LICENSE AGREEMENT
dated
as
of March 21, 2005, between Companhia de Bebidas das Américas - AmBev, a
corporation organized under the laws of the Federative Republic of
Brazil
(“AmBev”),
and
InBev S.A., a public limited liability company organized under the laws of
Kingdom of Belgium (“InBev”).
WHEREAS
(a) AmBev
possesses AmBev Recipes relating to the brewing and production of the AmBev
Products and InBev possesses InBev Recipes relating to the brewing and
production of the InBev Products;
(b) AmBev
and/or its Affiliates are the owners of the AmBev Marks, and InBev and/or
its
Affiliates are the owners of the InBev Marks;
(c) AmBev
and
InBev desire to enter into this License Agreement for the production, sales
and
distribution
(i) by InBev of the AmBev Products within the InBev Territory, and (ii) by
AmBev
of the
InBev Products within the AmBev Territory;
(d) AmBev
and
InBev have the professional expertise and specific qualifications to produce,
package, market and distribute, respectively, the InBev Products in the AmBev
Territory and the AmBev Products in the InBev Territory;
(e) AmBev
wishes to appoint and InBev wishes to accept the appointment to produce,
package, market and distribute the AmBev Products in the InBev
Territory;
(f) InBev
wishes to appoint and AmBev wishes to accept the appointment to produce,
package, market and distribute the InBev Products in the AmBev
Territory;
(g) AmBev
and
InBev desire to set forth in this License Agreement their respective rights
and
obligations in connection with the licensed production, packaging, marketing
and
distribution of InBev Products in the AmBev Territory and
the
AmBev
Products in the InBev Territory.
NOW
THEREFORE, in consideration of the mutual covenants set forth herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS.
As used
herein, the following terms, unless otherwise defined herein, shall
have
the
meanings specified below (equally applicable to both the singular and plural
forms):
(a) “Affiliate”
of any
Person means any other Person that directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common control with,
such first Person,
provided
that (i) with respect to AmBev, its Affiliates shall not include, unless
the
context otherwise
requires, (A) InBev or any other Person that directly or indirectly controls
AmBev or (B) any
other
direct
or
indirect subsidiary of InBev that is not also a direct or indirect subsidiary
of
AmBev,
and (ii) with respect to InBev, its Affiliates shall not include, unless
the
context otherwise
requires, AmBev or any direct or indirect subsidiary of AmBev. For purposes
of
this definition, “control”
of a
Person means (i) holding an amount of the voting securities or other voting
ownership or voting interests sufficient to elect at least a majority of
its
board of directors or other governing body or (ii) the power, directly or
indirectly, to direct or cause the direction of the
management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
(b) “AmBev
Beer”
means
any Beer carrying one or more AmBev Marks.
(c) “AmBev
Imported Products”
means
AmBev Beer produced by AmBev or one of its Affiliates to be marketed,
distributed and sold
by
InBev
within the InBev Territory in accordance with the terms of this License
Agreement.
(d) “AmBev
Licensed Products”
means
AmBev Beer produced, packaged, marketed, distributed and sold by InBev within
the InBev Territory in accordance with the terms of this License
Agreement.
(e) “AmBev
Marks”
means
all trademarks, service marks or trade names belonging or licensed to AmBev
and/or its Affiliates (whether registered or unregistered, or the subject
of a
pending application or not), as listed on Annex
A-1.
(f) “AmBev
Products”
means
AmBev Imported Products and AmBev Licensed Products.
(g) “AmBev
Recipes”
means
all of AmBev’s formulae, recipes, processes and specifications specified
by AmBev for use by InBev in connection with the production and packaging
of
AmBev
Licensed
Products under this License Agreement, including, without limitation, AmBev’s
yeast, brewing
processes, equipment and material specifications, trade and manufacturing
secrets, know-how,
scientific and technical information, including, without limitation, as set
forth in the current
Technical Manual of AmBev (any of which may be modified from time to time
by
AmBev after consultation with InBev in accordance with Section
3.1).
(h) “AmBev
Territory”
means
the geographical area of Latin America (excluding Argentina and Cuba),
including
the duty free customers in such area.
(i) “Beer”
means
any fermented alcoholic beverage and other malt based beverages.
(j) “Budget
Year”
means:
(i) for the year 2005, the period commencing on the date this License Agreement
is executed and ending on December 31, 2005; and (ii) for each subsequent
year
after 2005,
the
twelve-month period commencing on January
1st of
such
year and ending on December 31
of
such year; provided, however, that in the event of termination of this License
Agreement, the
Budget
Year shall end on the date of termination.
(k) “Competitor”
means
any Person (other than AmBev, InBev and their respective Affiliates) directly
or
indirectly involved in the production, importation, distribution, marketing,
bottling or sale of Beer in the AmBev Territory or InBev Territory, as the
case
may be.
(1) “Confidential
Information”
refers
to any data or information (including the Licensor Recipes), orally,
in writing or otherwise disclosed or provided under this License Agreement
by or
on behalf of
AmBev
or InBev, as the case may be, or their respective Affiliates (the disclosing
party) to the other
party (the
receiving party) which:
(i) is described
or
labeled as such; or
(ii) the
disclosing party informs the receiving party is confidential; or
(iii) a
reasonable third party, in a similar position to the receiving party would
treat
as and understand to be confidential.
Notwithstanding
the foregoing, Confidential Information shall not include information which:
(i)
has been published or is otherwise in the public domain at the time of
disclosure or thereafter, as the case may be (other than as a result of
disclosure by the receiving party, its employees, external advisors or agents);
(ii) is lawfully in the possession, or is the exclusive property, of the
receiving party prior to its disclosure, as evidenced by such party’s written
material; (iii) has been lawfully obtained by the receiving party from a
third
party or third parties who are not prohibited from disclosing it to such
party
and are not breaching any agreement by disclosing it to such party; or (iv)
is
independently developed by the receiving party without the benefit of
Confidential Information from the disclosing party.
(m) “Imported
Products” means InBev Imported Products or AmBev Imported Products, as context
requires.
(n) “InBev
Beer” means any Beer carrying one or more InBev Marks.
(o) “InBev
Imported Products” means InBev Beer produced by InBev or one of its Affiliates
to be marketed, distributed and sold by AmBev within the AmBev Territory
in
accordance with the terms of this License Agreement
(p) “InBev
Licensed Products” means InBev Beer produced, packaged, marketed, distributed
and sold by AmBev within the AmBev Territory in accordance with the terms
of
this License Agreement.
(q) “InBev
Marks” means all trademarks, service marks or trade names belonging or licensed
to InBev and/or its Affiliates (whether registered or unregistered, or the
subject of a pending application or not), as listed on Annex A-2.
(r) “InBev
Products” means InBev Imported Products and InBev Licensed
Products.
(s) “InBev
Recipes” means all of InBev’s formulae, recipes, processes and specifications
specified by InBev for use by AmBev in connection with the production and
packaging of InBev Licensed Products under this License Agreement, including,
without limitation, InBev’s yeast, brewing processes, equipment and material
specifications, trade and manufacturing secrets, know-how, scientific and
technical information, including, without limitation, as set forth in the
current Technical Manual of InBev (any of which may be modified from time
to
time by InBev after consultation with AmBev in accordance with Section
3.1).
(t) “InBev
Territory” means the geographical area comprised by Europe, Asia, Africa, Cuba
and the United States of America, including the duty free customers in such
area.
(u) “Intellectual
Property” means all current and future rights and interests related to
intellectual property as such term is used and understood in the beer
production, marketing and sale industry with respect to the AmBev Products
or
the InBev Products, as the case may be, or the method of production or
advertising and promotion of the AmBev Products or InBev Products, including,
but not limited to the Marks, Recipes, Confidential Information (whether
disclosed by or on behalf of AmBev, InBev or otherwise) as well as any related
patents, copyrights (including copyright rights in the packaging, labeling,
ornamentation, advertising and promotional materials and marketing plans
for the
Products) and also including any other creative materials, works, or efforts
created by AmBev or InBev or their Affiliates for use in connection with
the
AmBev Marks or the InBev Marks, as the case may be, and any derivative works
based thereon, in any tangible medium of expression now known or hereinafter
devised. Any copyrights and creative materials and the like created by Licensee
or its Affiliates for use with the Marks shall be deemed to be the property
of
Licensor
and Licensee shall execute such assignments as may be reasonably requested
by
Licensor to effectuate this purpose) and other related intellectual property
rights.
(v) “License
Agreement”means
this
License Agreement dated as of March 21, 2005, between AmBev and InBev, as
the
same may be amended, modified or supplemented from time to time.
(w) “Licensed
Products” means InBev Licensed Products or AmBev Licensed Products, as the
context requires.
(x) “Licensee”
means (i) AmBev (regarding InBev Products) and (ii) InBev (regarding AmBev
Products).
(y) “Licensee
Recipes” means AmBev Recipes or InBev Recipes, as the context
requires.
(z) “Licensor”
means (i) AmBev (regarding AmBev Products) and (ii) InBev (regarding InBev
Products).
(aa)
“Licensor Recipes” means AmBev Recipes or InBev Recipes, as the context
requires.
(ab)
“Marketing Expenditures” means costs of marketing, advertising and promotional
activities and brand contribution expenditures (including, without limitation,
consumer marketing, trade selling and discounts such as off invoice, bonus
stock
and volume rebates) related to the Products in the Territory.
(ac)
“Marks” means AmBev Marks or InBev Marks, as the context requires.
