to the Investor, and
(iii) Encumbrances which are not material to the value of
the properties or assets encumbered and which do not
impair in any material respect the current use or opera-
tion of such properties and assets.
3.10. Patents, Trademarks, Etc. Schedule 3.10
-------------------------
sets forth a list of all patents, common law and regis-
tered trademarks and service marks, applications for
trademark and service xxxx registrations, and copyright
registrations owned by G-Modelo or any of the G-Modelo
Corporations (the "Patent and Trademark Rights"). Except
as set forth on Schedule 3.10, (a) no other company is
licensed or authorized by G-Modelo or any of the G-Modelo
Corporations to use any of the Patent and Trademark
Rights; (b) neither G-Modelo nor any G-Modelo Corporation
uses any of the Patent and Trademark Rights by consent of
20
or license from any other rightful owner thereof, and the
same are free and clear of Encumbrances, and G-Modelo or
a G-Modelo Corporation has the right to exclude others
from making, using, or selling the invention of such
patents and has the exclusive right to use such common
law and registered marks and copyrighted works on the
goods or services for which they are currently used, or
on the goods and services specified in the respective
trademark registrations subject to any conditions or
limitations therein; (c) the conduct of the business of
the G-Modelo Corporations as now being conducted in
Mexico, Canada and the United States does not conflict
with any patents, trademarks, service marks, names, trade
names or copyrights of others in any way which has an
adverse effect on the business, assets, operations,
prospects or financial condition of G-Modelo and the G-
Modelo Corporations, taken as a whole; (d) G-Modelo and
the G-Modelo Corporations have no knowledge that the
conduct of the business of the G-Modelo Corporations as
now being conducted in any country other than Mexico,
Canada or the United States conflicts with any patents,
trademarks, service marks, names, trade names or copy-
rights of others in any way which has a material adverse
effect on the business, assets, operations, prospects or
financial condition of G-Modelo and G-Modelo Corpora-
tions, taken as a whole; (e) the G-Modelo Corporations
solely own good and valid title to the Patent and Trade-
xxxx Rights in Mexico, Canada and the United States, and
to the Controlling Shareholders' best knowledge after due
inquiry, there is no fact which raises any issue as to
the validity of the Patent and Trademark Rights in Mexi-
co, Canada and the United States; (f) the G-Modelo Corpo-
rations solely own good and valid title to the Patent and
Trademark Rights used in the conduct of the business of
the G-Modelo Corporations as now being conducted in any
country other than Mexico, Canada or the United States,
and except as set forth on Schedule 3.10, to the Control-
ling Shareholders' best knowledge after due inquiry,
there is no fact which raises any issue as to the validi-
ty of the Patent and Trademark Rights; (g) except as set
forth on Schedule 3.10, there is no pending litigation in
a court or proceedings in any administrative agency, nor
has G-Modelo or any G-Modelo Corporation received any
notice or other communication, in which any of the Patent
and Trademark Rights are being challenged or contested;
(h) except as set forth on Schedule 3.10, neither G-
Modelo nor any G-Modelo Corporation received any pro-
21
tests, claims, notices, or other communications relating
to infringement of the rights of others arising from the
present use of the Patent and Trademark Rights, and to
the Controlling Shareholders' best knowledge after due
inquiry, the subject matter of the Patent and Trademark
Rights do not thereby infringe; and (i) none of the Con-
trolling Shareholders, G-Modelo or any G-Modelo Corpo-
ration has contracted to provide indemnification for
infringement of the intellectual property rights of
others, or to grant any license of the Patent and Trade-
xxxx Rights to any other party or receive a license to
use any patent, trademark or copyright from a third
party, except as set forth in Schedule 3.10, or to under-
take or covenant not to xxx any other party with respect
to the Patent and Trademark Rights.
3.11. Litigation. Except as set forth in
----------
Schedule 3.11, there are no (a) actions, suits, proceed-
ings or investigations, pending or, to the Controlling
Shareholders' best knowledge after due inquiry, threat-
ened, against G-Modelo or any G-Modelo Corporation or (b)
orders, injunctions or decrees of any court or governmen-
tal agency against or affecting G-Modelo or any G-Modelo
Corporation, which in either (a) or (b) above would have
a material adverse effect on the business, assets, opera-
tions, prospects or financial condition of G-Modelo and
the G-Modelo Corporations, taken as a whole. There are
no actions, suits, proceedings or investigations, pending
or, to the Controlling Shareholders' best knowledge after
due inquiry, threatened, which would give any third party
the right to enjoin or rescind or cause a material alter-
ation in the transactions contemplated hereby.
3.12. Compliance with Laws. G-Modelo and each
--------------------
G-Modelo Corporation is in compliance in all material
respects with all laws, rules, regulations and orders
applicable to their respective businesses, and G-Modelo
and each G-Modelo Corporation has lawfully obtained all
necessary permits, licenses and governmental authoriza-
tions required for the ownership, use or occupancy of
their properties and assets and the carrying on of their
business as currently conducted, except for all such
failures to have any such permit, license or governmental
authorizations which would not, in the aggregate, have a
material adverse effect on the business, assets, opera-
tions, prospects or financial condition of G-Modelo and
the G-Modelo Corporations, taken as a whole.
22
3.13. Tax Matters.
-----------
(a) All Tax Returns (as hereinafter
defined) required to be filed by G-Modelo or the G-Modelo
Corporations (collectively, the "Taxpayers") have been
filed on a timely basis and are in all material respects
true, complete and correct;
(b) All Taxes (as hereinafter defined)
that are due and payable or claimed or asserted to be due
and payable by the Taxpayers by any tax authority for all
periods up to and including the Closing Date have been
paid or provided for, except for Taxes which are the
subject of customary challenges by the Ministry of Treas-
ury and the aggregate amount of which claimed by the
Ministry to be due does not exceed 3,500,000 Mexican
Pesos in any year;
(c) There are no liens for Taxes upon the
assets of any of the Taxpayers;
(d) The Taxpayers have complied in all
material respects with all applicable laws, rules and
regulations relating to the payment and withholding of
Taxes pursuant to all applicable tax provisions concern-
ing tax withholding or similar provisions and have,
within the time and in the manner prescribed by law, paid
over to the proper governmental authorities all amounts
required to be so withheld and paid over under all appli-
cable laws;
(e) (i) Except for the tax years 1988
through 1992, the statute of limitations for the assess-
ment of all Taxes under the Mexican income tax and the
United States federal income tax laws have expired for
all applicable returns of the Taxpayers or an audit of
those returns has been completed by the appropriate
taxing authorities for all periods ending on or before
the Closing Date, (ii) no deficiency for any Taxes has
been proposed, asserted or assessed which has not been
finally resolved, (iii) neither the Controlling Share-
holders nor the Taxpayers know of any facts that are
likely to result in any assertion or assessment of a Tax
with respect to any past taxable period, and (iv) no
taxing authority has successfully asserted any issue
concerning the liability of the Taxpayers for Taxes that
by application of similar principles could result in any
23
assertion or assessment of a Tax for another taxable
period;
(f) No Tax audits or other administrative
proceedings or court proceedings are now pending with
regard to any Taxes or Tax Returns of the Taxpayers;
(g) None of the transactions contemplated
by or completed with respect to this Agreement has or
will cause the Taxpayers to incur any additional Tax
liability as a result thereof;
(h) The Taxpayers have not incurred any
Tax liabilities for the period beginning January 1, 1993
and ending on the Closing Date other than Tax liabilities
incurred in the ordinary course of their business; and
(i) For purposes of this Agreement, (i)
"Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income
tax, property tax, value added tax, all other net income,
sales, use, ad valorem, beer excise, transfer, license,
withholding, payroll, employment, social security, INFON-
AVIT, SAR, estimated, property or other taxes, customs
duties, fees, assessments or charges of any kind whatso-
ever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any
taxing authority of any jurisdiction upon any of the
Taxpayers, and (ii) "Tax Returns" shall mean all returns,
declarations, reports, information returns and state-
ments required to be filed by any of the Taxpayers in
connection with Taxes.
3.14. Shareholder Agreements. Except for the
----------------------
Control Trust Agreement, the Option Trust Agreement and
the Banamex Trust Agreement, there are no contracts,
agreements or understandings, whether written or oral
(including any and all amendments thereto), among or
between the shareholders of G-Modelo or any G-Modelo
Corporation or any Related Person thereof or between a
shareholder of G-Modelo or any G-Modelo Corporation or
any Related Person thereof and G-Modelo or any G-Modelo
Corporation with respect to the shares of the capital
stock of G-Modelo or any G-Modelo Corporation or the
business or operations of G-Modelo or any G-Modelo Corpo-
ration.
24
3.15. Consents. No consent, approval or
--------
authorization of, or exemption by, or filing with, any
governmental or regulatory authority (other than as may
be required under the HSR Act or the Law on Economic
Competition ("LEC")) is required in connection with the
execution, delivery and performance by the G-Modelo
Signatories of the transactions contemplated by this
Agreement.
3.16. Environmental Matters. (a) The opera-
---------------------
tions of G-Modelo and the G-Modelo Corporations comply in
all material respects with all Federal, state and local
environmental and health and safety statutes and regula-
tions; (b) neither G-Modelo nor any G-Modelo Corporation
nor, to the Controlling Shareholders' best knowledge
after due inquiry, any prior owner or tenant of the Real
Property has made, caused or contributed to any release
of any hazardous or toxic waste, substance or constitu-
ent, into the environment; (c) none of the operations of
G-Modelo or any G-Modelo Corporation is subject to any
judicial or administrative proceeding alleging the xxxxx-
tion of any Federal, state or local environmental or
health or safety statute or regulation; (d) none of the
operations of G-Modelo or any G-Modelo Corporation is
subject to any compliance agreement or settlement agree-
ment resulting from an alleged violation of any Federal,
state or local environmental or health or safety statute
regulation; (e) none of the operations of G-Modelo or any
G-Modelo Corporation is the subject of any Federal, state
or local investigation or threatened investigation re-
xxxxxxx a violation or alleged violation of any Federal,
state or local environmental or health or safety statute
or regulation; (f) none of the operations of G-Modelo or
any G-Modelo Corporation is required to file a notice or
report pursuant to any Federal, state or local environ-
mental or health or safety statute or regulation of any
past or present spill or release of hazardous or toxic
substance or constituent into the environment; (g) none
of the businesses of G-Modelo or any G-Modelo Corporation
involves the generation, transportation, treatment, stor-
age or disposal of hazardous or toxic waste; (h) G-Modelo
and the G-Modelo Corporations have no knowledge of any
hazardous wastes or toxic substances in, on, over or
under the Real Property; and (i) G-Modelo and the G-
Modelo Corporations possess all material environmental
permits and authorizations required by any Federal, state
25
or local environmental or health and safety statute or
regulation to conduct their operations.
3.17. Absence of Certain Changes or Events.
------------------------------------
Except as set forth in Schedule 3.17, since December 31,
1992 there has not been (i) any material adverse change
in the business, assets, operations, prospects or xxxxx-
cial condition of G-Modelo and the G-Modelo Corporations,
taken as a whole; (ii) any significant damage, destruc-
tion or loss affecting G-Modelo or any of the G-Modelo
Corporations, which is not substantially covered by
insurance; (iii) any material increase in the compensa-
tion payable or to become payable by G-Modelo or any
G-Modelo Corporation to its officers or key employees;
(iv) any material increase in any bonus, insurance,
pension or other employee benefit plan, payment or ar-
rangement made to, for or with any such officers or key
employees; or (v) any entry into any agreement, commit-
ment or transaction (including, without limitation, any
borrowing, capital expenditure or capital financing) by
G-Modelo or any G-Modelo Corporation, except agreements,
commitments or transactions in the ordinary course of
business and consistent with past practice; or (vi) any
change by G-Modelo or any G-Modelo Corporation in ac-
counting methods, principles or practices except as
required by Mexican GAAP.
3.18. Material Contracts. Except for the
------------------
information which will be provided on the Schedule to be
delivered to the Investor pursuant to Section 7.2(a)(v),
Schedule 3.18 contains a list of each material contract,
license, lease, agreement or understanding (including,
without limitation, with governments or governmental
agencies), whether written or oral (including any and all
amendments thereto), to which G-Modelo or any G-Modelo
Corporation is a party or by which any of their respec-
tive properties or assets may be bound (a "Material
Contract"); and where such Material Contract is with a
party which is not a G-Modelo Corporation and is oral or
is evidenced only by form purchase orders, Schedule 3.18
identifies the commodity purchased or sold, the supplier
or purchaser thereof, the annual quantity purchased or
sold and a recent representative price therefor; pro-
----
vided, however, in the case of Material Contracts which
----- -------
are subject to confidentiality agreements between the
parties, Schedule 3.18 sets forth only the parties there-
to and the subject matter thereof; and provided, further,
-------- -------
26
such contracts are on an arm's-length basis and the price
terms thereof are at or below market. For purposes of
this Section 3.18, a Material Contract shall include,
without limitation, (a) any agreement, contract, commit-
ment, understanding or arrangement (a "Material Agree-
ment") requiring total payments of more than 1 million
Mexican Pesos (except with respect to oral agreements
which shall be deemed to be Material Agreements only if
they require total payments of 3 million or more Mexican
Pesos) and having a term exceeding six months and which
may not be cancelled upon 90 or fewer days' notice with-
out any liability, penalty or premium (other than a
nominal cancellation fee or charge); (b) one or more
purchase orders for a single product or service which
require aggregate payments in any twelve month period of
3 million or more Mexican Pesos; (c) any Material Agree-
ment which might reasonably be expected to have a materi-
al adverse effect on the business, assets, operations,
prospects or financial condition of G-Modelo and the
G-Modelo Corporations, taken as a whole; (d) any covenant
not to compete; (e) any Material Agreement (other than
the Material Agreements listed on Schedule 3.14) (1)
requiring total payments of more than 100,000 United
States dollars in any twelve month period and (2) which
is between or among G-Modelo or a G-Modelo Corporation
and any Controlling Shareholder who owns 1 percent or
more of the capital stock of G-Modelo or any entity in
which such Controlling Shareholder owns 1 percent or more
of the capital stock and (3) which involves the business
or operations of G-Modelo or any G-Modelo Corporation or
requires the payment of money or the provision of servic-
es to or by G-Modelo or any G-Modelo Corporation; or (f)
any other Material Agreement which is material to the
business, assets, operations, prospects or financial
condition of G-Modelo or any G-Modelo Corporation.
Except as disclosed in Schedule 3.18, none of the Con-
trolling Shareholders, G-Modelo or any G-Modelo Corpora-
tion or any other party to a Material Contract is in
default in any material respect thereunder. The infor-
mation required by the first sentence of this Section
3.18 with respect to oral contracts and purchase orders
to be set forth on Schedule 3.18, may be delivered to the
Investor within a reasonable time (not to exceed ninety
days) following the Closing.
3.19. Employee Benefits; Employment Contracts.
---------------------------------------
Schedule 3.19 contains a list of all material plans, pro-
27
grams, policies, contracts, agreements or understandings,
whether written or oral (including any and all amendments
thereto), to which G-Modelo or any G-Modelo Corporation
is a party which relate to all employment, bonus, profit-
-sharing, deferred compensation, pension, employee bene-
fit, welfare and retirement plans, stock purchase and
stock option plans, consulting arrangements in excess of
1 million Mexican Pesos per year and all labor union and
collective bargaining agreements.