(ad)
“Net
Sales” means, for any period, the invoiced gross sales value of Products sold
during such period by Licensee and its Affiliates to any third party less
returns, discounts, taxes and duties.
(ae)
“Parties” means AmBev and InBev, which may also be referred to individually as a
“Party”.
(af)
“Person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, governmental agency or body or other
entity.
(ag)
“Products” means Imported Products and Licensed Products.
(ah)
“Recipes” means AmBev Recipes and/or InBev Recipes, as the context
requires.
(ai)
“Territory” means the territory in which Licensee is licensed under this License
Agreement (i) to produce, package, market, distribute and sell the Licensed
Products and/or (ii) market, distribute and sell the Imported
Products.
(aj)
“Third Party Products” means any beverage that, as the case may be, either (i)
AmBev or any of its Affiliates or (ii) InBev or any of its Affiliates directly
or indirectly, produces, bottles or sells under third party trademarks, trade
names or service marks as of the date of this License Agreement.
2. SCOPE—EXCLUSIVITY
2.1
General
AmBev
hereby grants to InBev, on the terms and conditions set forth in this License
Agreement, the exclusive right to, either directly or through any Affiliate
of
InBev, (i) produce, package,
market,
distribute and sell the AmBev Licensed Products in the InBev Territory and
(ii)
market, distribute
and sell the AmBev Imported Products in the InBev Territory. Neither AmBev
nor
any of
its
Affiliates during the term of this License Agreement shall grant to any Person
other than InBev any such right, except for any such rights granted pursuant
to
agreements to which AmBev or its Affiliates
are parties as
of the
date of this License Agreement. InBev hereby grants to AmBev, on the terms
and
conditions set forth in this License Agreement, the exclusive right to, either
directly or through
any Affiliate of AmBev, (i) produce, package, market, distribute and sell
the
InBev Licensed
Products in the AmBev Territory and (ii) market, distribute and sell the
InBev
Imported Products in the AmBev Territory. Neither InBev nor any of its
Affiliates during the term of this License
Agreement shall
grant to any
Person other than AmBev any such
right, except for
any
such
rights
granted pursuant to agreements to which InBev or its Affiliates are parties
as
of the date of this License Agreement.
2.1.1
The
Parties agree that sales of InBev Beer into Canada and of Labatt Brewing
Co.’s
Beer into the
United States of America are currently regulated by separate arrangements
and
therefore are not
subject
to the provisions of this License Agreement. The Parties agree to discuss
the
possibility of amending such arrangements so as to cause their commercial
terms
(except transfer price and royalties) to be consistent with the provisions
of
Sections 3 to 11 of this License Agreement.
2.2
Enforceability
The
exclusive right granted by AmBev to InBev pursuant to Section 2.1 is valid
and
effective as of
the date
of this License Agreement. The exclusive right granted by InBev to AmBev
pursuant to Section 2.1 shall be valid and effective upon the date mutually
agreed in writing between AmBev and InBev.
2.3
Sales
Outside the Territory
With
the
exception of any collaboration
agreed to in writing between AmBev and InBev in the markets outside the AmBev
Territory, AmBev or its Affiliates will not, subject to applicable
law:
(a)
directly
or indirectly engage in sales or otherwise dispose of the InBev Products
outside
of the AmBev Territory;
(b)
establish
any branch or maintain any distribution depot for the sale of the InBev Products
outside the AmBev Territory; or
(c)
sell,
distribute or resell the InBev Products to a purchaser located in the AmBev
Territory if AmBev knows or reasonably should know that such purchaser intends
to directly or indirectly sell, distribute or resell the InBev Products outside
the AmBev Territory.
With
the
exception of any collaboration agreed to in writing between AmBev and InBev
in
the markets outside the InBev Territory, InBev or its Affiliates will not,
subject to applicable law:
(a)
directly
or indirectly engage in sales or otherwise dispose of the AmBev Products
outside
of the InBev Territory;
(b)
establish
any branch or maintain any distribution depot for the sale of the AmBev Products
outside the InBev Territory; or
(c)
sell,
distribute or resell the AmBev Products to a purchaser located in the InBev
Territory if InBev knows or reasonably should know that such purchaser intends
to directly or indirectly sell, distribute or resell the AmBev Products outside
the InBev Territory.
2.4
Non
Compete
(a)
During
the term of this License Agreement, AmBev shall not, on its own behalf or
in
combination with others or through any Affiliate, produce, package, market,
distribute, sell or resell (or have any interest in the production, packaging,
bottling, marketing, distribution, sale or resale of) any other competing
beer
(“competing beer”, as used herein, means European premium branded beer) in the
AmBev Territory, except for products owned by AmBev, brewing and/or packing
of
Third Party Products and distribution of Third Party Products that AmBev
or any
of its Affiliates distributes in its own distribution centers. During the
term
of this License Agreement, InBev shall not, on its own behalf or in combination
with others or through any Affiliate, produce, package, market, distribute,
sell
or resell (or have any interest in the production, packaging, bottling,
marketing, distribution, sale or resale of) any other competing beer (“competing
beer”, as used herein, means Latin American premium branded beer) in the InBev
Territory, except for products owned by InBev, brewing and/or packing of
Third
Party Products and distribution of Third Party Products that InBev or any
of its
Affiliates distributes in its own distribution centers.
(b)
During
the term of this License Agreement, in addition to its other covenants set
forth
herein, and subject to applicable law, AmBev or its Affiliates, (i) shall
not,
directly or indirectly, distribute, import, produce or sell any Beer in the
InBev Territory (other than the AmBev Products as contemplated by this License
Agreement or any Beer that AmBev or its Affiliates have a contractual obligation
to sell in the InBev Territory as at the date of this License Agreement),
and
(ii) shall not, directly or indirectly, sell, distribute or resell any Beer
to
any purchaser (except to InBev or its Affiliates)
that AmBev knows or reasonably should know intends to directly or indirectly
sell, distribute or resell such Beer in the InBev Territory. During the term
of
this License Agreement, in addition to its other covenants set forth herein,
and
subject to applicable competition law InBev or its Affiliates, (i) shall
not,
directly or indirectly, distribute, import, produce or sell any Beer in the
AmBev Territory (other than the InBev Products as contemplated by this License
Agreement or any Beer that InBev or its Affiliates have a contractual obligation
to sell in the
AmBev
Territory as at the date of this License Agreement), and (ii) shall not,
directly or indirectly, sell, distribute or resell any Beer to any purchaser
(except to AmBev or its Affiliates) that InBev knows or reasonably should
know
intends to directly or indirectly sell, distribute or resell such Beer in
the
AmBev Territory.
2.5
Termination of Existing Agreements
Notwithstanding
anything to contrary contained herein, each of AmBev and InBev shall use
its
reasonable efforts to terminate any existing agreements with third parties
that
are specified as exceptions to the respective obligations of AmBev and InBev
set
forth in Section 2.1 or Section 2.4 at the earliest possible date permitted
by
such agreements or, if such agreements have an indefinite term, as soon as
reasonably practicable.
2.6
Affiliates of the Parties
It
is
understood and agreed that, notwithstanding any provision of this License
Agreement to the contrary, all Intellectual Property Rights licensed by Licensor
hereunder are owned by Licensor and/or its Affiliates and the rights and
obligations of Licensor arising under this License Agreement may be carried
out
directly by Licensor or indirectly through such Affiliates. Further, it is
understood and agreed that, notwithstanding any provision of this License
Agreement to the contrary, the rights and obligations of Licensee hereunder
may
be carried out directly by Licensee or indirectly through its Affiliates.
Each
Party agrees to cause such Affiliates to comply with all obligations of such
Party hereunder (whether as Licensor or Licensee) to the extent applicable
to
such Affiliate. In addition, unless the context otherwise requires, any
reference in this LicenseAgreement
to a Party shall be deemed to include such Party and its Affiliates; provided
that each Party shall at all times and in all circumstances remain responsible
for the performance of its obligations hereunder.
3. BREWING
AND PACKAGING
3.1
General
Licensee
shall brew and package all Licensed Products in conformity with the Licensor
Recipes and shall have the right to use the Licensor Recipes only to produce
and
package the Licensed Products pursuant to
the terms
of
this License Agreement. No other right or
benefit to use the Licensor
Recipes is hereby granted or intended, either directly or by implication,
and no
other right or
benefit will be granted to Licensee except as herein provided (or otherwise
agreed to by Licensor
in
writing).
Licensor
is entitled to modify in its
absolute discretion and at any time during the term of this License Agreement
any of the Licensor Recipes. Licensor shall consult with Licensee of any
proposed modification at least three (3) months prior to the date on which
the
modification becomes effective. If the implementation of such modification
requires any out-of-pocket expenditures
by Licensee, then Licensee shall bear any such expenditure as reasonably
required by
Licensor.
During
the term of this License Agreement, in addition to its other covenants set
forth
herein, Licensor shall:
(a)
conduct
Licensor’s business in a manner that will reflect favorably upon the Licensed
Products so
as to
preserve the goodwill of retailers and consumer acceptance of the Licensed
Products in the Territory;
(b)
not
deliver to Licensee any yeast or Imported Products the expiration date of
which
would prevent Licensee from producing and selling Products in a reasonable
time
frame. If Licensor delivers to Licensee any yeast or Imported Product the
expiration date of which would prevent Licensee from producing and selling
Products in a reasonable time frame, Licensor shall, at Licensee’s option,
either (i) replace such products with equivalent products which comply with
the
terms of this Section and reimburse Licensee any costs incurred in connection
with the replaced yeast and/or Imported Product or (ii) refund any amount
paid
by Licensee hereunder for such yeast and/or Imported Products, and Licensee’s
costs related to such products, including the costs of destroying such yeast
and/or Imported Products, within thirty (30) days of Licensor’s
receipt
of an invoice therefor, and
(c)
obtain
such approvals, licenses and permits as it may require from time to time
under
the laws and regulations of country of origin of the Imported Products and/or
yeast in connection with the production, exportation, distribution, marketing
and sale of the Imported Products and delivery of yeast.
3.2
Approved brewery
With
respect to each brewery at which Licensed Products are to be brewed, Licensee
(after consultation with and inspection by Licensor) will conduct or cause
to be
conducted commercial scale brew tests of
the
particular Licensed Products produced at the brewery. Prior to the commencement
of the commercial brewing of the Licensed Products at a brewery, Licensee
will
obtain Licensor’s written approval of the brewery and Licensed Products produced
at such brewery, which approval shall not be unreasonably withheld. In
connection with its exercise of itsapproval
right, Licensor may require, as a condition of the approval, modifications
to
the brewery at which Licensed Products are to be brewed and to related storage
facilities, provided that such modifications are indispensable to the
maintenance of the quality standards of the Licensed Products. Licensee shall
bear all reasonable out-of-pocket expenditures, if any, relating to the
implementation of such modification.
3.3
Technical reports and samples
Every
month during the term of this License Agreement, Licensee, at Licensee’s
expense, shall deliver to Licensor product samples of recently produced Licensed
Products from each brewery at which they are produced by or on behalf of
Licensee, and supply to Licensor monthly quality control reports relating
to the
Licensed Products, both in a form reasonably acceptable to
Licensor.
3.4
Supply of yeast
3.4.1
Licensee shall
in
the production
of the Licensed Products only use yeast supplied by Licensor or such other
Person as Licensor may, from time to time, direct and approve in writing,
provided that in the event of any failure to supply sufficient quantities
of
yeast Licensee may use yeast from alternative sources approved by
Licensor, such approval not to be unreasonably withheld or delayed, provided
that Licensor shall reimburse Licensee for the expenses of obtaining yeast
from
such alternative sources. All yeast cultures and yeast propagated from
Licensor’s strain shall remain the property of Licensor.
3.4.2
Licensor shall produce and deliver yeast to Licensee within thirty (30) days
of
Licensor’s receipt of an order from Licensee. Licensee may require a reasonable
quantity of yeast for the correct
propagation and the subsequent production of
Licensed
Products. The yeast shall be of such
nature and quality as may be necessary to enable Licensee to produce Licensed
Products in accordance with the Recipes and other specifications, instructions
and directions given by Licensor hereunder.
3.4.3
The
yeast shall be supplied by Licensor to Licensee free of charge.
Licensor shall arrange, at its
own
cost and risk, for the yeast to be transported
to a destination designated
by
Licensee
(which
shall
be
a port, terminal or other similar facility) and shall tender delivery to
Licensee
at
such
destination. Licensee agrees to furnish whatever facilities are required
in
order for Licensee to accept
delivery of the yeast at such destination. Licensee shall bear
all
costs and risks associated with
transporting the yeast following tender of delivery by Licensor in accordance
with the
previous sentence.
3.4.4
Licensee shall use yeast supplied by Licensor hereunder only for the purpose
of
the production by Licensee of Licensed Products in accordance with this License
Agreement and shall not use, sell or otherwise dispose of any yeast without
Licensor’s prior written approval.
3.4.5
Licensee shall promptly upon becoming aware that an unauthorized Person has
gained access to Licensor’s culture yeast or details pertaining thereto, provide
to Licensor notice thereof and any information and other assistance as
reasonably required by Licensor in order for Licensor to gain information
pertaining to such access.
3.5
Technical assistance.
3.5.1
Licensor shall disclose, to the extent not previously disclosed, as soon
as
practicable after the date hereof, to Licensee the Licensor Recipes to enable
Licensee to fulfill its obligations and exercise its rights under this License
Agreement.
Subsequent
to the execution of this License Agreement, to the extent that Licensor acquires
new information or knowledge that would fall within the definition of Licensor
Recipes and
would
be necessary
for Licensee to fulfill its obligations or exercise its rights under this
License Agreement, Licensor
shall promptly disclose such information to Licensee. Such information shall
automatically
fall under the definition of Licensor Recipes. Licensor shall not have
any
obligation to
obtain
patent protection on the Licensor Recipes
in the
Territory.
3.5.2
The
Licensor Recipes to be disclosed or made available by Licensor hereunder
shall
be delivered in English and shall be in accordance with technical standards
used
by Licensor at the time of preparation thereof.
3.5.3
In order
to
assist Licensee in understanding the Licensor Recipes disclosed or made
available
to
Licensee pursuant to this License Agreement and to assist Licensee in
the
production and packaging of Licensed Products, Licensor shall, upon the
reasonable written request of Licensee, provide technical assistance to
technically qualified personnel of Licensee. Licensor shall use its reasonable
best efforts to make available qualified Licensor personnel to provide the
technical services required by Licensee.
3.5.4
In
the event that Licensee requests that Licensor makes personnel available
to
provide technical assistance at the facilities of Licensee, such assistance
shall be provided by Licensor’s personnel under the following
conditions:
(a)
Licensee shall advise Licensor in writing (which may be via e-mail) a reasonable
period of time in
advance of the first day of the proposed period that technical assistance
is
required and
submit a
schedule
of the proposed subjects, estimated number of working days required and dates
of
technical assistance;
(b)
Licensor shall as soon as practicable advise Licensee whether Licensor can
furnish such technical assistance consistent with the proposed schedule and,
if
not, shall propose a reasonable alternative arrangement or
schedule;
(c)
at
Licensee’s cost and expense, Licensee shall receive and make necessary
arrangements for Licensor’s personnel to be sent to Licensee’s
facilities;
(d)
Licensor’s
personnel sent to Licensee’s facilities to provide technical assistance shall
not be considered for any purpose to be employees, agents or representatives
of
Licensee, nor shall they assume any responsibility for Licensee’s production,
packaging, distribution, marketing, sale or resale of Licensed Products;
and
(e)
Licensor’s
personnel sent to Licensee’s facilities to provide technical assistance shall
work in accordance with Licensee’s internal service regulations.
3.5.5
Licensor warrants that Licensor’s personnel assigned to provide technical
assistance shall be qualified to provide such assistance in accordance with
good
professional practice, and that such personnel
shall use their reasonable best efforts to provide such assistance. No other
warranty with
respect
to technical assistance is or shall be deemed given by Licensor.
3.5.6
In
order to assist Licensee in understanding Licensor Recipes and to assist
Licensee in the production and packaging of the Licensed Products, Licensor
shall, upon the reasonable written request of Licensee, provide to Licensee
technical assistance to Licensee in the form of written answers to questions
from Licensee.
3.5.7
Licensor will be available at reasonable times (during Licensor’s normal
business hours and upon reasonable prior notice) to consult with Licensee
(by
e-mail or otherwise) regarding Licensor Recipes.
4.
CONTAINERS/LABELLING
4.1
Licensee shall only sell the Licensed Products in bottles, cans, kegs or
other
containers of such size, shape, type and with such labels or other packaging
material as shall have been previously approved by Licensor and that Licensee
confirms to be in compliance with the legal requirements of each country
within
the Territory where the Licensed Products will be marketed.
4.2
Licensee shall place on each package and label for Licensed Products which
it
produces or has produced a notation which states “Produced under license and
supervision of [name of Licensor]”, or another similar statement acceptable to
Licensor, in such languages as required by law or as mutually agreed by the
Parties.
5.
QUALITY
CONTROL -INSPECTION
5.1
Licensee shall ensure that a system of quality control
of a standard approved in writing by Licensor (such approval not to be
unreasonably withheld) be maintained in respect of the production, packaging
and
storing of the Products.
5.2
Once
per year, upon thirty (30) days prior notice to Licensee, Licensor and its
representatives may (i) visit and inspect any of the properties or facilities
of
Licensee at which Products or related promotional items are produced, processed,
packaged or stored by or for Licensee, (ii) inspect the brewing facilities,
brewing procedures, brewing laboratories, packaging and storage and quality
control procedures relating to the Products, and (iii) examine all their
books
of accounts and financial records, reports and other relevant papers which
are
related to the production, importation, packaging, distribution, marketing,
sale
or resale of the Products or otherwise related to this License Agreement.
At any
time during the term of this License Agreement, upon prior notice to Licensee,
Licensor and its representatives may discuss their affairs, finances and
accounts which are primarily related to the production, importation, packaging,
distribution, marketing, sale or resale of the Products or otherwise related
to
this License Agreement, with their officers, managers and independent
accountants; provided that the officers, managers and independent accountants
shall not be obligated to discuss any matter with respect to this License
Agreement that is being disputed by a Party. Licensee will fully cooperate
with
Licensor with respect to such inspection, examination or discussion, and
will
keep Licensor advised of each location at which the activities related to
the
production, importation, packaging, distribution, marketing, sale or resale
of
the Products or otherwise related to this License Agreement, are taking place.
The obligations under this Section 5 shall survive one (1) year after the
termination of this License Agreement.
6.