3.20. Real Property. As used herein, the term
-------------
"Real Property" shall mean all of the following:
(1) all material land and easements
owned, used or occupied by G-Modelo or any of the G-Mode-
lo Corporations and all material buildings, structures
and other improvements thereof or thereon; and
(2) all rights and appurtenances in and
to the Real Property described in subparagraph (1) above;
and
(3) all material real estate leasehold
interests owned by G-Modelo or any G-Modelo Corporation
as a tenant, excluding leases from G-Modelo or any G-
Modelo Corporation, and all other real property interests
owned by any of the G-Modelo Corporations.
(a) G-Modelo or a G-Modelo Corporation
has good and marketable title to the Real Property di-
rectly or indirectly through trusts, free and clear of
all easements, restrictions, covenants, conditions or
Encumbrances of any character whatsoever except (i)
conditions or restrictions which do not with respect to
the parcel of Real Property so encumbered have a material
adverse effect on the actual or intended use of such
property, (ii) public or private roadway rights-of-way or
utility easements which do not underlie any buildings,
(iii) real property leases to a G-Modelo Corporation, and
(iv) taxes and assessments which are a lien but which are
not yet due and payable or which are being contested in
good faith by appropriate proceedings and for which
appropriate reserves have been established and disclosed
in writing to the Investor.
28
(b) The Real Property conforms in all
material respects to any and all applicable state and
local laws, zoning and building ordinances and health and
safety ordinances, and no zoning, building or similar law
or ordinance or regulation is being violated by the
operation or use of the Real Property in any manner
having a material adverse effect on the marketability or
the actual or intended use or operation of the Real
Property. Neither G-Modelo nor any G-Modelo Corporation
has received any notice of any material violation of any
law, ordinance or regulation in connection with the
operation or use of such Real Property.
(c) None of the Real Property is subject
to the Federal Law of the Agrarian Reform.
(d) With respect to any Real Property
located (i) within one hundred kilometers of the border
of Mexico and any of the United States, Belize or Guate-
mala or (ii) within fifty kilometers of any of Mexico's
coastlines (the "Restricted Zone"), either (A) all of the
outstanding shares of capital stock of the G-Modelo
Corporations which own Real Property located within the
Restricted Zone have been duly transferred into the Real
Estate Trust or as promptly as practicable following the
Closing will be duly transferred into a trust to be
established under a trust agreement for the benefit of
such G-Modelo Corporations pursuant to Section 5.14, or
(B) the by-laws of the G-Modelo Corporations which own
Real Property in the Restricted Zone permit the indirect
ownership by foreigners of capital stock of such G-Modelo
Corporations.
3.21. Tied House Prohibitions. There is no
-----------------------
Mexican statute, rule or regulation applicable to G-
Modelo or any G-Modelo Corporation which prohibits G-
Modelo or any G-Modelo Corporation or its shareholders
from selling alcoholic beverages, on either a retail or
wholesale basis.
3.22. Insurance. G-Modelo and each G-Modelo
---------
Corporation have policies of liability, fire, automobile,
property and other forms of insurance, all of which are
valid and enforceable and in full force and effect, are
underwritten by unaffiliated financially sound and repu-
table insurers, are sufficient for all applicable re-
quirements of law and provide insurance, including,
29
without limitation, liability and products liability
insurance, in such amounts and against such risks as is
customary for companies engaged in similar businesses to
G-Modelo and the G-Modelo Corporations in Mexico to pro-
tect the properties, assets, businesses and operations of
G-Modelo and each of the G-Modelo Corporations. All such
policies will remain in full force and effect through
their respective dates and will not in any way be affect-
ed by or terminate or lapse by reason of, any of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF A-B, A-BI
AND THE INVESTOR
-------------------------------------------
A-B, A-BI and the Investor, jointly and sever-
ally, represent and warrant to each of the G-Modelo
Signatories, the Option Trust and the Banamex Trust as
follows:
4.1. Corporate Power and Authority; Effect of
----------------------------------------
Agreement. Each of A-B, A-BI and the Investor is a
---------
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each
of A-B, A-BI and the Investor has all requisite corporate
power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by each
of A-B, A-BI and the Investor of its obligations under
this Agreement and the consummation by each of A-B, A-BI
and the Investor of the transactions contemplated hereby
have been duly authorized by the Board of Directors of
each of A-B, A-BI and the Investor, and no other corpo-
rate action or proceeding on the part of each of A-B,
A-BI and the Investor or their stockholders is necessary
to authorize this Agreement or the consummation of any of
the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by each of
A-B, A-BI and the Investor and constitutes the valid and
binding obligation of each of A-B, A-BI and the Investor,
enforceable against each of them in accordance with its
terms. The execution, delivery and performance by the
each of A-B, A-BI and Investor of this Agreement and the
consummation by each of A-B, A-BI and the Investor of the
transactions contemplated hereby does not and will not,
30
with or without the giving of notice or the lapse of
time, or both, (a) violate any law, rule or regulation to
which any of them or any of their respective assets is
subject, (b) violate any order, writ, injunction, judg-
ment or decree applicable to any of them or any of their
respective assets or properties, or (c) conflict with, or
result in a breach of or default under, or give rise to
any right of termination, cancellation or acceleration
under (i) any term or condition of the Certificate of
Incorporation or By-Laws of any of them, or (ii) any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture or material lease, license, agreement
or other material instrument to which any of them or any
of their respective subsidiaries is a party or by which
any of their respective assets may be bound; except, with
respect to clauses (a), (b) and (c)(ii) above, for xxxxx-
tions, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair their
ability to consummate the transactions contemplated
hereby.
4.2. Consents. No consent, approval or autho-
--------
rization of, or exemption by, or filing with, any govern-
mental or regulatory authority (other than as may be
required under the HSR Act or the LEC) is required in
connection with the execution, delivery and performance
by A-B, A-BI or the Investor of the transactions contem-
plated by this Agreement.
4.3. Availability of Funds. The Investor has
---------------------
available or will have available on the Closing Date
sufficient funds to enable it to consummate the transac-
tions contemplated by Article II of this Agreement.
4.4. Management of G-Modelo and the G-Modelo
---------------------------------------
Corporations. Each of A-B, A-BI and the Investor ac-
------------
knowledge that it is its intention and desire, as well as
the intention and desire of the Controlling Shareholders,
that G-Modelo and the G-Modelo Corporations shall contin-
ue to be managed by the Controlling Shareholders, with
the participation of A-B, A-BI and the Investor as minor-
ity shareholders, as provided for in this Agreement and
in the Amended G-Modelo By-laws and the Amended Diblo By-
laws; and that this has been an essential and basic
condition for the Controlling Shareholders to enter into
this Agreement and to create and enter into the asso-
ciation or joint venture herein set forth.
31
ARTICLE V
COVENANTS OF THE PARTIES
------------------------
5.1. Access to Information.
---------------------
(a) A-B and its authorized representa-
tives shall be permitted to review the business activi-
ties of G-Modelo and the G-Modelo Corporations as they
deem reasonably necessary sufficiently in advance of
future investments in G-Modelo and Diblo contemplated by
this Agreement. For such purposes and subject to prior
consultation with a representative of the Controlling
Shareholders, (a) A-B and its authorized representatives
shall have access during normal business hours to books,
records and properties of G-Modelo and the G-Modelo
Corporations and to those employees and financial, legal
and other representatives of G-Modelo and the G-Modelo
Corporations having knowledge of financial, operating and
legal data and other information with respect to the
business and properties of G-Modelo and the G-Modelo
Corporations as A-B may reasonably request to enable A-B
and its authorized representatives to conduct a xxxxx-
cial, environmental and legal review of G-Modelo and the
G-Modelo Corporations for purposes of determining whether
to make further investments in G-Modelo and Diblo; pro-
----
vided, however, that such review shall be subject to
----- -------
prior consultation with and scheduling by representatives
of the Controlling Shareholders to ensure that the review
will be conducted in such a manner as not to disrupt the
operations of G-Modelo and the G-Modelo Corporations.
(b) From and after the Closing, A-B, A-
BI, the Investor and their authorized representatives
(the "A-B Group"), on the one hand, and the Controlling
Shareholders and their authorized representatives (the
"Controlling Shareholders Group"), on the other hand,
agree to treat all information concerning G-Modelo and
the G-Modelo Corporations (the "Confidential Informa-
tion") as strictly confidential; provided, however, that
-------- -------
disclosure of such information may be made by either the
A-B Group or the Controlling Shareholders Group (i) with
the prior written consent of the non-disclosing group or
(ii) if, in the opinion of counsel for the party desiring
to make such disclosure, such disclosure is required by
law, including, without limitation, in connection with
32
the public offerings contemplated by Section 5.8. The
term "Confidential Information" shall not be deemed to
include information which (i) is already in the posses-
sion of the A-B Group and which was not disclosed to the
A-B Group by the Controlling Shareholders Group or G-
Modelo, provided that such information is not known to
the A-B Group to be subject to another confidentiality
agreement with, or other obligation of secrecy to, G-
Modelo or a G-Modelo Corporation, (ii) is or becomes
generally available to the public other than as a result
of a disclosure by the A-B Group or the Controlling
Shareholders Group in violation of this Section 5.1(b),
or (iii) becomes available to either the A-B Group or the
Controlling Shareholders Group on a non-confidential
basis from a source other than G-Modelo or a G-Modelo
Corporation or their respective directors, officers,
employees, agents, representatives or advisors, provided
that such source is not known by the A-B Group or the
Controlling Shareholders Group, respectively, to be bound
by a confidentiality agreement with, or other obligation
of secrecy to, G-Modelo or a G-Modelo Corporation.
5.2. Further Assurances. Subject to the terms
------------------
and conditions of this Agreement, A-B, G-Modelo, Diblo
and the Controlling Shareholders, in their capacity as
shareholders, directors or officers of G-Modelo and Diblo
and as members of the technical committees of the Control
Trust, the Banamex Trust and the Option Trust (a) will
take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advis-
able under applicable laws and regulations to consummate
and make effective the transactions contemplated by this
Agreement, including without limitation, the transac-
tions, rights and obligations under the Amended G-Modelo
By-laws, Amended Diblo By-laws, the Control Trust Agree-
ment, the Option Trust Agreement and the Banamex Trust
Agreement (collectively, the "Ancillary Documents") and
to ensure that A-B's, A-BI's and the Investor's rights
under this Agreement and the Ancillary Documents continue
unimpeded and (b) will take, or cause to be taken, no
action inconsistent with the terms of this Agreement and
the Ancillary Documents or inconsistent with A-B's, A-
BI's or the Investor's rights hereunder or thereunder.
In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purpos-
es of this Agreement or the Ancillary Documents, (a) A-B
will cause its proper officers and directors to take all
33
such necessary action, and (b) the Controlling Sharehold-
ers will take or cause the proper officers and directors
of G-Modelo or any of the G-Modelo Corporations and the
Trustees under the Trust Control, the Banamex Trust and
the Option Trust to take all such necessary actions.
5.3. Filings; Tax Returns.
--------------------
(a) If upon the exercise by the Investor
of any of the rights provided in Article VI hereof or
Clause Eighth and Annex 3 of the Control Trust Agreement
to acquire shares of G-Modelo capital stock, 49 percent
or more of the total outstanding full voting capital
stock of G-Modelo would be held of record by a "Foreign
Investor" (as defined in the LRMI), G-Modelo shall give
written notice to the Investor (the "Foreign Investor No-
xxxx") within two business days following notice of the
Investor's intention to acquire shares, accompanied by a
certificate signed by the Secretary of the G-Modelo Board
of Directors certifying such ownership and indicating the
number of shares which would be owned by Foreign Inves-
tors upon the exercise by the Investor of the right to
acquire shares. Upon receipt of the Foreign Investor
Notice, the Investor may appoint a designated purchaser
to acquire such shares. In the event, the Investor
determines not to appoint such designated purchaser or
following the appointment of such designated purchaser,
the Investor and the Controlling Shareholders agree
promptly to file or cause to be filed with the Mexican
Foreign Investment Commission in accordance with the LRMI
all requisite documents and notifications necessary or
appropriate in order to obtain the requisite permits for
G-Modelo to become a "Foreign Corporation" within the
meaning of the LRMI. The parties hereto will coordinate
and cooperate with one another in exchanging such infor-
mation and provide such reasonable assistance as may be
requested in connection with obtaining the required
permits as promptly as possible.
(b) A-B and G-Modelo agree that they will
provide each other with such assistance as may reasonably
be requested by either of them in connection with the
preparation of any return of Taxes, any audit or other
examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for
Taxes and will provide the other with any records or
information relevant to such return, audit or examina-
34
tion, proceedings or determination as are in their pos-
session or subject to their control. Such assistance
shall include making employees available on a mutually
convenient basis to provide additional information and an
explanation of any material provided hereunder and shall
include providing copies of any relevant returns of Taxes
and any relevant Tax receipts.
5.4. Internal Reorganization. As promptly as
-----------------------
practicable following the Closing Date but in no event
later than December 31, 1993, the Controlling Sharehold-
ers shall cause G-Modelo and the G-Modelo Corporations to
effect and carry out a corporate reorganization in accor-
dance with the following provisions:
(a) all of the issued and outstanding
capital stock of Tapas Y Tapones de Zacatecas, S.A de
C.V. ("Tapas"), Promotora de Servicios de Zacatecas, S.A.
de C.V. ("Promotora"), and Envases de Zacatecas, S.A. de
C.V. ("Envases") then owned by Tenedora Xxxx, X.X. de
C.V. shall be transferred to Diblo;
(b) El Cubito Fabrica de Hielo, S.A. de
C.V. ("Hielo") shall be merged with and into Cerveceria
del Xxxxxxxx, X.X. de C.V. ("Pacifico"), and as a result
of such merger, the separate corporate existence of Hielo
shall cease and Pacifico shall continue as the surviving
corporation of the merger;
(c) G-Modelo will obtain, if necessary, a
ruling from the Mexican tax authorities that the transac-
tions described in (a) above are tax-free for Mexican
income and transfer tax purposes;
(d) each of Tecnica Inamex, S.A. de C.V.
and Instalaciones Inamex, S.A. de C.V. (collectively, the
"Inamex Subsidiaries") shall be merged with and into
Inamex de Cervezas y Xxxxxx, X.X. de C.V. ("Inamex"), and
as a result of such mergers, the separate corporate
existence of the Inamex Subsidiaries shall cease and
Inamex shall continue as the surviving corporation of the
mergers;
(e) Constructora Inamex, S.A. de C.V.
shall be liquidated;
35
(f) each of Perifreria, S.A. de C.V.,
Conorte, S.A. de C.V., Invoccidente, X.X.xx C.V., Negopa-
cifico, S.A. de C.V., Consureste, S.A. de C.V., Invocari-
be, S.A. de C.V., Pro-altiplano, S.A. de C.V., Transnore-
ste, S.A. de C.V. or Control Consolidado, S.A. de C.V.
(collectively, the "Distribution Companies") shall be
reorganized from a Sociedad Anonima de Capital Variable
into a Sociedad en Comandita Simple and, in connection
with such reorganizations, the Investor shall be issued
one interest in each of such Comanditas. A-B shall have
the right to approve the governing documents of each of
such Comandita, which approval shall not be unreasonably
withheld, and such governing documents shall provide that
no transfer of a partner's interest in the Comandita and
no amendment to the Comandita governing documents shall
be permitted without the unanimous consent of each of the
partners;
(g) following the reorganizations de-
scribed in (f) above, all of the Distribution Companies
shall be merged into two Distribution Companies, which
the Controlling Shareholders presently contemplate will
be Control Consolidado and Patentes (as hereinafter
defined), and the Investor will receive one interest in
each of such Distribution Companies; and
(h) G-Modelo and the Controlling Share-
holders agree that they will provide A-B with such assis-
tance and information as may reasonably be requested by
A-B in connection with any filings made by A-B with the
United States Internal Revenue Service.