WAREHOUSING
AND STORAGE
6.1
Licensor shall provide Licensee with freshness, shelf life
and
storage guidelines as well as other
information useful in monitoring and maintaining the quality of the
Products.
6.2
Licensee shall:
(a)
maintain, or cause others to maintain at all times, in warehouses that are
suitable for such purposes, an inventory of Products which it reasonably
believes to be sufficient to meet anticipated demand;
(b)
adhere to all reasonable conditions that may be prescribed by Licensor, in
relation to storage of
Products
to ensure that at all times the quality of such products is maintained,
including:
(i)
ensuring
that Products that exceed the expiration date are not sold;
(ii)
ensuring
that all Products that it produces or has produced are coded with an appropriate
expiration date, such date to be based on the conclusion of an appropriate
period between production and expiration of the Licensed Products, such period
to be agreed upon between Licensor and Licensee promptly after the date of
execution of this License Agreement; and
(iii)
destroying
or causing to be destroyed at its own cost and expense any stock of Products
in
its
possession, or the possession of wholesalers or retailers, that has passed
the
expiration
date
(other than due to a breach of Section 3.1(b)) or that has been damaged or
become unmarketable; unless such Product has become damaged or unmarketable
or
passed the expiration date due to (i) the quality problems in connection
with
the production of the Product by Licensor or (ii) the failure of merchandising
such Product if merchandising is not the responsibility of
Licensee.
7.
DISTRIBUTION,
SALE, MARKETING AND ADVERTISING OF THE PRODUCT
7.1
General
7.1.1
Licensee agrees that one of its essential responsibilities is to use its
reasonable best efforts to market and promote the Product in accordance with
business and marketing plans established in accordance with the provisions
of
this Section 7 (each, a “Business
and Marketing Plan”)
with a
view to developing and maximizing the sales of the Product.
7.1.2
Licensee shall maintain an appropriate sales and delivery force and a proper
system for recording orders, deliveries and other pertinent information
customary in the marketing, distribution and sale of like products in the
Territory.
7.2
Business and Marketing Plan
7.2.1
Licensee agrees that the Business and Marketing Plan is an important tool
to
identify, in consultation with Licensor, market developments, competitive
challenges and opportunities within the
Territory and to efficiently approach the same on an as-needed basis by setting
forth appropriate
strategies and marketing priorities, taking into account the specific
characteristics of the Products and their respective marketing positions
in the
Territory.
7.2.2
Licensee shall use its reasonable best efforts to comply with all actions,
objectives, goals and/or targets set forth in each Business and Marketing
Plan.
7.2.3
For
each Budget Year, a Business and Marketing Plan shall be established pursuant
to
the following rules:
(a)
The
Business and Marketing Plans for each of AmBev and InBev as Licensors for
the
first Budget Year (each, a “First
Business and Marketing Plan”)
shall
be agreed by the Parties within ninety (90) business days from the date of
this
License Agreement and shall be attached hereto as Annexes
B-1
and
B-2,
respectively;
(b)
For
any
subsequent Budget Year, Licensee shall prepare and deliver to Licensor not
later
than the 1st of November of the then-applicable Budget Year a written business
and marketing
plan for
the
next
Budget Year (the “Draft Business and Marketing Plan”), in the same format as the
First Business and Marketing Plan. Licensee will consult Licensor in preparing
and developing the Draft Business and Marketing Plan and will consider in
good
faith all comments made by Licensor;
(c)
Other
than with respect to minimum marketing expenditures and minimum sales volumes,
as established in the First Business and Marketing Plan or as previously
agreed
by the Parties for the sixth to tenth Budget Years, (in relation to which
any
deviation shall require the prior approval of the Licensor), the Draft Business
and Marketing Plan will, upon notice to that effect from Licensee to Licensor,
become the effective Business and Marketing Plan for the relevant Budget
Year.
7.3
Promotion and Marketing—Development of Advertising and Promotional
Material
7.3.1
Licensee shall actively promote the Product within the Territory in line
with
the Business and Marketing Plan. Licensee shall develop general marketing
and
advertising concepts for the
Products
in the Territory based on the agreed strategic positioning for the brands,
as
specified in the First Business and Marketing Plans.
7.3.2
Licensee shall use (whether by way of labeling, packaging, product
ornamentation, advertising, promotional item or otherwise) the Marks only
in
contexts, locations, forms, styles and colors prescribed or previously approved
by Licensor. Licensor may exercise this approval power on an item-by-item
basis
and/or by approving pre-established formats. Before Licensee uses the Marks
in
contexts, locations, forms, styles or colors that have not been approved
by
Licensor, it shall submit a sample thereof to Licensor for written approval.
Upon such approval being given, or upon expiration of a thirty (30) day period
without a response or request for additional information from Licensor, Licensee
may use such Marks in such contexts, locations, forms, styles or colors (subject
to the other limitations of this License Agreement). Licensor may, from time
to
time, prescribe changes in formats of usage of the Marks for the Territory,
and
Licensee shall promptly comply with any such changes, and shall bear all
reasonable expenses in order to comply with such changes. Any such changes
requested by Licensee shall be subject to Licensor’s approval, and the cost
thereof shall be borne exclusively by Licensee.
7.3.3
During the term of this License Agreement, at intervals that Licensor may
reasonably specify,
Licensee
shall provide Licensor with additional representative samples of labels,
containers, packaging,
promotional items, promotional literature and product ornamentation bearing
the
Marks.
7.3.4
All
labels, containers, packaging and materials bearing a Mark shall be of a
uniform
quality at
least
equivalent in all respects to the quality of items approved by
Licensor.
7.3.5
Any
approval granted by Licensor pursuant to this Section 73
can
under no circumstances be construed as a release of Licensee from its
obligations under this Section 7.3 and/or under Section 11 with respect to
the
use of the Marks.
7.3.6
The
advertising agency to be used for the advertising of the Product will be
the
advertising agency chosen by Licensee, unless otherwise
required
by Licensor.
7.3.7
Licensee shall reasonably provide Licensor with a copy of all briefings,
scripts
and storyboards with regard to “above the line” advertising and shall
incorporate all comments made by
Licensor
prior to final execution and in due time to be
able
to
intervene in the production process.
7.3.8
Licensor will advise Licensee of all relevant market advertising concepts
developed for the Products internationally and Licensee shall take them into
account in subsequent advertising campaigns.
7.3.9
Licensor will make available for Licensee’s use in the Territory advertising TV
programs developed for the Products in other markets, at normal talent and
usage
fees and other unavoidable additional costs and expenses of Licensor. Licensee
agrees to pay for local adaptations of international campaigns and third
parties
fees.
7.4
Brand
positioning
7.4.1
Licensee shall, unless otherwise agreed in writing by Licensor, position
the
Products in the Territory as Products of the highest reputation and quality,
sold in the skus to be approved by Licensor in accordance with the brand
positioning as set out in the Business and Marketing Plan. Notwithstanding
the
provisions of Section 7.2.3(c), all modifications to this positioning shall
require prior written approval of Licensor. Notwithstanding the provisions
of
Section 7.2.3(c), Licensor shall in its sole discretion, followed by reasonable
consultation with Licensee, be entitled to amend the positioning of the Products
by giving Licensee a written notice to this effect, four (4) months in
advance.
7.4.2
Licensee hereby acknowledges
that the success of the Products is dependent upon, among several other factors,
their positioning as first-rate quality Beers and positioning as set out
in the
Business and Marketing Plan and Licensee shall use its reasonable best efforts
to maintain the pricing of the Products to its customers at a price which
is
consistent with the competitive positioning of the Product in the corresponding
segment for Beer in the Territory.
7.5
Reports/meetings
7.5.1
Within three (3) weeks of each consecutive calendar quarter during the term
of
this License Agreement, Licensee shall deliver to Licensor:
(a)
a
sales
report regarding the previous quarter, indicating volume by sku, configuration
and sales channel,
as well
as a
summary
of key figures, trends and activities of Competitors, according to
the
format
provided by Licensor;
(b)
a
report
on the market conditions, including information on commercial conditions,
reports on Competitors, and changes in the market that are in the public
domain;
(c)
a
report
regarding the quarterly marketing expenses of Licensee; and
(d)
a
report
regarding the level of stock of the Products in Licensee’s and its Affiliates’
warehouse(s).
7.5.2
Licensor and Licensee shall organize bi-annual reviews, to be attended by
appropriate representatives
from both Licensor and Licensee. During such reviews, any of the
above-referenced
information shall be discussed, together with Licensee’s promotional and
marketing strategies for the sale of the Products, and Licensor and Licensee
shall also review the implementation by Licensee of the Business and Marketing
Plan during the previous period and assess the financial performance in relation
to the Products by Licensee and assess completion by Licensee of the Business
and Marketing Plan during the previous period. Licensee shall consider in
good
faith the comments and recommendations of Licensor in relation
hereto.
7.5.3
Licensee shall respond as soon as practicable and in good faith to all requests
by Licensor for
all
information required under this License Agreement and such additional
information relating to the Products as shall be reasonably requested by
Licensor.
7.5.4
Licensee acknowledges that Licensor shall rely upon all financial, sales,
statistical and other information provided by Licensee to Licensor hereunder.
Licensee represents and warrants that all such information provided to Licensor
shall be true, complete and accurate in all material respects as at the date
of
its communication.
7.6
Draught requirements
7.6.1
In
the event Licensor agrees that Licensee can sell the Product in kegs, Licensee
must adhere to the following conditions to safeguard the quality of Products
served on draught:
(a)
Licensor
must approve the type of outlets proposed by Licensee where the Products
can be
sold on draught;
(b)
Licensee
shall ensure that its own outlets and any other outlets where the Products
will
be sold are and will conform in all material respects to the type of outlet
that
has been approved;
(c)
Licensee
shall ensure that those outlets adhere in all material respects to the
specifications of Licensor in respect of draught installations; and
(d)
Licensee
shall ensure that those outlets respect the maintenance and cleaning program
of
Licensor.
7.6.2
In
order to verify whether the foregoing conditions are being satisfied, Licensee
shall permit previously planned inspections by the Licensor’s
authorized representatives of the draught installations in the outlets where
the
Products are sold.
7.6.3
To
this end, Licensee shall, at Licensor’s request, provide Licensor with a list of
all the outlets where the Products are sold on draught, to the extent that
this
is available and necessary for any previously planned inspection.
7.6.4
In
the reports described in Section 7.5.1, Licensee shall include an update
of the
number of outlets selling the Products on draught; a report regarding the
draught machines installed or dismantled during the previous quarter, according
to the format provided by Licensor; a report regarding the level of stock
of the
empty kegs in Licensee’s and its Affiliates’ warehouse(s); and a report on the
delivered/returned kegs and pallets.
8.
INSURANCE
Throughout
the term of this License Agreement, Licensee shall obtain and maintain insurance
covering its activities hereunder (including, without limitation, insurance
for
product liability) from a company reasonably acceptable to
Licensor.
9.
QUALITY
PROBLEM - COMPLAINTS - PRODUCT RECALL
9.1
Quality problem
Licensee
shall, upon the occurrence of any quality problem, (i) promptly notify Licensor
and provide full details pertaining to such event, and provide information
and
other assistance as may reasonably required by Licensor in
order
to gain information pertaining to such problem and (ii) take prompt action
to
remedy such problem, including any action reasonably requested by Licensor,
with
the cost of any such remedy to be borne by the Party responsible for the
quality
problem.
9.2
Complaints - product recall
Licensee
shall (i) report to Licensor any non-routine or otherwise material
correspondence or communication received from (x) any applicable governmental
agency, board or official concerning
the Products (including any correspondence relating to the Marks, Intellectual
Property,
Licensor
Recipes, containers, packaging or product dress thereof), and (y) any Person
that pertain to any perceived inadequacy in the quality of the Products or
any
claim or threatened claim with respect
to the Products, including, without limitation, claims for product liability
or
infringement of
Intellectual Property that may result in legal actions against either Licensee
or Licensor, or adversely affect the reputation of Licensee or Licensor or
could
result in a disclosure of any product defects in the Products or the
implementation of any product recalls of the Products, and (ii) provide notice
thereof and any information and other assistance as reasonably required by
Licensor in order for Licensor to gain information pertaining
thereto.
10 CONFIDENTIAL
INFORMATION
10.1
All
Confidential Information shall remain the sole property of the Party disclosing
it. Neither Party shall obtain any intellectual property rights in, or have
the
right to use, except as stated herein, any such Confidential Information
disclosed to it by or on behalf of the other Party.
10.2
The
Parties shall ensure that no Confidential Information is used or disclosed
in
any way, except as permitted by Sections 10.4 and 10.5 hereof or as used
by the
Parties in the performance of their obligations under this License Agreement.
The
confidentiality obligations set forth in this Section 10 shall survive
termination of this License Agreement indefinitely.
10.3
Upon
termination of this License Agreement, each Party shall return to the other
Party all of the other Party’s Confidential Information, including all magnetic,
computer and other electronic data, photostatic or other copies, or other
derivatives thereof, disclosed pursuant to this License Agreement. All other
analyses, compilations and documents containing or reflecting such information
shall be destroyed, such destruction to be confirmed by each recipient Party
in
writing.
10.4
Neither Party, nor any of its Affiliates, directors, officers,
employees,
external
advisors or agents shall, without the prior written consent of the disclosing
Party, disclose to any third party, directly or indirectly, any Confidential
Information or any of the terms, conditions or other facts contained in this
License Agreement or with respect to Products or Licensor Recipes, except
as
contemplated by Section 10.5 of this License Agreement or to: (i) its directors,
officers and employees
on a need to know basis; and (ii) its external advisors or agents on a need
to
know basis;
provided
that the recipient Party shall require such directors, officers, employees,
advisors or agents to maintain the confidentiality of the Confidential
Information.
10.5
In the
event
that a recipient Party is compelled, requested or required (by legal,
administrative
or
similar process, including but not limited to oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to disclose to any third party
any of the Confidential Information that it has received from the other Party,
the recipient Party shall provide the disclosing Party with prompt written
notice of any
such
request or requirement so that the disclosing Party may seek a protective
order
or other appropriate remedy and/or waive compliance with the provisions of
this
License Agreement. If in the absence of a protective order or other remedy
or
the receipt from the disclosing Party of a waiver, the recipient Party is
nonetheless legally compelled, as evidenced by receipt by the disclosing
Party
of a written opinion of legal counsel reasonably acceptable to the disclosing
Party, to so disclose Confidential Information (including to any tribunal
or
administrative
agency), the recipient Party may, without liability hereunder, so disclose
to
the third
party
(including a tribunal or administrative agency) only that portion of the
Confidential
Information
which such counsel advises is legally required to be disclosed, provided
that
the recipient Party exercises its reasonable efforts to preserve the
confidentiality of the Confidential Information, including, without limitation,
by cooperating with the disclosing Party to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Information (including by such tribunal or administrative
agency).
10.6
It
is understood and agreed that money damages would not be a sufficient remedy
for
any breach of the provisions of this Section 10 by any Party and that either
Party, subject to applicable law, shall be entitled to equitable relief
including but not limited to provisional or injunctive relief, and/or specific
performance as a remedy for any such breach. Such remedies shall not be deemed
to be the exclusive remedies for a breach by a Party, but shall be in addition
to all other remedies available at law to the aggrieved Party. The recipient
Party agrees not to oppose the granting of such equitable relief on the ground
that an adequate remedy does not exist in law, and to waive, and to use its
reasonable efforts to cause its directors, officers, employees and
representatives to waive, any requirement for the securing or posting of
any
bond in connection with such remedy. In the event of litigation relating
to this
Section 10, if the recipient Party has breached a provision of this Section
10,
then the recipient Party shall be liable and shall pay to the disclosing
Party
the reasonable legal fees and
any
other
expenses that the disclosing Party has incurred in connection with such
litigation, including any appeal therefrom.
10.7
Licensee shall, upon becoming aware that any of Licensor’s Confidential
Information or details pertaining thereto have inadvertently or otherwise
been
disclosed to or obtained by or are being used by any unauthorized third party,
provide notice thereof and any information and other assistance as reasonably
required by Licensor in order for Licensor to gain information pertaining
to
such use.
11.
LICENSOR’S
MARKS LICENSED TO LICENSEE
11.1
Licensee shall have the right to use the Marks or variations thereon or related
Intellectual Property solely pursuant to this License Agreement and all such
rights shall terminate upon termination of this License Agreement. Licensee
shall have no right to use any of the Marks or variations thereon or related
Intellectual Property for any purpose other than as product trademarks for
Products and on related advertising and promotional material expressly approved
by Licensor. In particular, Licensee shall have no right to use any of the
Marks
or variations thereon or related Intellectual Property as a trade name, as
the
name of any corporate or business entity, as a domain name or as part of
a phone
number using alpha numeric designations. Nothing in this License Agreement
shall
confer, or be deemed to confer, any rights in the Marks or variations thereon
or
any marks confusingly similar thereto or any Intellectual Property to Licensee
other than as set forth in the License Agreement.
11.2
Licensee shall not:
(a)
use
or
authorize the use of the Marks or variations thereon or any marks confusingly
similar thereto or any Intellectual Property in connection with the production,
packaging, distribution, marketing, sale or resale of Products produced by
or
for Licensee that does not meet the requirements of this License
Agreement;
(b)
use
or
authorize the use of any of the Marks or variations thereon or any marks
confusingly similar thereto or any Intellectual Property in connection with
the
production, packaging, distribution, marketing, sale or resale of any Products,
or service, except as expressly permitted under this License
Agreement;
(c)
use
or authorize the use of any of the Marks or variations thereon or any marks
confusingly similar thereto or any Intellectual Property for any purpose
other
than as expressly provided for in this License Agreement and
(d)
use
or authorize the use of any of the Marks or variations thereon or any marks
confusingly similar thereto or any Intellectual Property following the
termination of this License Agreement.
11.3
Any
registration of the Marks shall be made in the name and at the cost of Licensor
as the sole owner of such Marks and shall remain the property of
Licensor.
11.4
Licensor shall take all such actions in such manner as it may determine is
appropriate in registering, obtaining, maintaining and enforcing its rights
and/or its Affiliates’ rights to the Marks both inside and outside of the
Territory;
11.5
Licensor shall maintain the Marks in full force and effect during the term
of
this License Agreement and not take any action with respect to the Marks
that
would materially and adversely affect Licensee’s rights under this License
Agreement, without in each case obtaining the express written consent of
Licensee, which consent shall not be unreasonably withheld.
11.6
Licensee shall reasonably cooperate with Licensor, at Licensor’s cost and
expense, in connection with the registration or obtaining, maintenance and
enforcement of Licensor’s rights in any of the Marks in the
Territory.