5.5. Election of A-B Director. The Control-
------------------------
ling Shareholders shall be entitled to designate a G-Mod-
elo director for election to the A-B Board of Directors.
Following such designation, A-B will use its best efforts
to nominate and cause such designee to be elected to the
A-B Board of Directors at the Annual Meeting of Share-
holders of A-B next succeeding such designation and to
continue to nominate and cause such a designee to be
elected for so long as the Investor owns ten percent or
more of the total outstanding shares of G-Modelo capital
stock.
5.6. Environmental and Safety Laws. From and
-----------------------------
after the date hereof, G-Modelo and the G-Modelo Corpora-
tions shall conduct their businesses so as to comply in
36
all material respects with all Federal, state and local
environmental and health and safety laws and regulations
in all jurisdictions in which they are or may at any time
be doing business. If G-Modelo or any G-Modelo Corpora-
tion shall (a) receive notice that it is the subject of
any investigation or threatened investigation by any
Federal, state or local government agency regarding the
violation or alleged violation of any Federal, state or
local environmental or health and safety statute or
regulation; or (b) receive notice that any judicial or
administrative complaint, proceeding or order has been
filed or is about to be filed against G-Modelo or a G-
Modelo Corporation alleging violations of any Federal,
state or local environmental or health and safety statute
or regulation, then G-Modelo or the G-Modelo Corporation
shall promptly provide A-B with such notice, and in no
event later than within fifteen (15) days from receipt
thereby by G-Modelo or the G-Modelo Corporation.
5.7. USA Export Agreement. The Controlling
--------------------
Shareholders agree that the USA Export Agreement shall
not be amended without the prior written consent of A-B,
which shall not be unreasonably withheld.
5.8. Consummation of Public Offerings; Regis-
----------------------------------------
tration of Shares.
-----------------
(a) The Controlling Shareholders agree to
use their best efforts to sell on a widely distributed
basis an aggregate of 27,436,722 Series C Shares and to
cause G-Modelo to sell an aggregate of 10,161,748 Series
C Shares prior to May 31, 1995, of which at least an
aggregate of 26,420,548 Series C Shares (such shares
representing thirteen percent of the authorized capital
stock of G-Modelo) shall be sold in one or more public
offerings (the "Offerings") and the remainder of which
shall be sold on a widely distributed basis through open-
market transactions or otherwise. Prior to filing an
application with the Comision Nacional de Valores with
respect to any of the Offerings, the Controlling Share-
holders and G-Modelo agree to provide the Investor with a
copy of such application and all offering materials
prepared in connection therewith sufficiently in advance
of the proposed filing date to enable the Investor to
review and comment on such application.
37
(b) The Controlling Shareholders and
G-Modelo agree to use their best efforts to cause the
Series C Shares, and at the request of A-B, the Series B
Shares to be placed on the Bolsa Mexicana de Valores,
S.A. de C.V. (the "Bolsa"). The Controlling Shareholders
and G-Modelo shall have the right to cause the Series A
Shares to be placed on the Bolsa.
5.9. Dividend Policies.
-----------------
(a) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and as members of the technical
committees of the Control Trust and the Option Trust
agree to take all actions necessary to cause G-Modelo to
adopt and to follow, and all such parties agree to adopt
and to follow, in accordance with Mexican law, the fol-
lowing annual dividend policy on the Series A Shares,
Series B Shares, Series C Shares and Series P-C Shares.
(i) For the period commencing
on the Closing Date and ending at such time as
clause (ii) of this paragraph (a) becomes ap-
plicable, the per share amount of the annual
dividend payable on the outstanding Series A
Shares, Series B Shares and Series C Shares
will be an amount equal to (A) the greater of
(1) 15 percent of G-Modelo's consolidated af-
ter-tax net earnings calculated in accordance
with Mexican GAAP for the most recently com-
pleted calendar year, and (2) 45,109,950 Mexi-
can Pesos divided by (B) the aggregate number
of Series A Shares, Series B Shares and Series
C Shares outstanding on the record date fixed
by the shareholders of G-Modelo for the payment
of such dividend.
(ii) If the Investor purchases
all of the Option Shares pursuant to the Op-
tion, then for the period commencing January 1,
1998, the per share amount of the annual divi-
dend payable on the outstanding Series A
Shares, Series B Shares and Series C Shares
will be an amount equal to (A) the greater of
(1) Consolidated G-Modelo Free Cash Flow (as
hereinafter defined) for the most recently
completed calendar year, and (2) 45,109,950
38
Mexican Pesos, divided by (B) the aggregate
number of Series A Shares, Series B Shares and
Series C Shares outstanding on the record date
fixed by the shareholders of G-Modelo for the
payment of such dividend. For purposes hereof,
"Consolidated G-Modelo Free Cash Flow" shall
equal all of the consolidated after-tax net
earnings of G-Modelo and its subsidiaries cal-
culated in accordance with Mexican GAAP avail-
able to holders of Series A Shares, Series B
Shares and Series C Shares, (A) plus deprecia-
tion and amortization, (B) plus any decrease in
non-cash net working capital, (C) plus other
expenses which do not require a cash outlay,
(D) minus other income which does not provide
cash, (E) minus capital expenditures and other
asset acquisitions, (F) minus any increase in
non-cash net working capital, and (G) minus any
principal repayments of indebtedness, all of
which shall be determined as shown in the exam-
ple contained in Exhibit B hereto.
(iii) For the period commencing
on the Closing Date and ending on the date the
Series P-C Shares are exchanged for Series B
Shares, the per share amount of the annual
dividend payable on the outstanding PC Shares
will be calculated in accordance with the terms
of such Series P-C Shares set forth in the
Amended G-Modelo By-laws.
(b) The Controlling Shareholders in their
capacity as shareholders, directors or officers of Diblo
and as members of the technical committee of the Banamex
Trust agree to take all actions necessary to cause Diblo
to adopt and to follow, and all such parties agree to
adopt and to follow, in accordance with Mexican law, the
following annual dividend policy on the Diblo capital
stock. Commencing on the Closing Date, there shall be
declared (i) an annual dividend on the outstanding Diblo
P-C Shares in an amount sufficient for G-Modelo to xx-
xxxxx and pay the annual dividend provided for in para-
graph (a)(iii) above; provided, however, upon the ex-
-------- -------
change by the Investor of the Series P-C Shares into
Series B Shares, the Diblo P-C Shares will be exchanged
by G-Modelo effective as of the date of such exchange by
the Investor on a share-for-share basis for Diblo Series
39
A Shares and the annual dividend policy set forth in this
clause (i) shall terminate, and (ii) an annual dividend
on the outstanding Diblo Common Shares which shall be
payable to all holders of Diblo Common Shares in an
amount sufficient for G-Modelo to declare and pay the
annual dividend provided for in paragraphs (a)(i) and
(a)(ii) above.
(c) The Controlling Shareholders in their
capacity as shareholders, directors or officers of Diblo
and as members of the technical committee of the Banamex
Trust agree to take all actions necessary to cause the G-
Modelo Corporations to declare annual dividends in an
amount which, in the aggregate, are sufficient to enable
G-Modelo and Diblo to declare and pay the dividends
provided for in paragraphs (a) and (b) above, respective-
ly.
(d) Subject to the applicable require-
ments of Mexican law, the Amended G-Modelo By-laws and
the Amended Diblo By-Laws, each of G-Modelo in the case
of paragraph (a) above, and Diblo in the case of para-
graph (b) above, will declare the annual common dividend
following shareholder approval at a shareholders meeting
to be held on or prior to April 30, of each year. Sub-
ject to the applicable requirements of Mexican law (in-
cluding applicable regulations of the Bolsa for any
shares listed thereon), the Amended G-Modelo By-laws and
the Amended Diblo By-laws, the common dividend shall be
payable to shareholders of record on the date of the
shareholders meeting and shall be paid on or prior to the
fifth day following the declaration date.
(e) Notwithstanding the provisions of
this Section 5.9, A-B and the Controlling Shareholders
agree to consider prior to the declaration of annual
dividends on the Series A Shares, the Series B Shares and
the Series C Shares the effect such dividends will have
on the business, operations and best interests of G-
Modelo and the G-Modelo Corporations, including, if
applicable, taking into account the purchase by G-Modelo
of the Banamex Put Shares (as defined in Section 5.16)
pursuant to Section 5.16.
40
5.10. Equity Participations.
---------------------
(a) At all times after the date of this
Agreement, (i) Diblo shall own at least 99.9854 percent
of Patentes y Marcas para Promocion de Exportaciones,
S.A. de C.V., a Mexican corporation, or its successor
("Patentes"), (ii) Patentes shall own no less than 80
percent of the outstanding capital stock of Procermex and
(iii) Procermex shall own not less than 80 percent and 80
percent, respectively, of the outstanding capital stock
of Eurocermex and Iberocermex.
(b) At all times after the date of this
Agreement, Diblo shall own no less than 41.051 percent,
7.1641 percent and 26.30 percent, respectively, of the
outstanding capital stock of Direccion de Fabricas, S.A.
de C.V. ("Difa"), Gondi, S.A. de C.V. ("Gondi"), and
Extractos y Xxxxxx, X.X. de C.V. ("Extractos"), each of
which is a Mexican corporation.
5.11. Operation of G-Modelo. Except as other-
---------------------
wise provided for in this Agreement, the Controlling
Shareholders and G-Modelo agree that following the Clos-
ing Date and for so long as the Investor owns at least 10
percent of the shares of capital stock of G-Modelo and at
least 10 percent of the shares of capital stock of Diblo,
(i) the only assets of G-Modelo will be 169,701,202 Diblo
Series A Shares, 17,030,940 Diblo P-C Shares, cash, mar-
ketable securities and the proceeds received by G-Modelo
from the Offerings pursuant to Section 5.8 and the sale
of Series C Shares to G-Modelo's executive employees
pursuant to Section 5.13; (ii) G-Modelo will incur no
liabilities other than liabilities expressly permitted
and incurred in connection with the transactions contem-
plated by this Agreement; and (iii) G-Modelo will conduct
no business or operations except in connection with the
transactions contemplated by this Agreement and except
for investing activities with respect to the cash and
marketable securities owned by it.
5.12. Government Officials. From and after
--------------------
the date hereof, G-Modelo and the G-Modelo Corporations
have the continued intention to cause their officers and
employees to conduct their businesses so as to comply in
all material respects with all Federal, state and local
Mexican laws, including those concerning payments of
money or other things of value to government officials
41
and to refrain from making or authorizing an offer or
payment of money or other thing of value, directly or
indirectly, (a) to or for the benefit of a government
official in order to obtain the wrongful performance or
omission of any acts related to the duties of such gov-
ernment official, or (b) to a political party or xxxxx-
date when such contributions are not made in the form and
within the limits permitted by Mexican law so as to
wrongfully influence any official act or decision or to
wrongfully induce such party or candidate to wrongfully
use its or his influence with the government to affect or
influence any act or decision of government.
5.13. Sale of Series C Shares to Employees.
------------------------------------
G-Modelo shall have the right to offer for subscription
up to 3,048,525 Series C Shares from its treasury to
certain executive employees of the G-Modelo Corporations
(other than the Controlling Shareholders), or to a trust
for their benefit, pursuant to the terms of an employee
stock purchase plan to be adopted following the Closing.
G-Modelo agrees to consult with A-B in connection with
the creation and implementation of such plan to ensure
that the plan will not result in compensation expense
under U.S. GAAP.
5.14. Real Estate Transfers. As soon as prac-
---------------------
ticable following the Closing, the Controlling Sharehold-
ers agree to take all action necessary to cause G-Modelo,
and G-Modelo agrees, to transfer all of the outstanding
shares of capital stock of Distribuidora Pacifico y
Modelo de Tepic, S.A. de C.V. and Distribuidora Pacifico
y Modelo de Xx Xxx, X.X. de C.V. to a trust to be estab-
lished under a trust agreement for the benefit of one or
both of Control Consolidado or Patentes.
5.15. Technical Committees. Following the
--------------------
Closing Date, the Controlling Shareholders will take all
actions necessary to ensure that a majority of the mem-
bers of the technical committees of the Control Trust,
the Option Trust and the Banamex Trust are Controlling
Shareholders.
42
5.16. Failure by the Investor to Acquire all
--------------------------------------
Diblo Option Shares. In the event that the Investor does
-------------------
not acquire all of the Diblo Option Shares (as such term
is defined in Section 6.4) pursuant to Section 6.4, the
Controlling Shareholders shall have the right, at their
sole election, at any time during the three year period
following the expiration of the Investor's right to
acquire such Diblo Option Shares pursuant to the Diblo
Option (as such term is defined in Section 6.4) either
(a) to require that G-Modelo purchase all of the Diblo
Common Shares then held by the Banamex Trust (the "Banam-
ex Put Shares"), such right being exercisable at any time
or from time to time, in whole or in part, or (b) to
merge Diblo and G-Modelo with the result that each out-
standing Diblo Common Share held by the Banamex Trust or
the Investor shall be converted into a number of shares
of full voting common stock of G-Modelo reflecting the
fair market value thereof (with Series A Shares being
issued to the Controlling Shareholders and Series B
Shares being issued to the Investor); provided, however,
-------- -------
(i) that no such merger shall be effected unless A-B has
agreed that the merger would not have any significant ad-
verse financial, accounting or tax consequences for A-B,
and (ii) if such merger is effected, the shares issued to
the Controlling Shareholders would not be Restricted
Shares (as hereinafter defined) subject to Article VI of
this Agreement. If the merger of Diblo and G-Modelo is
prohibited by the immediately preceding clause, the
parties shall work together to achieve a mutually accept-
able transaction structure which would achieve the Con-
trolling Shareholders' objectives. In the event that the
Controlling Shareholders elect to require G-Modelo to
purchase the Banamex Put Shares pursuant to clause (a)
above, the Controlling Shareholders shall deliver a
written notice (the "Banamex Put Notice") to G-Modelo and
the Investor in accordance with Section 13.10 indicating
(1) the number of Banamex Put Shares, (2) the Banamex Put
Price Per Share (as hereinafter defined), and (3) the
date and time fixed for the consummation of such sale.
The purchase price per share for the Banamex Put Shares
(the "Banamex Put Price Per Share") shall be calculated
in the same manner and subject to the same limitations
and restrictions as the Diblo Option Price Per Share
provided for in Section 6.4(a)(including the limitations
and restrictions set forth in the two provisory clauses
in the third sentence of Section 6.3(a)) except that (i)
43
all references in Section 6.3(a) to the Option Exercise
Notice shall mean the Banamex Put Notice, and (ii) the
Adjusted G-Modelo Per Share Earnings shall be calculated
during the most recently completed four quarters prior to
the date of the Banamex Put Notice.
ARTICLE VI
TRANSFER, SALE AND PURCHASE RIGHTS
----------------------------------
6.1. General. Subject to the rights and
-------
obligations of the Controlling Shareholders with respect
to their Trust Rights in the Entrusted Shares (as such
terms are defined in the Control Trust Agreement) pursu-
ant to the Control Trust Agreement, none of the Control-
ling Shareholders, the Trustee on behalf of the Control
Trust, the Trustee on behalf of the Option Trust, the
Trustee on behalf of the Banamex Trust or the Investor
shall sell, convey, assign, transfer, deliver, mortgage,
pledge, encumber or otherwise dispose (a "Disposition" or
when used as a verb, "Dispose") of any Series A Shares
(except for an aggregate of 27,436,722 Series C Shares to
be sold by the Controlling Shareholders on a widely
distributed basis in accordance with Section 5.8), Series
B Shares, Series P-C Shares or Diblo Common Shares (col-
lectively, the "Restricted Shares") held by such party
except as provided in this Agreement, the Control Trust
Agreement, the Option Trust Agreement and the Banamex
Trust Agreement; provided, however, that until such time
-------- -------
as the Series C Shares are sold to the public in accor-
dance with Section 5.8, they shall be deemed to be Re-
stricted Shares for purposes of this Agreement. Any at-
tempted Disposition in violation hereof shall be null and
void. Notwithstanding the foregoing, any party may make
a Disposition of Restricted Shares, whether voluntarily
or involuntarily, directly or indirectly, pursuant to (a)
any transfer of legal title to the Restricted Shares
resulting from the resignation, removal or change of a
trustee holding Restricted Shares for the benefit of
another, (b) any distribution of Restricted Shares from
an estate or trust to any beneficiary thereof, (c) any
transfer of Restricted Shares to such party's spouse,
child, grandchild, brother, uncle, aunt, nephew, adopted
child, great-grandchild or parent, (d) any transfer of
Restricted Shares to a trust for the benefit of any
person described in clause (c), a Controlling Sharehold-
44
er, charitable institution or other trust created to
pursue philanthropic purposes for the benefit of third
parties not affiliated with a beer company (other than G-
Modelo or A-B), or (e) any transfer of Restricted Shares
to a partnership or corporation controlling, controlled
by or under the common control with one or more of the G-
Modelo Signatories, and only if, in each case under
clauses (a) through (e) above, (i) the recipient of such
Restricted Shares agrees in writing to be bound by the
terms and conditions of this Agreement in which event,
for purposes of this Agreement, such recipient shall be
deemed to be a (1) "Controlling Shareholder" if the
disposing party was a Controlling Shareholder, the Trust-
ee of the Control Trust, the Trustee of the Option Trust
or the Trustee of the Banamex Trust if the Disposition
was effected by a substitution of Trustee of such Trust
or (2) the Investor if the disposing party was the Inves-
tor, and (ii) in the case of any Disposition by a party
other than the Investor, the Investor receives reasonable
notice of such Disposition, a copy of the recipient's
written agreement required by clause (i) above, and
copies of any related instruments effecting a substitu-
tion of the trustee pursuant to clause (a) above, creat-
ing a trust pursuant to clause (d) above or evidencing
control of the corporation or partnership to which a
Disposition was made pursuant to clause (e) above, and
(iii) in the case of any Disposition by the Investor, the
Controlling Shareholders receive reasonable advance
notice of such Disposition, a copy of the recipient's
written agreement required by clause (i) above, and
copies of any related instruments creating a trust pursu-
ant to clause (d) above, effecting a substitution of the
trustee pursuant to clause (a) above or evidencing A-B's
control of the corporation or partnership to which a
Disposition was made pursuant to clause (e) above.
6.2. Offer to Sell; Right of First Refusal.
-------------------------------------
(a) In the event that the Investor xx-
xxxxx to make a Disposition at any time of any of Re-
stricted Shares (other than the Series P-C Shares) then
owned by it (other than a Disposition permitted by Sec-
tion 6.1), the Investor shall first submit a written
offer (the "Offering Notice") of such shares to each of
the Controlling Shareholders (each of such parties, an
"Offeree") in accordance with Section 13.10 specifying
45
the number of Restricted Shares being offered for sale
(the "Offered Shares").
(b) Within five business days after
receipt of an Offering Notice, each Offeree shall give a
written notice (a "Response Notice") to the Investor
informing the Investor as to whether it desires to nego-
tiate the purchase of the Offered Shares, which Response
Notice shall specify the number of Offered Shares each
such Offeree desires to purchase. Upon receipt of
affirmative Response Notice(s) for all of the Offered
Shares, the Investor and Offeree(s) shall promptly nego-
tiate in good faith the terms governing such purchase.
In the event the Offeree(s) delivering Response Notices
do not intend, in the aggregate, to negotiate the pur-
chase of all of the Offered Shares, the Investor shall
determine whether to negotiate the sale of the aggregate
number of Offered Shares proposed to be purchased in such
Response Notices. If (i) the Investor determines to sell
such lesser number of Offered Shares, then the Investor
and the Offeree(s) delivering affirmative Response Notic-
es shall promptly negotiate in good faith the terms
governing such purchase, or (ii) the Investor determines
to attempt to sell all Offered Shares, then the Investor
shall give a written notice (a "Second Offering Notice")
within five business days after receipt of the Response
Notices to each Offeree who delivered an affirmative
Response Notice (a "Purchasing Offeree") setting forth
the names of, and number of Offered Shares to be pur-
chased by, each Purchasing Offeree and the number of
Offered Shares remaining offered for purchase. Within
five business days after receipt of a Second Offering
Notice, the Purchasing Offerees shall determine whether
they will negotiate the purchase of all Offered Shares
and give the Investor written notice of such determina-
tion (a "Second Response Notice"). If the Purchasing
Offerees, in the aggregate, determine to negotiate the
purchase of all Offered Shares, the Investor and the Pur-
chasing Offerees shall promptly negotiate in good faith
the terms governing such purchase.
(c) In the event that (i) the parties
cannot in good faith reach agreement upon the terms of
said purchase of Offered Shares within thirty days fol-
lowing the date of the Response Notice or the Second
Response Notice, as the case may be, or (ii) the Investor
makes the determination provided in paragraph (b)(ii) and
46
the Purchasing Offerees, in the aggregate, decline to
negotiate the purchase of all of the Offered Shares, then
the Investor shall have the right to negotiate the sale
of the Offered Shares to a third party (a "Third Party
Purchaser") for cash.
(d) If the Investor receives a bona fide
cash offer from a Third Party Purchaser (a "Third Party
Offer") to purchase all of such Offered Shares which the
Investor wishes to accept, the Investor shall cause the
Third Party Offer to be reduced to writing and shall
submit a written notice of such Third Party Offer (a
"Third Party Offer Notice") to each of the Purchasing
Offerees specifying (i) the names of all Purchasing
Offerees receiving the Third Party Offer Notice, (ii) the
number of Offered Shares, (iii) the proposed cash pur-
chase price (the "Third Party Offer Price"), (iv) the
name and address of the Third Party Purchaser, and (v)
all other material terms of the proposed Disposition,
including the proposed method of cash payment. The Third
Party Offer Notice shall set forth the Investor's irrevo-
cable offer to sell the Offered Shares to the Purchasing
Offerees at the price and upon the terms stated in the
Third Party Offer Notice.
(e) Within ten business days after re-
ceipt of a Third Party Offer Notice, the Purchasing
Offerees receiving a Third Party Offer Notice shall give
written notice (a "Third Party Offer Response Notice") to
the Investor as to whether they elect to purchase all,
but not less than all, of the Offered Shares upon the
terms and conditions set forth in the Third Party Offer
Notice. Any affirmative Third Party Offer Response
Notice shall specify a date and time for the closing of
the purchase (the "Purchase Right Closing"), which date
shall not be less than ten nor more than forty days after
the date of such affirmative Third Party Response Notice.
The Purchase Right Closing shall take place at such
location as the parties may mutually agree upon, and the
purchase price per share to be paid by a Purchasing
Offeree for the purchase of Offered Shares pursuant to
this Section 6.2(e) shall be equal to the Third Party
Offer Price per share and shall be paid in the manner
proposed in the Third Party Offer Notice.
(f) If the Offered Shares are not pur-
chased by the Purchasing Offerees, the Investor may make
47
a Disposition of the Offered Shares to the Third Party
Purchaser named in the Third Party Offer Notice but only
in strict compliance with the terms stated therein or on
terms more favorable to the Investor, and thereafter the
Offered Shares in the hands of the Third Party Purchaser
shall not be subject to the provisions of this Agreement.
If the Investor shall fail to complete such Disposition
to the Third Party Purchaser within ninety days following
the receipt of the Third Party Offer Response Notice, the
Investor shall be required to submit another Offering
Notice pursuant to Section 6.2(a) in order to Dispose of
any of its Restricted Shares.
(g) In the event that the Purchasing
Offerees indicate their willingness to purchase, when
aggregated, a number of Restricted Shares greater than
the number of the Offered Shares, the Offered Shares
shall be allocated among the Purchasing Offerees in
proportion to their respective percentage ownerships of
G-Modelo capital stock.
(h) Any failure by the Controlling Share-
holders to deliver a Response Notice, a Second Response
Notice or a Third Party Offer Response Notice within the
required time period shall be deemed an irrevocable
election not to purchase the Offered Shares.
(i) Subject to the rights of first refus-
al among the Controlling Shareholders set forth in the
Control Trust Agreement, the Investor shall have rights
identical to those set forth in paragraphs (a) through
(h) above with respect to all of the Restricted Shares
owned by the Controlling Shareholders or the Control
Trust, which rights shall be provided for in the Control
Trust Agreement, but shall, for purposes of this Agree-
ment, be deemed to be set forth herein as if fully set
forth in haec verba. Notwithstanding the foregoing and
-- ---- -----
as provided in the Control Trust Agreement, in the event
the Investor does not exercise the Option on or before
December 31, 1997 in full and purchase 51,052,626 Series
B Shares pursuant to Section 6.3, the Investor's rights
of first refusal shall terminate and be of no further
force and effect as of December 31, 1997 (or such later
date as provided in the Control Trust Agreement).
48
6.3. The Investor's Option to Purchase Shares
----------------------------------------
of G-Modelo Capital Stock.
-------------------------
(a) The Controlling Shareholders and the
Trustee on behalf of the Option Trust hereby grant to the
Investor an irrevocable option (the "Option") to purchase
51,052,626 Series B Shares, which shall be Class II
shares representing the variable capital of G-Modelo (it
being agreed that such number of shares of G-Modelo capi-
tal stock, which when added to the 20,323,498 Series P-C
Shares or Series B Shares then owned by the Investor,
will cause the Investor to own at least 35.12 percent of
the outstanding G-Modelo capital stock after exercise of
the Option) (the "Option Shares"), which Option Shares
will be obtained by converting the 51,052,626 Series A
Shares held in trust pursuant to the Option Trust Agree-
ment into a like number of Series B Shares. The exercise
price per share payable by the Investor for the Option
Shares shall be equal to the "Average Closing Price Per
Share of G-Modelo Capital Stock." The Average Closing
Price Per Share of G-Modelo Capital Stock shall be equal
to the average closing price per share of the Series C
Shares on the Bolsa for the 30 trading-days preceding the
date of the Option Exercise Notice (as hereinafter de-
fined); provided, however, that in the event such Average
-------- -------
Closing Price Per Share of G-Modelo Capital Stock (i) is
less than 15 times the Adjusted G-Modelo Per Share Earn-
ings (as hereinafter defined), the Average Closing Price
Per Share of G-Modelo Capital Stock shall be deemed to be
an amount equal to 15 times the Adjusted G-Modelo Per
Share Earnings, and (ii) is more than 19 times the Ad-
justed G-Modelo Per Share Earnings, the Average Closing
Price Per Share of G-Modelo Capital Stock shall be deemed
to be an amount equal to 19 times the Adjusted G-Modelo
Per Share Earnings; and provided, further, that (1) if,
-------- -------
in addition to the Series C Shares trading on the Bolsa
on the date the Average Closing Price Per Share of G-
Modelo Capital Stock is determined, the Series A Shares
and/or Series B Shares are also traded on the Bolsa on
such date, the Average Closing Price Per Share of G-
Modelo Capital Stock shall be equal to the quotient
(rounded to the fourth decimal) determined by (x) multi-
plying the average closing price per share of each Series
of G-Modelo so traded on the Bolsa for such 30 trading-
day period by the number of outstanding shares of such
Series, and (y) adding all such multiplication products
49
to determine the sum thereof, and (z) dividing such sum
by the aggregate number of outstanding shares of all
Series of capital stock of G-Modelo so traded; (2) if
shares of any Series of capital stock of G-Modelo were
not traded on the Bolsa for a period of 30 trading-days
preceding the date of the Option Exercise Notice, the
Average Closing Price Per Share of G-Modelo Capital Stock
shall be based on the average closing price per share of
such Series of G-Modelo capital stock on the Bolsa for
such number of days that such Series of G-Modelo stock
traded on the Bolsa prior to such date, subject to the
limitations provided in the immediately preceding provi-
so; and (3) if 26,420,548 Series C Shares (such shares
representing thirteen percent of the total authorized
capital stock of G-Modelo) have not theretofore been sold
to the public as contemplated by Section 5.8 and placed
on the Bolsa, the Average Closing Price Per Share of G-
Modelo Capital Stock shall be conclusively deemed to have
been established as provided in clause (i) of the immedi-
ately preceding proviso. For purposes hereof, the "Ad-
justed G-Modelo Per Share Earnings" shall mean (x) the
consolidated after-tax net earnings of G-Modelo calculat-
ed in accordance with Mexican GAAP for the most recently
completed four quarters prior to the date of the Option
Exercise Notice, as reported to the Bolsa, if shares of
G-Modelo capital stock have been listed on the Bolsa, or
as prepared by G-Modelo, if shares have not been listed,
excluding any non-recurring extraordinary items, divided
by (y) the aggregate number of outstanding shares of
G-Modelo capital stock; and provided, further, that for
-------- -------
purposes of this Agreement, such Adjusted G-Modelo Per
Share Earnings shall be independently certified by each
of C&L and PW.
(b) The Option may be exercised by the
Investor, in whole or in part, at any time or from time
to time commencing on July 1, 1995 and ending on December
31, 1997 by delivery of written notice of such exercise
(an "Option Exercise Notice") to the Controlling Share-
holders and the Option Trust in accordance with Section
13.10. The Option Exercise Notice shall indicate (i) the
date (an "Option Closing Date") and time fixed for the
Option Closing (which date shall not be less than ten nor
more than forty days following the date of the Option
Exercise Notice), (ii) the number of Option Shares to be
purchased, and (iii) the Average Closing Price Per Share
of G-Modelo Capital Stock. The closing of the purchase
50
of the Option Shares (an "Option Closing") shall take
place at such location as the parties may mutually agree
upon.
(c) At any Option Closing hereunder (i)
the Investor shall pay in immediately available funds an
aggregate purchase price for the Option Shares to be
purchased (the "Aggregate Option Price") equal to the
product of (A) the Average Closing Price Per Share of G-
Modelo Capital Stock and (B) the number of Option Shares
being purchased at such Option Closing converted into
United States dollars at the Free Exchange Rate, and (ii)
the Trustee on behalf of the Option Trust shall deliver
to the Investor a certificate or certificates represent-
ing the number of Option Shares so purchased, duly en-
dorsed in the name of the Investor.
(d) In the event that any purchase of
Option Shares by the Investor pursuant to this Section
6.3 would require the approval of or any filing with any
Mexican or United States governmental agency, including,
without limitation, the Mexican Foreign Investment Com-
mission pursuant to the LRMI, the LEC or the United
States Federal Trade Commission or the Antitrust Division
of the United States Department of Justice pursuant to
the HSR Act, and such approval has not been obtained or
all waiting periods have not expired or been terminated
prior to the Option Closing Date, (x) if the approval of
the Mexican Foreign Investment Commission pursuant to the
LRMI is the sole remaining approval and all other appli-
cable waiting periods have expired or been terminated,
the Investor shall have the right to appoint a designated
purchaser to consummate such purchase pursuant to Section
5.3(a), or (y) the Option Closing Date shall automati-
cally be extended to the date which is no more than three
business days after the approval of all such governmental
agencies has been granted and all waiting periods have
expired or been terminated; provided, however, the Option
-------- -------
Closing Date may not be extended beyond August 10, 1998.