11.7
Licensee shall provide notice to Licensor as soon as Licensee has knowledge
of
any improper or wrongful use in the Territory by third parties of the Marks
or
variations thereon, marks confusingly similar to the Marks or related
Intellectual Property and provide such information and other assistance as
reasonably required by Licensor in order for Licensor to gain information
pertaining to such use. Licensee shall not take any action with respect to
the
Marks that would materially and adversely affect Licensor’s rights, without
obtaining the express written consent of Licensor, which consent shall not
be
unreasonably withheld.
11.8
Additionally, Licensee agrees that:
(a)
The
Marks and the respective goodwill and Intellectual Property are the sole
property of Licensor in the Territory and elsewhere;
(b)
Licensee acknowledges the validity and enforceability of the Marks and the
sole
and exclusive ownership of those Marks and other related Intellectual Property
by Licensor. Licensee agrees that it shall not, at any time during the term
of
this License Agreement or thereafter, challenge said validity or enforceability
of the Marks or other related Intellectual Property for any reason or Licensor’s
sole and exclusive ownership thereof. Licensee agrees that, in addition to
the
Marks, Licensor shall be the exclusive owner of any and all copyright rights
and
other intellectual property rights pertaining to the Products, including
but not
limited to all copyright rights and other intellectual property rights in
any
packaging, labeling and ornamentation for the Products and any related
promotional merchandising and advertising activities, plans and materials
including any marketing plans. Licensee has no right to use this Intellectual
Property except in connection with the performance of its duties in connection
with the production, distribution, packaging, sale and advertising of the
Products. To the extent necessary, Licensee agrees to assign, at Licensee’s cost
and expense, any rights it might otherwise claim for any particular type
of
Intellectual Property to Licensor upon request and further agrees that it
shall
obtain, at Licensee’s cost and expense, assignments of all such rights from any
third party consultants working on its behalf in connection with the preparation
of any particular Intellectual Property. Licensee will not, by virtue of
any of
its activities hereunder, obtain any ownership interest in or title to the
Marks
or any variations thereon,
including
variations not permitted by this License Agreement, any marks that are
confusingly similar thereto or any Intellectual Property, or in any registration
thereof and any uses of such Marks or any variations thereon, including
variations not permitted by this License Agreement, any marks that are
confusingly similar thereto or any Intellectual Property shall inure only
to the
benefit of Licensor. If by operation of law or otherwise Licensee shall obtain
any ownership interest in or to the Marks or any variations thereon, including
variations not permitted by this License Agreement, any marks that are
confusingly similar thereto or any Intellectual Property, upon written request
by and the expense of Licensor, or its designee, Licensee shall promptly
assign
such ownership interest in the Marks or any variations thereon, including
variations not permitted by this License Agreement, any marks that are
confusingly similar thereto or any Intellectual Property, to Licensor (or
if
Licensor so requests, grant a perpetual, royalty-free license to Licensor
to use
the Marks or any variations thereon, including variations not permitted by
this
License Agreement, any marks that are confusingly similar thereto or any
Intellectual Property) without any charge. Each Party agrees to sign all
agreements (and cancellation agreements) that the other Party may reasonably
require relating to the Licensed Products in the Territory, provided that
the
terms of such agreement shall be consistent with the terms of, and shall
not
affect Licensee’s rights under, this License Agreement;
(c)
Licensee
shall have no right to take or require any action with respect to registering
or
otherwise obtaining, maintaining or enforcing rights in and to the Marks,
including, without limitation, any action with respect to the registration
of
any Mark or variation thereon as a trademark, service mark, trade name, business
name or internet domain name in any national, state or local registry
established for the purpose of recording the same, but shall reasonably
cooperate (at Licensor’s sole cost and expense) in any such actions as requested
by Licensor or its designee; and
(d)
Except
as
permitted herein, during the term of this License Agreement and thereafter,
Licensee will not use or attempt to register (i) any mark confusingly similar
to
the Marks, or (ii) any label, package or product ornamentation confusingly
similar to those used in connection with the Products, for any type of
product.
12.
IMPORT
12.1
Unless Licensor approves local production of the Products in a certain country
within the Territory that is included in the Business and Marketing Plan,
Licensee shall import Imported Products into such country.
Licensor
or its Affiliates shall sell the Imported Products to Licensee or its Affiliates
nominated by
Licensee
in accordance with the principles of transfer pricing as set out in
Annex C.
Payment
for Imported Products shall be made within thirty (30) days from the date
the
respective invoice is issued by Licensor or its Affiliates, as the case may
be.
All
payments related to the Imported Products shall be made directly by the Person
importing such Imported Products, Licensee or an Affiliate nominated by
Licensee, as the case may be, to the Person exporting the Imported Products,
Licensor or an Affiliate of Licensor, as the case may be.
12.2
For
those countries in the Territory where local production has been approved,
Licensee undertakes to use its reasonable best efforts to ensure that there
will
be sufficient brewing capacity and stock capacity on the sites of the approved
breweries specified in Section 3.2 to fulfil its obligations under this License
Agreement including, without limitation, sufficient capacity to fully supply
all
demand for the Product within the Territory based upon each Business and
Marketing Plan.
If
for
any reason (including but not limited to Force Majeure) to be approved by
Licensor, Licensor
or
Licensee reasonably believes there is a risk that the volume of the Licensed
Products in the Territory will be inadequate to meet the demand in the
Territory, then Licensee or its Affiliates shall purchase and import the
Imported Product subject to the capability of Licensor to meet the demand
at the
price determined in accordance with the principles of transfer price as set
out
in Annex
C.
12.3
Licensee undertakes that it will use reasonable efforts to obtain any and
all
necessary governmental, municipal and corporate permits and licenses for
the
importation of the Imported Product.
12.4
Licensee shall not stop local production of Licensed Products in a certain
country within the Territory without the prior written approval of
Licensor.
13.
ROYALTIES
13.1
Subject to Section 13.4, Licensee hereby agrees to pay to Licensor a royalty
of
7% per calendar quarter of Net Sales. The Parties may agree that royalties
be
applied against an agreed upon threshold, which may be modified from time
to
time at the beginning of each quarter in relation to sales volumes and Marketing
Expenditures for the relevant year and in recognition of Licensee’s required
efforts to market and promote the Product in the Territory.
13.2
Royalty payments under Section 13.1 in respect of any calendar quarter shall
be
made on the last business day of the immediately succeeding month (each,
a
“royalty
payment date”).
13.3
For
the purposes of calculation of royalty payments, Net Sales shall be converted
from the applicable local currency into Euros at the average exchange rate
prevailing on the last day of the applicable calendar quarter. Licensee shall
make the royalty payments under this Section 13 in a currency designated
by
Licensor (such designation to be made at least five business days prior to
the
relevant royalty payment date). If the currency designated by Licensor is
different from Euros, then the amount of the royalty payment to be made by
Licensee shall be an amount in Euros converted by Licensee into Licensor’s
designated currency at an exchange rate prevailing on the second business
day
prior to the relevant royalty payment date). Payments under this Section
13
shall be made to the bank account designated in writing by Licensor (such
account information to be furnished to Licensee at least five business days
prior to the relevant royalty payment date), and each such payment shall
be
accompanied by a statement from Licensee giving explanatory details of sales
and
computation of royalties as may be reasonably requested by
Licensor.
13.4
Notwithstanding anything to the contrary herein, royalties shall correspond
to
(i) 0% for the first
Budget Year; (ii) 1.75% for the second Budget Year; (iii) 3.5% for the third
Budget Year; and
(iv)
5.25% for the fourth Budget Year.
13.5
Licensee shall maintain, retain and make available to Licensor, during the
entire term of this License Agreement and for two (2) years thereafter, books,
accounts and records of and relating to royalties paid and due to
Licensor.
13.6
All
royalty payments to be made hereunder by Licensee to Licensor shall be without
deduction of any kind whatsoever, including, but not limited to, taxes, fees,
registration or recording taxes, stamp charges, any other similar governmental
or quasi-governmental charge, or any setoffs
or counterclaims, except for any withholding tax imposed by any governmental
authority within the Territory, the amount of which shall be withheld by
Licensee and deducted from such royalty payment. If Licensee shall pay any
taxes
on behalf of Licensor, it shall obtain
official
tax receipts evidencing such payment and deliver such receipts to Licensor
within thirty days after such receipts are made available to
Licensee.
13.7
If
payments due hereunder are (i) payable prior to the receipt of any required
government approval, in Licensee’s country, (ii) the payment thereof by Licensee
would violate any applicable laws or regulations or order of any competent
authority in Licensee’s country, or (iii) if such laws and
regulations
or competent authority shall impose an unreasonable burden upon any such
remittance, then Licensor may opt to instruct Licensee to deposit the due
amounts into an escrow account at a bank selected by Licensor for the benefit
of
Licensor until such government approval is obtained, the remittance is permitted
or ceases to be unreasonably burdensome. After Licensee has obtained all
government approvals, the permission is obtained or the unreasonable burden
is
removed, the total amount deposited by Licensee in such escrow account shall
be
converted into the currency designated by Licensor and immediately remitted
to
Licensor or its designee. In case the amount resulting from the conversion
of
the deposit into the currency designated by Licensor is less than the amount
Licensor would have received if the remuneration was remitted at the time
established herein, then Licensee shall remit, on the same day, in immediately
available funds, the amount corresponding to such difference.
Licensee
acknowledges that the deposit of the money into an escrow account according
to
the terms of this License Agreement does not represent payment to Licensor
and
shall not release Licensee from all its obligations under this License Agreement
(except to the extent any payments to be made hereunder would be illegal
or
unreasonably burdensome as provided above). The deposit is only intended
to
segregate the amounts due and payable for remittance to Licensor as provided
above.
14.
TERM
AND TERMINATION
14.1
Subject to Section 14.2, this License Agreement shall be effective from the
date
hereof, and shall remain in force for an initial term of ten (10)
years.
14.2
In
addition to any other rights or remedies the Parties may have under this
License
Agreement,
any
Party shall be entitled to terminate this License Agreement as set forth
below
upon thirty (30) days prior notice to the other Party in the event
that:
(a)
there
occurs a change of control of the other Party;
(b)
the
other
Party fails to achieve minimum Marketing Expenditures or minimum sales volumes
for two consecutive Budget Years;
(c)
the
other
Party fails to remedy any material breach by such Party (or any Affiliate
of
such Party) in the performance of the terms of this License Agreement within
one
hundred twenty (120) days from when it receives notification from the
non-breaching Party, giving full particulars of such breach and requiring
it to
be remedied, provided if such breach is not capable of being cured within
such
thirty (30) days and the breaching Party is diligently pursuing the cure
of such
breach, such thirty (30) day period shall be extended an additional thirty
(30)
days;
(d)
the
other
Party is adjudicated bankrupt or applies for suspension of payment of its
debts
or offers a settlement to its creditors pursuant to applicable law;
(e)
the
other
Party goes into liquidation or dissolution (except for the purpose of a merger
or reorganization wherein the company resulting from such merger or
reorganization effectively agrees to be bound by and assume all of the rights
and obligations of the merged or reorganized company under this License
Agreement);
(f)
the
other
Party ceases to carry on business; or
(g)
a
circumstance of Force Majeure causes the other Party to not operate for a
period
of three (3) consecutive months.
14.3
This
License Agreement will also terminate, without fault, in the event the Parties
fail to agree
on
minimum Marketing Expenditures and minimum sales volumes for (i) the First
Business and Marketing Plans within the period specified in Section
7.2.3(a); or (ii) the minimum Marketing
Expenditures and minimum
sales volumes for the sixth to tenth Budget Years by December 31,
2009.
15.
CONSEQUENCES
OF TERMINATION
15.1
If
Licensor so requests in writing within thirty (30) days of the termination
of
this License Agreement, Licensee will promptly sell and deliver to Licensor
(or
its designee), and Licensor will purchase (or cause to be purchased by its
designee) from Licensee the inventory of Products (or other products purchased
by Licensee) which is still in Licensee’s
possession on the date of such request and which Licensee has not yet sold
or
committed to a third party on the date of such request.
15.1.1
In
the case of yeast or any product (other than the Product) supplied free of
charge by Licensor to Licensee hereunder is still in Licensee’s possession on
the date of termination of this License Agreement, Licensee shall promptly
destroy such yeast/other product, unless otherwise requested by
Licensor.
15.2
The
purchase price for such products subject to Section 15.1 shall be the cost
to
Licensee of purchasing such products from Licensor, paid or incurred by Licensee
thereon. Licensor will only purchase such products that are of marketable
or
usable quality, excluding out-of-date products. If Licensor elects not to
purchase any Licensee inventory of Products, Licensee shall retain the
non-exclusive right to sell Products produced or imported, as the case may
be,
prior to the termination of this License Agreement in the Territory for a
period
of sixty (60) days following the date of termination of the License Agreement.
In lieu of payment or refund as hereinabove required, Licensor may, at its
election, credit the amount thereof to Licensee’s account to the extent of any
sums then owed to Licensor by Licensee.
15.3
Upon
termination of this License Agreement, all orders placed but for which delivery
has not been made shall be deemed cancelled.
15.4
In
addition to any other rights that a Party may have under this License Agreement,
in the event that a representation made by a Party is incorrect in any material
respect, or a Party fails to perform any material obligation or undertaking
required by this License Agreement or is responsible
for the event entitling the other Party to terminate this License Agreement,
except if such failure is caused solely by a Force Majeure event as set forth
in
Section 16 and subject to the provisions of Section 14.2, the other Party
shall
be entitled to damages and whatever other remedies are available under
applicable law or equity.
15.5
If
Licensor terminates this License Agreement pursuant to Section 14, it may
immediately terminate
Licensee’s right to produce
Licensed
Products by giving notice to such effect to Licensee.
Promptly after such termination, Licensee shall destroy the culture yeast
purchased from Licensor
hereunder, and not use or make any reference to the Marks or variations thereon
or marks
confusingly similar thereto or any Intellectual Property, nor
use
any label,
package, promotional item,
or
product ornamentation with respect to the sale of any product of any kind
whatsoever that
is
confusingly similar to those used in connection with the Products, except
as
otherwise provided in Section 15.2. Upon termination of this License Agreement,
(i) all rights granted to Licensee to use the Marks or variations thereon
and
other related Intellectual Property shall terminate immediately (except such
rights to exhaust existing inventory during a 60-day period as set forth
in
Section 15.2) and Licensee agrees that it shall make no further use of the
Marks
or variations thereon or any other confusingly similar Marks and said
Intellectual Property (except to exhaust existing inventory during a 60-day
period as set forth in Section 15.2); (ii) Licensee shall return to Licensor,
at
Licensor’s cost and expense, Licensor Recipes, as well as all unused labeling,
packaging, product ornamentation, advertising, promotional items and the
like
bearing any of the Marks or variations thereon and Intellectual Property;
and
(iii) Licensee shall take action reasonably requested by Licensor, at Licensor’s
cost and expense, to confirm that all rights to use the Marks and Intellectual
Property have reverted to Licensor, including, where appropriate, the execution
of such assignments and confirmatory documents as may be reasonably requested
by
Licensor. Each Party shall also return to the other Party all Confidential
Information as required hereunder, and not thereafter use any Confidential
Information of the other Party. Licensor shall be entitled to take all steps
necessary for the removal of the name of Licensee as an authorized user of
the
Marks from all governmental registries, if applicable, without opposition
or
hindrance from Licensee, and Licensee shall cooperate by signing all
documentation reasonably required by Licensor to effect this
result.
15.6
Upon
termination of this License Agreement in accordance with its terns, the rights
and obligations of the Parties to each other hereunder shall terminate; provided
that:
(a)
Licensee’s right as set forth in Section 15.2 to distribute in the Territory in
the Products produced or sold prior to termination shall survive termination
of
this License Agreement;
(b)
any
and all rights that a Party may have had against the other Party on or prior
to
such termination (including in respect of breaches of representations or
covenants herein on or prior to the termination of this License Agreement)
shall
survive termination of this License Agreement; and
(c)
the
obligations of the Parties under Sections 10, 11, 15.5 and 17 shall survive
termination of this License
Agreement.
16.
FORCE
MAJEURE.
16.1
The
failure of a Party to perform any of its obligations under this License
Agreement, or to meet delivery dates, if caused by Force Majeure, shall not
subject that Party to any liability to the other.
16.2
For
the purpose of this License Agreement “Force Majeure” shall include, without
limiting the generality of the foregoing, the following events deemed to
be
beyond the reasonable control of the Party and not resulting from an
inappropriate behavior or action from that Party:
(a)
strikes,
lockouts or other industrial disturbances;
(b)
civil
disturbances, sabotage, war, blockades, insurrections, vandalism, riots,
epidemics;
(c)
legislation,
regulations, policy, rulings, decisions or any other activities of federal,
provincial or municipal governments or any agencies thereof materially affecting
the ability of a Party to effectively carry out its obligations under this
License Agreement
16.3
In
such event, the Party affected by Force Majeure shall use its reasonable
best
efforts to minimize the effects of such event and to overcome such event
as soon
as practicable. However, nothing herein is intended to relieve Licensee of
any
royalty obligation.
17.
INDEMNIFICATION.
17.1
Each
Party shall indemnify the other Party and its employees, officers, directors,
agents and Affiliates (“Other
Indemnified
Persons”)
from,
and shall hold the other Party and the Other Indemnified Persons harmless
against all loss, cost, liability, damage or expense (each, a “Loss”)
which
may be imposed upon or reasonably incurred by such other Party or Other
Indemnified Person, including reasonable attorney’s fees and disbursements and
reasonable settlement payments, in connection with any claim, action or other
proceeding or threat thereof (including fines and other governmentally imposed
charges), made or instituted in which the other Party or any Other Indemnified
Person may be involved by reason of.
(a)
in
the case of Licensor:
(i)
any
Loss,
including without limitation Loss arising from a product liability claim
arising
out of Licensor’s or its respective Affiliates’ negligence in relation to
Products; or
(ii)
any
tortious act on the part of Licensor or its respective Affiliates.
(b)
in
the case of Licensee:
(i)
any
Loss,
including without limitation Loss arising from a product liability claim
arising
out of Licensee’s or its respective Affiliates’ negligence in relation to
Products; or
(ii)
any
tortious act on the part of Licensee’s or its respective
Affiliates.
18.
GENERAL
PROVISIONS
18.1
Licensee shall maintain records of all papers, correspondence, proof of payment,
ledgers, books, accounts and other information relating to its services or
performance hereunder. Licensor or its designee may inspect, examine and
review
such records (and make copies thereof) at any time upon at least five days’
notice during normal business hours during this License Agreement and for
two
(2) years thereafter.