In the event that the Option Closing is extended pursuant
to clause (y) of the immediately preceding sentence, the
Aggregate Option Price shall be reduced by the aggregate
amount of dividends on the Option Shares to be purchased
at the Option Closing, if any, declared following the
Option Closing Date set forth in the Option Exercise
Notice and paid to holders of record on a date which is
prior to the date the Option Closing, as so extended
51
occurs; provided, however, the Investor shall be required
-------- -------
to pay interest on such Aggregate Option Price at the
Prime Rate, for the period beginning on the Option Clos-
ing Date set forth in the Option Exercise Notice to but
not including the date the Option Closing, as so extend-
ed, occurs.
6.4. The Investor's Option to Purchase Diblo
---------------------------------------
Common Shares.
-------------
(a) The Controlling Shareholders and the
Trustee on behalf of the Banamex Trust hereby grant to
the Investor an irrevocable option (the "Diblo Option")
to purchase 32,237,145 Diblo Series B Shares, which shall
be Class II shares representing the variable capital of
Diblo (it being agreed that such number of shares of
Diblo capital stock, which when added to the 24,329,922
Diblo Series B Shares then owned by the Investor, will
cause the Investor to own at least 23.25 percent of the
outstanding Diblo capital stock after exercise of the
Diblo Option) (the "Diblo Option Shares"), which Diblo
Option Shares are held in the Banamex Trust. The exer-
cise price per share payable by the Investor for the
Diblo Option Shares (the "Diblo Option Price Per Share")
shall be calculated by (i) adding the Total G-Modelo
Common Equity Capitalization (as hereinafter defined) to
the product obtained by multiplying the Average Closing
Price Per Share of G-Modelo Capital Stock by the total
number of Series P-C Shares then outstanding (the "Total
G-Modelo Equity Capitalization"), (ii) dividing the Total
G-Modelo Equity Capitalization by G-Modelo's aggregate
percentage ownership of the outstanding Diblo capital
stock on the day preceding the date of the Diblo Option
Exercise Notice (as hereinafter defined)(the "Total Diblo
Equity Capitalization"), and (iii) dividing the Total
Diblo Equity Capitalization by the aggregate number of
Diblo Common Shares and Diblo P-C Shares outstanding at
the close of business on the day preceding the date of
the Diblo Option Exercise Notice (the "Diblo Per Share
Market Price"). For purposes hereof, "Total G-Modelo
Common Equity Capitalization" shall mean the product
obtained by multiplying (x) the Average Closing Price Per
Share of G-Modelo Capital Stock by (y) the aggregate
number of Series A Shares, Series B Shares and Series C
Shares outstanding at the close of business on the day
preceding the date of the Diblo Option Exercise Notice.
The determination of the Diblo Option Price Per Share
52
shall be subject to the limitations and restrictions set
forth in, and shall be calculated in accordance with, the
two provisory clauses in the third sentence of Section
6.3(a) above; provided, however, the Adjusted G-Modelo
-------- -------
Per Share Earnings shall be calculated during the most
recently completed four quarters prior to the date of the
Diblo Option Exercise Notice and all references to Option
Exercise Notice in Section 6.3(a) shall mean the Diblo
Option Exercise Notice.
(b) The Diblo Option may be exercised by
the Investor, in whole or in part, at any time or from
time to time commencing on July 1, 1995 and ending on
December 31, 1997 by delivery of written notice of such
exercise (the "Diblo Option Exercise Notice") to the
Controlling Shareholders and the Banamex Trust in accor-
dance with Section 13.10. The Diblo Option Exercise
Notice shall indicate (i) the date (the "Diblo Option
Closing Date") and time fixed for the Diblo Option Clos-
ing (which date shall not be less than ten nor more than
forty days following the date of the Diblo Option Exer-
cise Notice), (ii) the number of Diblo Option Shares to
be purchased, and (iii) the Diblo Option Price Per Share.
The closing of the purchase of the Diblo Option Shares
(the "Diblo Option Closing") shall take place at such
location as the parties may mutually agree upon.
(c) At any Diblo Option Closing hereunder
(i) the Investor shall pay in immediately available funds
an aggregate purchase price for the Diblo Option Shares
to be purchased (the "Aggregate Diblo Option Price")
equal to the product of (A) the Diblo Option Price Per
Share and (B) the number of Diblo Option Shares being
purchased at such Diblo Option Closing converted into
United States dollars at the Free Exchange Rate, and (ii)
the Trustee on behalf of the Banamex Trust shall deliver
to the Investor a certificate or certificates represent-
ing the number of Diblo Option Shares so purchased, duly
endorsed in the name of the Investor.
(d) In the event that any purchase of
Diblo Option Shares by the Investor pursuant to this
Section 6.4 would require the approval of or any filing
with any Mexican or United States governmental agency,
including, without limitation, the Mexican Foreign In-
vestment Commission pursuant to the LRMI, the LEC or the
United States Federal Trade Commission or the Antitrust
53
Division of the United States Department of Justice
pursuant to the HSR Act, and such approval has not been
obtained or all waiting periods have not expired or been
terminated prior to the Diblo Option Closing Date, (x) if
the approval of the Mexican Foreign Investment Commission
pursuant to the LRMI is the sole remaining approval and
all other applicable waiting periods have expired or been
terminated, the Investor shall have the right to appoint
a designated purchaser to consummate such purchase pursu-
ant to Section 5.3(a) or (y) the Diblo Option Closing
Date shall automatically be extended to the date which is
no more than three business days after the approval of
all such governmental agencies has been granted and all
waiting periods have expired or been terminated; provid-
-------
ed, however, the Diblo Option Closing Date may not be
-- -------
extended beyond August 10, 1998. In the event that the
Diblo Option Closing is extended pursuant to clause (y)
of the immediately preceding sentence, the Aggregate
Diblo Option Price shall be reduced by the aggregate
amount of dividends on the Diblo Option Shares to be
purchased at the Diblo Option Closing, if any, declared
following the Diblo Option Closing Date set forth in the
Diblo Option Exercise Notice and paid to holders of
record on a date which is prior to the date the Diblo
Option Closing, as so extended, occurs; provided, howev-
-------- ------
er, the Investor shall be required to pay interest on
--
such Aggregate Diblo Option Price at the Prime Rate, for
the period beginning on the Diblo Option Closing Date set
forth in the Diblo Option Exercise Notice to but not
including the date the Diblo Option Closing, as so ex-
tended, occurs.
6.5. Consequences of Failure to Convert Series
-----------------------------------------
P-C Shares. In the event that the Investor does not
----------
convert the Series P-C Shares into a like number of
Series B Shares on or prior to December 31, 1996, in
accordance with the terms of the Series P-C Shares, then
the following provisions shall be mandatorily and irrevo-
cably applicable and binding on all parties to this
Agreement.
(a) The Series P-C Shares shall be re-
deemed by G-Modelo on December 31, 1996, in accordance
with the terms of the Series P-C Shares and the Amended
G-Modelo By-laws.
54
(b) The rights granted to the Investor to
purchase Option Shares and Diblo Option Shares pursuant
to Sections 6.3 and 6.4, respectively, the restrictions
on transfer and the right of first refusal granted to the
Investor pursuant to Sections 6.1 and 6.2(i) hereof and
Clause Eighth and Annex 3 of the Control Trust Agreement,
respectively, and the restrictions on transfer and the
right of first refusal granted to the Controlling Share-
holders pursuant to Section 6.1 and 6.2, respectively,
shall expire and be of no further force and effect.
(c) The Investor shall have the right
(the "Put Right"), in its sole discretion, to require
that:
(i) the Controlling Sharehold-
ers purchase all, but not less than all, of the
Shares of G-Modelo Stock (the "G-Modelo Put
Shares") and the Diblo Common Shares (the "Dib-
lo Put Shares," and together with the "G-Modelo
Put Shares," the "Put Shares") then owned,
directly or indirectly, by the Investor and its
authorized designees, if any; and
(ii) the Controlling Sharehold-
ers or G-Modelo or any combination thereof pur-
chase all, but not less than all, of the Diblo
Put Shares then owned, directly or indirectly,
by the Investor and its authorized designees,
if any.
The Investor shall exercise the Put Right by delivering a
written notice (the "Put Notice") to the Controlling
Shareholders and G-Modelo in accordance with Section
13.10 indicating (1) the number of Put Shares, (2) the G-
Modelo Put Price Per Share (as hereinafter defined) and
the Diblo Put Price Per Share (as hereinafter defined),
and (3) the date and time fixed for the consummation of
such sale (the "Put Closing"), which date shall not be
less than ten nor more than forty days following the date
of the Put Notice. The purchase price per share for the
G-Modelo Put Shares (the "G-Modelo Put Price Per Share")
shall be calculated in the same manner and subject to the
same limitations as the Average Closing Price Per Share
of G-Modelo Capital Stock provided for in Section 6.3(a)
except that (x) all references in Section 6.3(a) to
Option Exercise Notice shall mean Put Notice, and (y) the
55
Adjusted G-Modelo Per Share Earnings shall be calculated
during the most recently completed four quarters prior to
the date of the Put Notice. The purchase price per share
for the Diblo Put Shares (the "Diblo Put Price Per
Share") shall be calculated in the same manner and sub-
ject to the same limitations as the Diblo Option Price
Per Share provided for in Section 6.4(a) except that (i)
all references in Section 6.3(a) to Option Exercise
Notice shall mean Put Notice, and (ii) the Adjusted G-
Modelo Per Share Earnings shall be calculated during the
most recently completed four quarters prior to the date
of the Put Notice. At the Put Closing, (x) the Control-
ling Shareholders or G-Modelo or any such combination
thereof shall pay an aggregate purchase price for the Put
Shares equal to the sum of (A) the product obtained by
multiplying the G-Modelo Put Price Per Share by the
number of G-Modelo Put Shares, and (B) the product ob-
tained by multiplying the Diblo Put Price Per Share by
the number of Diblo Put Shares, in United States dollars
in immediately available funds, calculated in accordance
with the Free Exchange Rate, and (y) the Investor shall
deliver to the purchasers certificates representing the
Put Shares, duly endorsed in the name of the purchaser.
(d) In addition to, and not in lieu of,
the Put Rights, the Investor shall have the right (the
"Withdrawal Right"), in its sole discretion, to require
that G-Modelo (in the case of G-Modelo capital stock) and
Diblo (in the case of Diblo capital stock) purchase all,
but not less than all, of the G-Modelo Put Shares and the
Diblo Put Shares, respectively, then owned, directly or
indirectly, by the Investor and its authorized designees,
if any, and G-Modelo and Diblo shall be obligated to
purchase all of such shares. The Investor shall exercise
the Withdrawal Right by delivering a written notice (the
"Withdrawal Notice") to the Controlling Shareholders, G-
Modelo and Diblo in accordance with Section 13.10 indi-
cating the number of G-Modelo Put Shares and Diblo Put
Shares to be withdrawn. G-Modelo, Diblo and the Control-
ling Shareholders, in their capacity as shareholders,
directors or officers of G-Modelo and Diblo and as mem-
bers of the technical committees of the Control Trust,
the Option Trust and the Banamex Trust, will take all
actions, and do all things necessary to ensure that the
withdrawal is completed (the "Withdrawal Closing") as
soon as permitted by Mexican law, the Amended G-Modelo
By-laws and the Amended Diblo By-laws. For purposes of
56
this Section 6.5(d), the withdrawal price per share for
the G-Modelo Put Shares pursuant to the Withdrawal Right
(the "G-Modelo Withdrawal Price Per Share") shall be the
amount per share of G-Modelo capital stock paid by G-
Modelo to the Investor in connection with the exercise of
the Withdrawal Right pursuant to the Amended G-Modelo By-
laws. For purposes of this Section 6.5(d), the with-
drawal price per share for the Diblo Put Shares pursuant
to the Withdrawal Right (the "Diblo Withdrawal Price Per
Share") shall be the amount per share of Diblo capital
stock paid by Diblo to the Investor in connection with
the exercise of the Withdrawal Right pursuant to the
Amended Diblo By-laws. At the Withdrawal Closing, (x) G-
Modelo shall pay an aggregate withdrawal price (the
"Aggregate G-Modelo Withdrawal Price") for the G-Modelo
Put Shares equal to the product obtained by multiplying
the G-Modelo Withdrawal Price Per Share by the number of
G-Modelo Put Shares, and Diblo shall pay an aggregate
withdrawal price (the "Aggregate Diblo withdrawal Price"
and, together with the Aggregate G-Modelo Withdrawal
Price, the "Aggregate Withdrawal Price") for the Diblo
Put Shares equal to the product obtained by multiplying
the Diblo Put Price Per Share by the number of Diblo Put
Shares, in Mexican Pesos in immediately available funds,
and (y) the Investor shall deliver to G-Modelo and Diblo,
as the case may be, the certificates representing the Put
Shares, duly endorsed in the names of the companies. In
connection with the Investor's exercise of the Withdrawal
Right pursuant to this Section 6.5(d), the Controlling
Shareholders agree to indemnify, jointly and severally,
the Investor for the full amount, if any, of the G-Modelo
Withdrawal Price Shortfall (as hereinafter defined) and
the Diblo Withdrawal Price Shortfall (as hereinafter de-
fined). For purposes of this Section 6.5(d), (1) the "G-
Modelo Withdrawal Price Shortfall" shall be an amount
equal to the sum of (A) the difference between the G-
Modelo Put Price Per Share calculated in accordance with
Section 6.5(c) and the G-Modelo Withdrawal Price Per
Share plus (B) an amount equal to the interest on the
Aggregate G-Modelo Withdrawal Price and the G-Modelo
Withdrawal Price Shortfall at the Prime Rate, for the
period beginning on the earliest date on which the Put
Closing could have occurred had the Controlling Share-
holders purchased the G-Modelo Put Shares pursuant to the
Put Right and continuing to but not including the date of
the Withdrawal Closing, and (2) the "Diblo Withdrawal
Price Shortfall" shall be an amount equal to the sum of
57
(C) the difference between the Diblo Put Price Per Share
calculated in accordance with Section 6.5(c) and the
Diblo Withdrawal Price Per Share plus (D) an amount equal
to the interest on the Aggregate Diblo Withdrawal Price
and the Diblo Withdrawal Price Shortfall at the Prime
Rate for the period beginning on the earliest date on
which the Put Closing could have occurred had the Con-
trolling Shareholders purchased the Diblo Put Shares
pursuant to the Put Right and continuing to but not in-
cluding the date of the Withdrawal Closing. The Control-
ling Shareholders agree to pay the G-Modelo Withdrawal
Price Shortfall and the Diblo Withdrawal Price Shortfall
to the Investor in United States dollars in immediately
available funds calculated in accordance with the Free
Exchange Rate within three business days after the With-
drawal Closing.
(e) The Controlling Shareholders shall
have the right (the "Call Right") to require that the
Investor sell all, but not less than all, of the Put
Shares, and the Investor shall be obligated to so sell
all of the Put Shares. The Controlling Shareholders
shall exercise the Call Right by delivering a written
notice (the "Call Notice") to the Investor in accordance
with Section 13.10 indicating the total number of Put
Shares, (ii) the Aggregate Call Purchase Price (as here-
inafter defined), and (iii) the date and time fixed for
the consummation of such sale (the "Call Closing"), which
date shall not be less than ten nor more than forty days
following the date of the Call Notice. The purchase
price per share for the Put Shares shall be calculated in
the same manner and subject to the same limitations as
provided for in Section 6.5(c) except that (i) all refer-
ences in Section 6.3(a) to Option Exercise Notice shall
mean Call Notice, and (ii) the Adjusted G-Modelo Per
Share Earnings shall be calculated during the most re-
cently completed four quarters prior to the date of the
Call Notice (the "Call Price Per Share"). At the Call
Closing, the purchasers shall pay an aggregate purchase
price for the Put Shares equal to the Call Price Per
Share multiplied by the number of Put Shares, in United
States dollars in immediately available funds, calculated
in accordance with the Free Exchange Rate, and (ii) the
Investor shall deliver to the purchasers certificates
representing the Put Shares, duly endorsed in the name of
the purchasers.
58
(f) Following consummation of the trans-
actions contemplated by paragraphs (a) and (c) or (d) or
(e) and the performance in full by all parties of all of
their obligations thereunder, this Agreement shall termi-
nate (other than Sections 5.1(b), 13.8, 13.9, 13.10,
13.11, 13.12 and Article XII).
6.6. Restriction on Dispositions to Competi-
---------------------------------------
tors. Notwithstanding anything to the contrary contained
----
in this Agreement, none of the G-Modelo Signatories, the
Banamex Trust, the Option Trust or the Investor shall,
and the Controlling Shareholders as members of the tech-
nical committee of the Control Trust shall cause the
Control Trust not to, sell or offer to sell and the G-
Modelo Signatories shall cause the other Controlling
Shareholders not to sell or offer to sell any shares of
capital stock of G-Modelo (other than Series C Shares to
be sold on a widely distributed basis in accordance with
Section 5.8) or any G-Modelo Corporation to any Person or
its controlling shareholders engaged, directly or indi-
rectly, in the production, distribution or sale of beer
in or to the United States or Mexico other than the
Investor or its designees in accordance with the terms of
this Agreement.
6.7. Restrictions on Acquiring Series C
----------------------------------
Shares. Until the earlier of (x) such time as the Inves-
------
tor has exercised the Option in full or (y) the expira-
tion of the Option, the Controlling Shareholders and A-B
each agree that they will not, directly or indirectly
through affiliates, nominees or otherwise, acquire record
or beneficial ownership of any Series A Shares, Series B
Shares or Series C Shares pursuant to open-market pur-
chases.
6.8. Extension of Time Periods. In the event
-------------------------
that any purchase of shares of G-Modelo capital stock or
Diblo capital stock by A-B, A-BI or the Investor, on the
one hand, or the Controlling Shareholders or G-Modelo, on
the other hand, pursuant to Sections 6.2, 6.3, 6.4, 6.5
and 12.2 hereof and Clause Eighth and Annex 3 of the
Control Trust Agreement is subject to any legal impedi-
ment or would require the approval of or any filing with
any Mexican or United States governmental agency, includ-
ing, without limitation, the Mexican Foreign investment
Commission pursuant to the LRMI, the LEC or the United
States Federal Trade Commission or the Antitrust Division
59
of the United States Department of Justice pursuant to
the HSR Act, and such legal impediment is not removed or
approval has not been obtained or all waiting periods
have not expired or been terminated prior to the date set
for the consummation of the acquisition of such shares,
the parties hereto agree that the termination of all
exercise periods during which such acquisition may take
place shall be tolled for a period not to exceed six
months from the expiration date of such period and as a
result of such tolling the closing date for any such
acquisition shall automatically be extended to a date
which is no more than three business days after the
approval of all such governmental agencies has been
granted and all waiting periods have expired or been
terminated; provided, however, such closing date may not
-------- -------
be extended to a date which is six months beyond the day
following the last day that such closing could otherwise
have taken place.
ARTICLE VII
BOARDS OF DIRECTORS; VOTING
---------------------------
7.1. Boards of Directors. Pursuant to the
-------------------
Amended G-Modelo By-laws:
(a) Effective as of the Closing Date (i)
the number of members of the G-Modelo Board of Directors
shall be fixed at fourteen (each of whom may have an
alternate), three of whom shall be nominated by the
Investor (the "Investor Nominees") and eleven of whom
shall be nominated by the Controlling Shareholders (the
"Controlling Shareholder Nominees") and (ii) the Investor
Nominees and the Controlling Shareholder Nominees shall
be elected to the G-Modelo Board of Directors, in accor-
dance with Mexican law and the Amended G-Modelo By-laws.
A-B and the Controlling Shareholders agree to consider
the advisability of inviting up to four independent
individuals to become members of the fourteen person G-
Modelo Board of Directors (the "Independent Nominees") up
to three of whom would be nominated by the Controlling
Shareholders in consultation with A-B and one of whom
would be nominated by A-B in consultation with the Con-
trolling Shareholders.
60
(b) Effective as of the time the Investor
and its authorized designees, if any, own, in the aggre-
gate, at least 35.12 percent of G-Modelo's outstanding
capital stock (i) the number of members of the G-Modelo
Board of Directors shall be increased to twenty-one (each
of whom may have an alternate), the number of Investor
Nominees shall be increased to ten and the number of
Controlling Shareholder Nominees shall remain at eleven,
(ii) A-B and the Controlling Shareholders will consider
maintaining the appointment of the Independent Nominees,
and (iii) the additional Investor Nominees selected to
fill such newly created directorships shall be elected to
the G-Modelo Board of Directors in accordance with Mexi-
can law and the Amended G-Modelo By-laws.
(c) All such G-Modelo directors nominated
and elected pursuant to paragraphs (a) and (b) above
shall serve on the G-Modelo Board of Directors until
their respective successors are duly elected and quali-
fied in accordance with this Agreement and the provisions
of the Amended G-Modelo By-laws. In addition, at each
annual meeting of G-Modelo shareholders following the
Closing, the Investor Nominees and the Controlling Share-
holder Nominees shall be elected to the G-Modelo Board of
Directors.
(d) Notwithstanding anything contained in
this Agreement to the contrary, in the event that the
Investor or its authorized designees, if any, acquire, in
the aggregate, a number of Series A Shares that represent
ten percent or more of G-Modelo's total outstanding
capital stock, the Controlling Shareholders shall cause,
in accordance with Section 7.1(g), one of the Controlling
Shareholder Nominees to be removed from the G-Modelo
Board of Directors and the Investor shall be entitled to
fill such vacancy. Thereafter, at each annual meeting of
G-Modelo shareholders, the Investor shall be entitled to
nominate one of the Controlling Shareholder Nominees.
(e) For so long as the Controlling Share-
holders are entitled to nominate more members of the G-
Modelo Board of Directors than A-B, the Controlling
Shareholders shall have the right to nominate a Control-
ling Shareholder Nominee to act as Chairman of the G-Mod-
elo Board of Directors, which nomination shall be ap-
proved by a simple majority vote of the G-Modelo Board of
Directors.
61
(f) Except as provided in Section 7.1(d),
any vacancy on the G-Modelo Board of Directors occurring
by reason of death, resignation, removal or other termi-
nation of a director elected pursuant to Section 7.1(a)
or 7.1(b) shall be filled by a new director nominated by
the same party who was entitled to nominate the previous
incumbent whose death, resignation, removal or other
termination created such vacancy.
(g) The party who nominated any director
elected pursuant to Section 7.1(a) or 7.1(b), and only
such party, shall have the right to remove such director
by giving written notice to the Comisario of G-Modelo to
call a meeting of G-Modelo shareholders for such purpose.
(h) Pursuant to the Amended G-Modelo By-
laws and the Amended Diblo By-laws, the Investor shall
have rights identical to those set forth in paragraphs
(a) through (g) above with respect to Diblo and the Diblo
Board of Directors.
7.2. Corporate Actions.
-----------------
(a) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and Diblo and as members of the
technical committees of the Control Trust, the Banamex
Trust and the Option Trust, agree to use their best ef-
forts and to take all actions necessary to ensure that
during the period the Investor and its authorized design-
ees, if any, own, in the aggregate, at least 20,323,498
shares of the outstanding capital stock of G-Modelo and
at least 24,329,922 outstanding Diblo Common Shares, the
Investor shall be entitled to the following rights and
protections as a minority shareholder of G-Modelo and
Diblo:
(i) The Investor shall have the
right to elect three Investor Nominees to the
fourteen member G-Modelo Board of Directors and
at least two Investor Nominees to G-Modelo's
seven member Executive Committee (and their re-
spective alternates).
(ii) The Investor shall have the
right to name a statutory auditor (Comisario)
of G-Modelo.
62
(iii) The Investor shall have the
right to approve any change to the dividend
policies of G-Modelo and Diblo set forth in
Section 5.9 or to approve any dividend or dis-
tribution not in compliance with Section 5.9.
(iv) There shall be a majority
vote by series of the holders of Series A
Shares and Series B Shares and a majority vote
of the holders of the Series P-C Shares, at an
Extraordinary Meeting of Shareholders of G-Mod-
elo to approve (A) amendments to the Amended
G-Modelo By-laws or Amended Diblo By-laws which
would be contrary to or inconsistent with the
Investor's rights contained in this Agreement,
(B) acquisitions, divestitures, spin-offs,
mergers or consolidations which will modify
G-Modelo's earnings or asset base by more than
ten percent, or involve companies owned in part
by the Controlling Shareholders outside the
G-Modelo corporate structure, or (C) except for
divestitures of a controlling interest in a G-
Modelo Corporation otherwise permitted in (B)
above, the sale of any shares of capital stock
of any of the G-Modelo Corporations (except as
is otherwise required in the by-laws of the
Comanditas pursuant to Section 5.4 of this
Agreement).
(v) A-B shall have the right to
approve all pricing and other policies for
transactions between G-Modelo or any G-Modelo
Corporation, on the one hand, and Procermex,
Difa, Gondi, Tramo Cia. de Transportes, S.A. de
C.V., a Mexican corporation ("Tramo"), Eurocer-
mex, Iberocermex, Tapas, Promotora, Envases or
any other Subsidiary in which a Controlling
Shareholder has any ownership interest other
than through G-Modelo, on the other hand, to
assure that such transactions are carried out
on an arm's-length basis; provided, however,
-------- -------
that such approval shall not be withheld if the
resulting pricing for each such transaction is
at or below Market Price (as defined); and pro-
----
vided, further, that such approval will be re-
----- -------
quired with respect to pricing or other poli-
cies for transactions with Procermex only when
63
they imply changes to the pricing or policies
for transactions with Procermex existing as of
March 24, 1993 (which policies are generally
described in Exhibit C hereto). For purposes
hereof, "Market Price" shall mean for any prod-
uct or service, the lowest price available to
the purchaser in Mexico from any North American
source (including, without limitation, Subsid-
iaries of the Investor), whether on a spot or
long-term basis, which pricing will be verified
from time to time by check bids. Furthermore,
in furtherance of the parties' desire to obtain
the best available prices, G-Modelo and each G-
Modelo Corporation agree to consult on a semi-
annual basis with the Investor regarding all
purchases of major goods and services acquired
by them, regardless of source. Within a rea-
sonable period of time following the Closing,
G-Modelo will provide to the Investor a sched-
ule setting forth for each of the companies
referred to in the first sentence of this
clause (v), the commodity sold to or purchased
by any other G-Modelo Corporation, the annual
quantity thereof purchased or sold and a recent
representative unit price therefor.
(vi) The following planning and
control processes shall be presented to and
approved by a majority vote of the G-Modelo
Board of Directors, provided such vote includes
the approval of at least two Investor Nominees
(a "Qualified Vote") and thereafter implemented
by the G-Modelo management: (A) annual budgets
for capital and income statement line items, in
reasonable detail, which shall be presented to
the G-Modelo Board of Directors in the fourth
quarter of each fiscal year and thereafter
shall be revised quarterly by a Qualified Vote
of the G-Modelo Board of Directors to reflect
changes in the Mexican economy and other market
circumstances; (B) the five-year plan for busi-
ness strategy, income statement, balance sheet
and cash flow statement, which shall be pre-
sented to the G-Modelo Board of Directors annu-
ally; and (C) monthly and year-to-date operat-
ing, financial and sales results versus budget,
with updated estimates for the remainder of the
64
current fiscal year which shall be presented at
each monthly or bi-monthly G-Modelo Board of
Directors (or Executive Committee) meeting.
(vii) To promote the sharing of
functional skills between G-Modelo and A-B, the
Investor Nominees and the Controlling Share-
holder Nominees shall mutually agree on the
selection of executive and management personnel
candidates to rotate between G-Modelo and A-B
in the Finance, Marketing, Corporate Planning,
Brewing and Operations areas commencing as soon
as reasonably practicable after the Closing;
provided, however, that no participant in such
-------- -------
program shall hold an executive office or posi-
tion with any host company nor shall such par-
ticipant have any authority to act in the name
or on behalf of, or otherwise to bind, the host
company; provided, further, that each party
-------- -------
shall continue to pay the compensation of each
of such party's participants in the program, as
well as all costs and expenses relating to such
participation, and the host company shall have
no obligations in respect of any such payments.
(viii) The Investor shall have the
right to approve (A) any issuances of G-Modelo
capital stock (other than on a pro rata basis
to all G-Modelo shareholders without the pay-
ment of any consideration therefor) or (B) any
amortization of shares of G-Modelo capital
stock.
(ix) Whenever any of the matters
described in (iii) through (vii) above are to
be approved by a G-Modelo Corporation, such
matter must first be approved by a Qualified
Vote of the G-Modelo Board of Directors; pro-
----
vided, however, with respect to the matters set
----- -------
forth in (iii) above, there shall be no Quali-
fied Vote of the G-Modelo Board of Directors
required as long as Section 5.9 is fully com-
plied with.
65
(b) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and Diblo and as members of the
technical committees of the Control Trust, the Banamex
Trust and the Option Trust, agree to use their best ef-
forts and to take all actions necessary to ensure that
during the period the Investor and its authorized design-
ees, if any, own, in the aggregate, at least 71,376,124
shares of the outstanding G-Modelo capital stock, in
addition to the minority shareholder rights and protecti-
ons provided for in Section 7.2(a), the Investor shall be
entitled to the following rights and protections as a
minority shareholder of G-Modelo and Diblo:
(i) The Investor shall have the
right to elect ten Investor Nominees to the 21
person G-Modelo Board of Directors and at least
four Investor Nominees to G-Modelo's nine mem-
ber Executive Committee (and their respective
alternates).
(ii) Prior to implementation by
the G-Modelo management, the G-Modelo Board of
Directors shall approve the following by a
Qualified Vote: (A) the submission of the
annual financial statements and proposals to
the Ordinary Meeting of Shareholders of G-Mode-
lo to change the dividend policies of G-Modelo
and Diblo from those set forth in Section 5.9
or to approve any dividend or distribution not
in compliance with Section 5.9; (B) capital
expenditures or lease commitments over 15 mil-
lion United States dollars which were not in-
cluded in the annual budget previously ap-
proved; (C) entering any business other than
(I) the manufacture of beer, containers or
packaging materials therefor, (II) the produc-
tion of raw materials for the manufacture of
beer, containers or packaging materials, or
(III) the sale and distribution of beer; (D)
borrowing money, issuing guarantees or creating
liens or mortgages in excess of 15 million
United States dollars; (E) all pricing and
other policies for transactions between G-Mode-
lo or any G-Modelo Corporation, on the one
hand, and Procermex, Difa, Gondi, Tramo, Euroc-
66
ermex, Iberocermex, Tapas, Promotora, Envases
or any other Subsidiary in which a Controlling
Shareholder has any ownership interest other
than through G-Modelo, on the other hand, to
assure that such transactions are carried out
at an arm's-length basis; provided, however,
-------- -------
that such approval shall not be withheld if the
resulting pricing for each such transaction is
at or below Market Price; and provided, fur-
-------- ----
ther, that such approval will be required with
----
respect to pricing or other policies for trans-
actions with Procermex only when they imply
changes to the pricing or policies for transac-
tion with Procermex existing as of March 24,
1993 (which policies are generally described in
Exhibit C hereto); (F) the annual appointment
of G-Modelo's external auditors, which shall be
one of the "Big 6" international accounting
firms; (G) entering into multi-year contracts
exceeding 15 million United States dollars in
the aggregate; (H) sales of assets exceeding 15
million United States dollars; (I) deviations
of over five percent that involve decisions by
management from the annual budget previously
approved; (J) any new license or sale of trade-
marks or technology or modification of same;
provided, however, that existing licensing
-------- -------
agreements may be renewed automatically without
such approval; and (K) closing a major produc-
tion facility.
(iii) Whenever any of the matters
described in (ii) above are to be approved by a
G-Modelo Corporation, such matter must first be
approved by a Qualified Vote of the G-Modelo
Board of Directors; provided, however, with re-
-------- -------
spect to the matters set forth in clause (A)
thereof, there shall be no Qualified Vote of
the G-Modelo Board of Directors required as
long as Section 5.9 is fully complied with.
(iv) The G-Modelo shareholders
may, only by a vote of 70 percent or more of
the outstanding shares of G-Modelo capital
stock entitled to vote at an Extraordinary
Meeting of Shareholders of G-Modelo, approve
(A) a merger, consolidation or spin-off involv-
67
ing G-Modelo or a G-Modelo Corporation; (B) an
amendment to G-Modelo's charter or the Amended
G-Modelo By-laws; and (C) other company action
requiring shareholder approval at an Extraordi-
nary Meeting of Shareholders of G-Modelo.
(v) Except as otherwise provid-
ed in the Amended G-Modelo By-laws, all matters
requiring shareholder approval at an Ordinary
Meeting of Shareholders of G-Modelo shall be
done by a simple majority vote of the shares.
ARTICLE VIII
CONDITIONS TO THE INVESTOR'S OBLIGATIONS
----------------------------------------
The obligation of the Investor to consummate
the transactions contemplated by Article II shall be
subject to the satisfaction (or waiver) on or prior to
the Closing Date of all of the following conditions:
8.1. Representations, Warranties of the G-
-------------------------------------
Modelo Signatories. All representations and warranties
------------------
of the G-Modelo Signatories set forth in Article III
shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
8.2. No Prohibition. The consummation of the
--------------
transactions contemplated herein shall not be prohibited
or delayed by any order, decree or injunction of a court
of competent jurisdiction and there shall not have been
any action taken or any statute, rule or regulation or
order of any court or administrative agency enacted which
(a) prohibits or delays the Investor from consummating
the transactions contemplated hereby or (b) imposes any
material limitation on the ability of the Investor to
exercise full rights of ownership of the Series P-C
Shares or the Initial Diblo Shares.
68
8.3. No Action. No action, suit or proceeding
---------
before any court or governmental or regulatory authority
shall be pending or threatened against A-B, A-BI or the
Investor or any of their Subsidiaries challenging the
validity or legality of the transactions contemplated by
this Agreement.
8.4. HSR Act. Each of A-B and G-Modelo and
-------
any other person (as defined in the HSR Act and the rules
and regulations thereunder) required in connection with
the transactions contemplated in this Agreement to file a
Notification and Report Form for Certain Mergers and
Acquisitions shall have made such filing and the applica-
ble waiting period with respect to each such filing shall
have expired or been terminated.
8.5. Certificates. The G-Modelo Signatories
------------
will furnish to the Investor such certificates and other
documents, instruments and writings to evidence the
fulfillment of the conditions set forth in Article IX as
the Investor may reasonably request.
8.6. Opinion. The G-Modelo Signatories will
-------
furnish to the Investor, the opinion of Xxxxxxxxxxx Y
Steta in the form attached hereto as Exhibit D.
ARTICLE IX
CONDITIONS TO THE G-MODELO SIGNATORIES'
AND THE BANAMEX TRUST'S OBLIGATIONS
---------------------------------------
The obligations of the G-Modelo Signatories and
the Trustee on behalf of the Banamex Trust to consummate
the transactions contemplated in Article II shall be
subject to the satisfaction (or waiver) on or prior to
the Closing Date of all of the following conditions:
9.1. Representations and Warranties of A-B,
--------------------------------------
A-BI and the Investor. All representations and warran-
---------------------
ties of A-B, A-BI and the Investor set forth in Article
IV shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
69
9.2. No Prohibition. The consummation of the
--------------
transactions contemplated herein shall not be prohibited
or delayed by any order, decree or injunction of a court
of competent jurisdiction and there shall not have been
any action taken or any statute, rule or regulation or
order of any court or administrative agency enacted which
prohibits or delays the G-Modelo Signatories or the
Banamex Trust from consummating the transactions contem-
plated hereby.
9.3. No Action. No action, suit or proceeding
---------
before any court or governmental or regulatory authority
shall be pending or threatened against G-Modelo, any of
the G-Modelo Corporations, the Controlling Shareholders
or the Banamex Trust challenging the validity or legality
of the transactions contemplated by this Agreement.
9.4. HSR Act. Each of A-B and G-Modelo and
-------
any other person (as defined in the HSR Act and the rules
and regulations thereunder) required in connection with
the transactions contemplated in this Agreement to file a
Notification and Report Form for Certain Mergers and
Acquisitions shall have made such filing and the applica-
ble waiting period with respect to each such filing shall
have expired or been terminated.
9.5. Certificates. The Investor will furnish
------------
to the G-Modelo Signatories and the Trustee of the Banam-
ex Trust such certificates and other documents, instru-
ments and writings to evidence the fulfillment of the
conditions set forth in Article VIII as such parties may
reasonably request.
9.6. Opinion. The Investor will furnish to
-------
the Controlling Shareholders, the opinions of Xxxxxxx X.
Xxxxxxx, Esq., Senior Associate General Counsel of A-B,
Skadden, Arps, Slate, Xxxxxxx & Xxxx and Xxxxx, Xxxxxx-
Xxxxxxx y Xxxxxxxxxx, in the forms attached hereto as
Exhibits E, F and G, respectively.
70
ARTICLE X
INDEMNIFICATION
---------------
10.1. The Controlling Shareholders', G-Modelo
---------------------------------------
and Diblo Indemnification. Subject to the terms and
-------------------------
conditions of this Article X, the Controlling Sharehold-
ers shall, jointly and severally, indemnify, defend and
hold the Investor and its directors, officers, employees,
Subsidiaries and assigns (the "Investor Group") harmless
from and against any and all damages, liabilities, obli-
gations, claims, demands, judgments, settlements, costs
and expenses of any nature whatsoever, including reason-
able attorneys' fees (individually a "Loss" or collec-
tively "Losses"), directly or indirectly, asserted
against, resulting to, imposed upon or incurred by the
Investor Group or any member thereof, at any time after
the Closing Date and prior to the Expiration Date (as
defined in Section 13.1) by reason of or resulting from
any inaccuracy of any representation or warranty or any
breach or violation of any covenant or agreement of the
G-Modelo Signatories contained in this Agreement (collec-
tively, the "Investor Group Claims"); provided, however,
-------- -------
in the event that the Controlling Shareholders shall
fail, refuse or otherwise be unable to indemnify the
Investor Group to the full extent of its Losses (other
than as provided in the immediately succeeding sentence),
G-Modelo and Diblo shall, jointly and severally, indemni-
fy, defend and hold the Investor Group harmless from and
against any and all Losses which the Controlling Share-
holders shall have failed to indemnify the Investor Group
from. The provision for indemnification contained in
this Section 10.1 shall be operative and effective in
respect of Investor Group Claims (other than Investor
Group Claims by reason of or resulting from any inaccura-
cy of the representations or warranties set forth in
Sections 3.1, 3.2 and 3.4, as to which the limitations
contained in this sentence shall not be applicable and as
to which the Investor Group shall be indemnified to the
full extent of all such Investor Group Claims) only if
and to the extent the amount of such Investor Group
Claims exceeds 15 million United States dollars.
10.2. The Investor's Indemnification. Subject
------------------------------
to the terms and conditions of this Article X, the Inves-
tor shall indemnify, defend and hold the Controlling
Shareholders and G-Modelo and their directors, officers,
71
employees, Subsidiaries and assigns (the "G-Modelo
Group") harmless from and against any and all Losses,
directly or indirectly, asserted against, resulting to,
imposed upon or incurred by the G-Modelo Group or any
member thereof, at any time after the Closing Date and
prior to the Expiration Date by reason of or resulting
from any inaccuracy of any representation or warranty or
any breach or violation of any covenant or agreement of
the Investor contained in this Agreement (collectively,
the "G-Modelo Group Claims" and together with the Inves-
tor Group Claims, the "Claims"). The provision for
indemnification by the Investor contained in this Section
10.2 shall be operative and effective in respect of
G-Modelo Group Claims only if and to the extent the
amount of such G-Modelo Group Claims (other than G-Modelo
Group Claims by reason of or resulting from any inaccura-
cy of the representation and warranty set forth in Sec-
tion 4.1, as to which the limitation contained in this
sentence shall not be applicable and as to which the G-
Modelo Group shall be indemnified to the full extent of
all such G-Modelo Group Claims) exceeds 15 million United
States dollars.
10.3. Conditions of Indemnification. The
-----------------------------
obligations and liabilities of the Controlling Sharehold-
ers and the Investor, as the case may be, under Sections
10.1 and 10.2 (herein referred to as the "Indemnifying
Party"), with respect to Claims made by third parties
shall be subject to the following terms and conditions:
(a) The person to whom such Claim relates
(the "Indemnified Party") will give the Indemnifying
Party prompt notice of such Claim, and the Indemnifying
Party will assume the defense thereof by representatives
chosen by it.
(b) If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to
assume the defense thereof, the Indemnified Party or any
other member of its group shall (upon further notice to
the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf
of and for the account and risk of the Indemnifying
Party, subject to the right of the Indemnifying Party to
assume the defense of such Claim at any time prior to the
settlement, compromise or final determination thereof.
72
(c) Anything in this Section 10.3 to the
contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely
affect the Indemnified Party or any other member of the
Indemnified Party's group other than as a result of money
damages or other money payments, the Indemnified Party or
such member of the Indemnified Party's group shall have
the right to defend, at its own cost and expense, and to
compromise or settle such Claim with the consent of the
Indemnifying Party and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an uncon-
ditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party or such member of the
Indemnified Party's group, or both, a release from all
liability in respect of such Claim.
10.4. Remedies Cumulative. The remedies
-------------------
provided herein shall be cumulative and shall not pre-
clude assertion by any of the parties hereto of any other
rights or the seeking of any other remedies against any
other party hereto.
ARTICLE XI
TERMINATION PRIOR TO CLOSING
----------------------------
11.1. Termination. This Agreement may be
-----------
terminated at any time prior to the Closing:
(a) by mutual written consent of A-B and
the Controlling Shareholders;
(b) by either the Controlling Sharehold-
ers or A-B in writing, without liability to the terminat-
ing party on account of such termination (provided the
terminating party is not otherwise in default or in
breach of this Agreement), if the Closing shall not have
occurred on or before December 31, 1993; or
(c) by either the Controlling Sharehold-
ers or A-B in writing, without liability to the terminat-
ing party on account of such termination (provided the
terminating party is not otherwise in default or in
breach of this Agreement), if A-B, A-BI and the Investor
73
or the Controlling Shareholders, respectively, shall (i)
fail to perform in any material respect its covenants and
agreements contained herein required to be performed
prior to the Closing Date, or (ii) materially breach any
of their representations, warranties or covenants con-
tained herein if such breach would cause a condition to
the obligation of the terminating party to close not to
be satisfied and if such failure to perform or breach has
not been waived by the terminating party; provided,
--------
however, that a party's right to indemnification hereun-
-------
der shall not be affected by such party's waiver of its
right of termination pursuant to this Section 11.1 if
such right of termination arises from a willful breach of
this Agreement.
11.2. Procedure and Effect of Termination. In
-----------------------------------
the event of termination of this Agreement and abandon-
ment of the transactions contemplated hereby by either of
the parties pursuant to Section 11.1, written notice
thereof shall forthwith be given to all other parties,
and this Agreement shall terminate (other than Sections
5.1(b), 13.8, 13.9, 13.10, 13.11, 13.12 and Article XII)
and the transactions contemplated hereby shall be aban-
doned, without further action by any of the parties
hereto. If this Agreement is terminated as provided
herein:
(a) upon request therefor, each of the
parties hereto will redeliver all documents, work papers
and other material of the other parties relating to the
transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing
the same;
(b) no party hereto shall have any lia-
bility or further obligation to any other party to this
Agreement pursuant to this Agreement except as stated in
this Section 11.2; and
(c) all filings, applications and other
submissions made pursuant to the terms of this Agreement
shall, to the extent practicable, be withdrawn from the
agency or other Person to which made.
74
ARTICLE XII
DISPUTE RESOLUTION
------------------
12.1. Arbitration. In the event of a dispute
-----------
among the parties with respect to the validity, intent,
interpretation, performance, enforcement or arbitrability
of any of the terms contained in this Agreement or any
claim arising out of or in connection with this Agree-
ment, except for disputes or claims involving the types
of matters set forth in Section 12.2, such dispute or
claim shall promptly be submitted for resolution to the
Board of Directors of G-Modelo. If the G-Modelo Board of
Directors, by a Qualified Vote, shall be unable to re-
solve the dispute within 30 days, the Controlling Share-
holders shall appoint a Controlling Shareholder Nominee
and the Investor shall appoint an Investor Nominee to a
special committee. The members of the special committee
shall use their best efforts to reach an amicable resolu-
tion of the dispute and any mutually acceptable resolu-
tion shall be deemed final and binding and shall be
implemented as soon as practicable. If the special
committee is unable to resolve the dispute within 30 days
after its appointment or, if either the Controlling
Shareholders or A-B shall have failed to appoint a repre-
sentative to the special committee, within 30 days after
either the Controlling Shareholders or A-B has appointed
its representative, the matter shall be submitted for
final resolution to an international arbitration panel
consisting of three arbitrators selected as follows: the
Chairman of A-B shall select one arbitrator; a majority
of the Controlling Shareholders shall select one arbitra-
tor; and the two arbitrators so appointed shall select a
third arbitrator. The third arbitrator shall be the
presiding arbitrator and may not be a citizen or resident
of either the United States or Mexico and must be unaf-
filiated with the parties hereto. In the event either
the Controlling Shareholders or A-B shall have failed to
select an arbitrator within 15 days after either the
Controlling Shareholders or A-B has selected its arbi-
trator or the two arbitrators so selected shall fail to
agree on a third arbitrator, such arbitrator shall be
selected by the United States Representative of the
International Chamber of Commerce. The place of arbitra-
tion shall be New York City, in the State of New York,
the United States of America. All arbitrators shall be
fluent in both the English and Spanish languages and
75
their award shall be rendered in English. The English
language shall be used in all documents, briefs, evidence
and any other writings submitted to the arbitration
panel. All arbitration proceedings shall be conducted in
the English language. The arbitration procedure set
forth in this Section 12.1 shall be the sole and exclu-
sive means of settling or resolving any dispute referred
to in this Section 12.1. The arbitration shall be con-
ducted in accordance with the UNCITRAL Arbitration Rules
then in effect, as modified herein. The award of the
arbitrators shall be final and binding on the parties and
may be presented by any of the parties for enforcement in
any court of competent jurisdiction and the parties
hereby consent to the jurisdiction of such court solely
for purposes of enforcement of this arbitration agreement
and any award rendered hereunder. In any such enforce-
ment action, irrespective of where it is brought, none of
the parties will seek to invalidate or modify the deci-
sion of the arbitrators or otherwise to invalidate or
circumvent the procedures set forth in this Section 12.1
as the sole and exclusive means of settling or resolving
such dispute, including by appeal to any court which
would otherwise have jurisdiction in the matter. The
fees of the arbitrators and the other costs of such
arbitration shall be borne by the parties in such propor-
tions as shall be specified in the arbitration award.
12.2. Business Disagreements.
----------------------
(a) In the event that at any time follow-
ing the Closing there is a Fundamental Business Disagree-
ment (as hereinafter defined), the Investor shall have
the right to require (the "Dispute Right") that the
Controlling Shareholders purchase all, but not less than
all, of the shares of G-Modelo capital stock and the
Diblo Common Shares then owned, directly or indirectly,
by the Investor and its authorized designees, if any
(such aggregate number of shares being referred to herein
as the "Investor Shares"), at an aggregate purchase price
(the "Investor Share Price") equal to the aggregate
purchase price paid by the Investor and its authorized
designees, if any, for the Investor Shares, payable in
United States dollars in immediately available funds.
The Investor shall exercise the Dispute Right by delivery
of a written notice (the "Dispute Notice") to the Con-
trolling Shareholders in accordance with Section 13.10
indicating that (i) there exists a Fundamental Business
76
Disagreement, (ii) the number of Investor Shares to be
purchased by the Controlling Shareholders, (iii) the
Investor Share Price, and (iv) the date and time fixed
for the consummation of such sale (which date shall not
be less than twenty nor more than forty days following
the date of the Investor Notice).
(b) In the event that the Controlling
Shareholders fail, refuse or are otherwise unable or un-
willing to purchase the Investor Shares pursuant to
subsection (a) above, the Controlling Shareholders shall
notify the Investor (the "Controlling Shareholder Re-
sponse Notice") of such determination within fifteen days
following the date of the Dispute Notice, and the Inves-
tor shall have the right to purchase all, but not less
than all, of the shares of G-Modelo capital stock and
Diblo Common Shares then owned by the Controlling Share-
holders or held in trust for the benefit of the Control-
ling Shareholders (the "Controlling Shareholder Shares")
at an aggregate purchase price equal to the product of
(i) the number of Controlling Shareholder Shares and (ii)
that fraction having the Investor Price as the numerator
and the aggregate number of Investor Shares as the denom-
inator, payable in United States dollars in immediately
available funds. The Investor shall notify the Control-
ling Shareholders (the "Investor Response Notice") of its
intention with respect to the purchase of the Controlling
Shareholder Shares within fifteen days following the date
of the Controlling Shareholder Response Notice. In the
event the Investor elects to purchase the Controlling
Shareholder Shares, the Investor Response Notice shall
specify the date and time fixed for the consummation of
such purchase (which date shall not be less than ten nor
more than forty days following the Controlling Sharehold-
er Response Notice).
(c) For purposes of this Section 12.2, a
"Fundamental Business Disagreement" shall mean a dis-
agreement between A-B and the Controlling Shareholders
over fundamental business direction, e.g., change in the
charter or by-laws, change in dividend policy, corporate
objectives, etc., including, but not limited to, dis-
agreements relating to those matters with respect to
which the Investor has minority shareholder protection as
identified in Section 7.2.
77
ARTICLE XIII
MISCELLANEOUS
-------------
13.1. Survival of Representations, Warranties
---------------------------------------
and Covenants. All representations and warranties of the
-------------
parties hereto contained in this Agreement shall survive
the Closing Date, regardless of any investigation made by
the parties hereto, for a period ending on the third
anniversary of the Closing Date, except that the repre-
sentations and warranties set forth in Sections 3.1, 3.2,
3.3, 3.4 and 4.1 shall survive indefinitely and the
representations and warranties set forth in Section 3.13
and, to the extent the representations and warranties set
forth in Section 3.8 relate to liabilities for Taxes,
Section 3.8 shall survive until the later of the applica-
ble statutes of limitation or the final resolution of all
issues arising under Section 3.13 and Section 3.8. The
covenants and agreements contained herein to be performed
or complied with after the Closing shall survive without
limitation as to time, unless the covenant or agreement
specifies a term, in which case such covenant or agree-
ment shall survive for a period of three years following
the expiration of such specified term and shall thereupon
expire. The respective expiration dates for the survival
of the representations and warranties and the covenants
shall be referred to herein as the "Expiration Date."
13.2. Entire Agreement. This Agreement,
----------------
including the Exhibits and disclosure schedules hereto
and the other agreements, documents and instruments
referred to herein constitute the sole understanding of
the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings of the
parties hereto with respect to the transactions contem-
plated by this Agreement, including without limitation
the Heads of Agreement.
13.3. Successors and Assigns. The terms and
----------------------
conditions of this Agreement shall inure to the benefit
of and be binding upon the respective parties hereto and
their respective successors and permitted assigns; pro-
----
vided, however, that neither this Agreement nor any of
----- -------
the rights, obligations or interests hereunder shall be
assigned by any party without the prior written consent
of the other parties hereto; and provided, further, that
-------- -------
no assignment of this Agreement or any of the rights,
78
obligations or interests hereof shall relieve the assign-
or of its obligations under this Agreement. Notwith-
standing anything to the contrary contained in this
Section 13.3, each of A-B, A-BI and the Investor may
assign any or all of its rights or obligations hereunder
to each other or to a Subsidiary without the prior writ-
ten consent of the G-Modelo Signatories; provided, howev-
-------- ------
er, that such Subsidiary shall agree in writing to be
--
bound by the terms and conditions of this Agreement, that
such assignment shall in no way limit or relieve any of
them of any of their obligations hereunder and that such
Subsidiary remains a Subsidiary of A-B.
13.4. Counterparts. This Agreement may be
------------
executed in counterparts, each of which shall for all
purposes be deemed to be an original and all of which
shall, taken together, constitute the same instrument.
13.5. Interpretation. The table of contents
--------------
and article and section headings contained in this Agree-
ment are solely for reference, shall not be deemed to
constitute part of this Agreement, and shall not affect
the interpretation hereof.
13.6. Amendment and Modification. Subject to
--------------------------
applicable law, this Agreement may be amended, modified
or supplemented only by written agreement of each of the
parties hereto with respect to any of the terms contained
herein.
13.7. Waiver of Compliance; Consents. Except
------------------------------
as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, cove-
nant, agreement or condition herein may be waived by the
parties entitled to the benefits thereof only by a writ-
ten instrument signed by such parties granting such
waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. When-
ever this Agreement requires or permits consent by or on
behalf of any of the parties hereto, such consent shall
be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in
this Section 13.7.
79
13.8. Broker's Fees. Each of A-B, A-BI, the
-------------
Investor, the G-Modelo Signatories, the Banamex Trust and
the Option Trust (a) represents and warrants that, it has
not taken and will not take any action that would cause
the other parties to have any obligation or liability to
any Person for a finder's or broker's fee, and (b) agrees
to indemnify the other parties for breach of the forego-
ing representation and warranty, whether or not the
Closing occurs.
13.9. Expenses. Whether or not the transac-
--------
tions contemplated hereby are consummated, each of the
Controlling Shareholders, G-Modelo, the G-Modelo Corpora-
tions, A-B, A-BI and the Investor shall pay all costs and
expenses incurred by it, or on its behalf, in connection
with this Agreement and the transactions contemplated
hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consul-
tants, accountants and counsel.
13.10. Notices. Any notice, request, instruc-
-------
tion or other document permitted or required to be given
hereunder by any party hereto to any other party shall be
in writing and delivered personally or by facsimile
transmission or sent by registered or certified mail,
postage prepaid, as follows:
if to G-Modelo or a G-Modelo Corporation, to:
Grupo Modelo, S.A. de X.X.
Xxxxxx Xxxxxxx 000
00000 Xxxxxx, D.F.
Attention: Chairman of the Board
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-280-5322
with a copy to:
Xxxxxxxxxxx Y Steta, S.C.
Edif. "Omega"
Xxxxxx Xxxxxxx 345, 2nd Floor
Col. Xxxxxxxxxxx Xxxxxxx
00000 Xxxxxx, D.F.
Attention: Lic. Xxxxxxx Xxxxxxxxxxx
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-280-6226
80
if to a Controlling Shareholder, to such
Controlling Shareholder:
c/o Grupo Modelo, S.A. de X.X.
Xxxxxx Xxxxxxx 000
00000 Xxxxxx, D.F.
Attention: Chairman of the Board
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-280-5322
with a copy to:
Xxxxxxxxxxx Y Steta, S.C.
Edif. "Omega"
Xxxxxx Xxxxxxx 345, 2nd Floor
Col. Xxxxxxxxxxx Xxxxxxx
00000 Xxxxxx, D.F.
Attention: Lic. Xxxxxxx Xxxxxxxxxxx
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-280-6226
if to A-B, A-BI or the Investor, to:
Anheuser-Xxxxx Companies, Inc.
Xxx Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President and General
Counsel
Telephone No.: 00-000-000-0000
Facsimile No.: 00-000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telephone No.: 00-000-000-0000
Facsimile No.: 00-000-000-0000
with a further copy to:
Xxxxx, Xxxxxx-Xxxxxxx Y Xxxxxxxxxx
Bosque de Ciruelos 304, Piso 0
Xxxxxx xx Xxx Xxxxx
00000 Xxxxxx, D.F.
Attention: Lic. Xxxxxx Xxxxxx-Xxxxxxx
81
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-596-3309
if to the Option Trustee or the Banamex Trust-
ee, to:
Banco Nacional de Mexico, S.A., Trust
Division
Paseo de la Reforma Xx. 000, 00xx Xxxxx
Xxx. Xxxxxx
00000 Xxxxxx, D.F.
Attention: Sr. Xxxxxxx Xxxxxxx Xxxxxxx
Xx. Xxxxxxxx Xxxxxx de Oca
Telephone No.: 000-00-0-000-0000
Facsimile No.: 011-52-5-225-9751
or at such other address for a party as shall be speci-
fied by like notice. Any notice which is delivered
personally in the manner provided herein or by facsimile
transmission shall be deemed to have been duly given to
the party to whom it is directed upon actual receipt by
such party. Any notice which is addressed and mailed in
the manner herein provided shall be conclusively presumed
to have been duly given to the party to which it is
addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed
in the mail.
13.11. Governing Law. This Agreement shall be
-------------
construed in accordance with and governed by the laws in
force in the United Mexican States without regard to the
conflict of laws provisions thereof.
13.12. Public Announcements. Except as may be
--------------------
required by law, none of the parties hereto shall make
and the Controlling Shareholders shall ensure that no G-
Modelo Corporation makes any public statements, includ-
ing, without limitation, any press release, with respect
to this Agreement or the transactions contemplated hereby
without prior consultation and opportunity to comment
being afforded to the other parties.
82
IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be duly executed on its
behalf as of the date first above written.
ANHEUSER-XXXXX COMPANIES, INC.
By: s/AUGUST X. XXXXX III
--------------------------
Name:
Title:
ANHEUSER-XXXXX INTERNATIONAL, INC.
By: s/XXXX X. XXXXXXX
---------------------------
Name:
Title:
ANHEUSER-XXXXX INTERNATIONAL
HOLDINGS, INC.
By: s/XXXXX XXXXXXX
----------------------------
Name:
Title:
GRUPO MODELO, S.A. de C.V.
By: s/XXXXXXXX XXXXXXXXX R.
----------------------------
Name:
Title:
DIBLO, S.A. de C.V.
By: s/XXXXXXXX XXXXXXXXX R.
----------------------------
Name:
Title:
83
BANCO NACIONAL DE MEXICO, S.A.,
AS TRUSTEE OF THE OPTION TRUST
By: s/LIC XXXXXXX XXXXXXX XXXXXXX
----------------------------
Lic. Xxxxxxx Xxxxxxx Xxxxxxx, as
trustee delegate u/a dated June
11, 1993
By: s/XXXXXXXX XXXXXX DE OCA
----------------------------
Xxxxxxxx Xxxxxx de Oca, as trustee
delegate u/a dated June 11, 1993
BANCO NACIONAL DE MEXICO, S.A., AS
TRUSTEE OF THE BANAMEX TRUST
By: s/LIC XXXXXXX XXXXXXX XXXXXXX
----------------------------
Lic. Xxxxxxx Xxxxxxx Xxxxxxx, as
trustee delegate u/a dated June
11, 1993.
By: s/XXXXXXXX XXXXXX DE OCA
----------------------------
Xxxxxxxx Xxxxxx de Oca, as trustee
delegate u/a dated June 11, 1993
s/XXXXXXXX XXXXXXXXX R.
--------------------------------
Xxxxxxxx Xxxxxxxxx R., on his own
behalf and as a member of the te-
chnical committee of the Control
Trust
s/XXXXX XXXXXXXXXXXXXX
--------------------------------
Xxxxx Xxxxxxxxxxxxxx, on his own
behalf and as a member of the te-
chnical committee of the Control
Trust
s/XXXXXXX XXXX R.
--------------------------------
Xxxxxxx Xxxx R., on his own behalf
and as a member of the technical
committee of the Control Trust
84
s/XXXX XXXXXXX-XXXXXXX Y P.
----------------------------------
Xxxx Xxxxxxx-Xxxxxxx y P., on his
own behalf and as a member of the
technical committee of the Control
Trust
s/XXXXXXXX XXXX M.
----------------------------------
Xxxxxxxx Xxxx M., on his own be-
half and as a member of the tech-
nical committee of the Control
Trust
s/XXXXX XXXXXXXX XXXX
----------------------------------
Xxxxx Xxxxxxxx Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/XXXX XXXXXXXX XXXX
----------------------------------
Xxxx Xxxxxxxx Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/XXXXXXX XXXXXXXX XXXX
----------------------------------
Xxxxxxx Xxxxxxxx Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/XXXXXX XXXXX VDA DE XXXXXXX XXXX
----------------------------------
Xxxxxx Xxxxx Vda. de
Xxxxxxx Xxxx
85
s/EUSICINIA XXXXXXXX XXXX
--------------------------------
Eusicinia Xxxxxxxx Xxxx
s/XXXXXXX XXXXXXXX XXXX
--------------------------------
Xxxxxxx Xxxxxxxx Diez
s/MA XXXXXXX XXXXXXXX XXXX
--------------------------------
Ma. Xxxxxxx Xxxxxxxx Diez
s/XXXXXXXXX XXXXXXXX XXXX
--------------------------------
Xxxxxxxxx Xxxxxxxx Diez
s/XXXXXXXXXX XXXXXX XXXXXXXX
--------------------------------
Xxxxxxxxxx Xxxxxx Xxxxxxxx
s/MA XXXXXXX XXXXXX XXXXXXXX
--------------------------------
Ma. Xxxxxxx Xxxxxx Xxxxxxxx
s/MA XXXXXX XXXXXX XXXXXXXX
--------------------------------
Ma. Xxxxxx Xxxxxx Xxxxxxxx
86