18.2
This
License Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereof and thereof and supersedes all prior
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, relating to such subject
matter.
18.3
All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be delivered by hand or sent by fax or sent
by
overnight courier service and shall be deemed given when so delivered by
hand or
fax, or one day after being sent if sent by overnight courier service, addressed
to a Party at the address set forth below or such other address as may hereafter
be designated in writing
by such Party to the other Party:
(i)
if to
AmBev:
Chief
Marketing Officer
General
Counsel
Rua
Renato Paes de Barros, 1017, 4’ andar
04530.001
- São Paulo
-
SP
Brazil
Fax:
(55-11) 2122-1529
(ii)
if
to InBev :
Chief
Commercial Officer
Chief
Legal Officer
Brouwerijplein,
1
3000
Leuven
Belgium
(32-16)
506942
18.4
In
the event that any provision of this License Agreement shall be held to be
invalid or unenforceable, the same shall not affect in any respect whatsoever
the validity or enforceability of the remainder of this License Agreement.
If a
provision hereof is held to be invalid or unenforceable, the Parties shall
negotiate in good faith to replace the invalid or unenforceable provision
to the
greatest extent possible with another valid provision that will achieve the
economic effect intended by this License Agreement.
18.5
This
License Agreement shall be binding upon and benefit the Parties and their
respective legal representatives and permitted successors and
assigns.
18.6
This
License Agreement may not be amended, altered or modified except by written
instrument, signed by all Parties.
18.7
The
fact that a Party should at a given time fail to demand performance of any
one
of the provisions in this License Agreement shall not affect such Party’s right
to demand full performance of the License Agreement, nor shall it constitute
agreement to amendment of any section. Likewise, any delay in exercising
rights
or privileges by a Party shall not constitute acceptance of or agreement
with an
amendment to any section.
18.8
Neither Party may assign, transfer, sub-license, sub-contract or otherwise
dispose whether by merger, operation of law or otherwise, this License
Agreement, in whole or in part, without the prior consent of the other Party.
Notwithstanding the foregoing, either Party may assign this License Agreement
to
an Affiliate; provided, however, that no assignment to an Affiliate shall
limit
or affect the assigning Party’s obligations hereunder. Any purported assignment
contrary to the terms hereof shall be null and void and of no force or
effect.
18.9
No
consent or waiver, express or implied, by a Party, of any breach or default
by
any other Party in the performance by such other Party of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of
any
other breach or default in the performance by such other Party of the same
or
any other obligations of such other Party hereunder or thereunder. Failure
on
the part of a Party to complain of any act or failure to act of the other
Party
or to declare the other Party in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Party of its rights hereunder.
The giving of consent by a Party in any one instance shall not limit or waive
the necessity to obtain such Party’s consent in any future
instance.
18.10
Each Party shall ensure that it, and its Affiliates, directors, officers,
employees, external advisors and agents observe and perform all of such Party’s
covenants, representations, warranties and undertakings set forth in this
License Agreement and each Party shall, at its sole expense, take all reasonable
measures (including but not limited to court proceedings) to restrain its
Affiliates, directors, officers, employees, external advisors or agents from
breaching such covenants, representations, warranties or undertakings,
including, but not limited to, any prohibited or unauthorized disclosure
or use
of Confidential Information.
18.11
From time to time, as and when requested by any Party, each Party shall execute
and deliver, or cause its Affiliates to execute and deliver, all such documents
and instruments and shall take, or cause its Affiliates to take, all such
further or other actions, as such other Party may reasonably deem necessary
or
desirable to consummate the transactions contemplated by this License Agreement,
including, in the case of Licensor, causing its Affiliates who are owners
of the
Marks licensed to Licensee to execute and deliver to Licensee such agreements
and other instruments as Licensee or its counsel may reasonably request as
necessary or desirable to confirm the grant of the license for such
Marks.
19.
GOVERNING
LAW.
This
Agreement shall be governed and construed in accordance with the internal
laws
of the State of New York.
20. ARBITRATION
20.1
All
disputes, claims or controversies arising out of or in connection with this
Agreement, which is not settled within sixty (60) days after the written
notice
given by either Party to the other, shall be finally settled under the Rules
of
Arbitration of the International Chamber of Commerce by three arbitrators
appointed in accordance with the Rules of Arbitration of the International
Chamber of Commerce. The arbitrators nominated by the Parties shall agree
on the
third arbitrator within thirty (30) days. The proceedings shall be held in
the
English language. The arbitration shall take place in New York, New
York.
20.2
The
award made by the arbitrators shall be final and binding upon the Parties
and
may be enforced in any court of competent jurisdiction. The allocation of
costs
shall follow the award and shall include all reasonable expenses, including
without limitation, attorney’s fees.
21.
APPROVAL
AND REGISTRATION BY COMPETENT AUTHORITIES
21.1
Should any law or regulation relevant to this License Agreement require this
License Agreement to be registered, Licensee agrees and undertakes to register
this License Agreement with the relevant governmental authorities, in accordance
with the relevant laws and regulations of the Territory, immediately after
the
execution of this License Agreement.
21.2
Should any law or regulation relevant to this License Agreement require this
License Agreement to be notified to or to obtain the approval, authorization
or
other exemption from the competent antitrust authorities of the Territory
or any
other authority supervising such cases (the “Authorities”),
Licensee shall procure, immediately after the execution of this License
Agreement, that this License Agreement be notified to the Authorities with
a
view towards obtaining such approval or exemption. The Parties shall closely
co-operate in preparing such notification, the wording of which shall be
accepted in writing by the Parties before being submitted to the Authorities
for
obtaining the necessary permissions and exemptions. Until such approval or
exemption is obtained, the failure of either Party to perform any of its
obligations hereunder shall
not
constitute a breach hereof to the extent performance thereof would violate
applicable antitrust laws.
21.3
If
the Authorities make their permission or exemption conditional upon certain
measures being taken, the Parties will discuss in good faith about how to
implement said measures or such other measures satisfactory to the Authorities
as well as the consequences thereof for the License Agreement and arrangements
among the Parties. If within the time set by the Authorities the negotiations
among the Parties do not result in an agreement satisfactory to both Parties,
this License Agreement may be terminated by either Party upon one-month’s
written notice.
22.
COUNTERPARTS.
This
License Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective
when
one or more such counterparts have been signed by each of the Parties and
delivered to the other Party. An executed counterpart of this License Agreement
delivered by fax or other means of electronic communication shall be deemed
to
be an original and shall be as effective for all purposes as delivery of
a
manually executed counterpart.
[The
remainder of this page is intentionally left blank; signature page to
follow]
[SIGNATURE
PAGE TO LICENSE AGREEMENT]
IN
WITNESS WHEREOF, the Patties have executed this License Agreement as of the
day
and year first set forth above.
|
Companhia
De Bebidas das Américas - Ambev
|
|
by
|
/s/
Luiz Fernando Ziegler de Saint Edmond
|
| |
|
| |
Title:
Director General
|
| |
|
by
|
/s/
Joào Mauricio Giffoni de Castro Neves
|
| |
Name:
Joào Mauricio Giffoni de Castro Neves
|
| |
Title:
Director Financeiro de Relacóes com Investidores
|
| |
|
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InBev
S.A.
|
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by
|
/s/
Jo van Biesbroeck
|
| |
Name:
Jo van Biesbroeck
|
| |
Title:
Chief Strategy & Business Development Officer
|
| |
|
by
|
/s/
Brent Willis
|
| |
Name:
Brent Willis
|
| |
Title:
Chief Commercial Officer
|
[SIGNATURE
PAGE TO LICENSE AGREEMENT]
IN
WITNESS WHEREOF, the Patties have executed this License Agreement as of the
day
and year first set forth above.
|
Companhia
De Bebidas das Américas - Ambev
|
|
by
|
|
| |
Name:
|
| |
Title:
|
| |
|
by
|
|
| |
Name:
|
| |
Title:
|
| |
|
|
InBev
S.A.
|
|
by
|
|
| |
Name:
|
| |
Title:
|
| |
|
by
|
|
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Name:
|
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Title:
|
ANNEXES
A-I.
AMBEV MARKS
A-2.
INBEV MARKS
B-1.
AMBEV
FIRST BUSINESS AND MARKETING PLAN
B-2.
INBEV
FIRST BUSINESS AND MARKETING PLAN
C.
PRINCIPLES ON TRANSFER PRICING
ANNEX
A-I
AMBEV
MARKS
BRAHMA
[The
remainder of this page is intentionally left blank.]
ANNEX
A-2
INBEV
MARKS
STELLA
ARTOIS
BECK’S
[The
remainder of this page is intentionally left blank.]
ANNEX
B-1
AMBEV
FIRST BUSINESS AND MARKETING PLAN
[To
be
added within ninety (90) days after the date of this License
Agreement.]
ANNEX
B-2
INBEV
FIRST BUSINESS AND MARKETING
PLAN
[To
be
added within ninety (90) days after the date of this License
Agreement.]
ANNEX
C
PRINCIPLES
ON TRANSFER PRICING
Transfer
pricing principles and methodology
1.
Transfer
prices will be expressed in amount by hectolitre.
2.
The
currency of the invoice will be
USD
for products shipped to USA, CAD for Canada,
£
for the UK and EURO to other countries.
3.
The
calculation of each item in the Transfer Price formula (item 6) done during
the
Y+ 1 budget process
must be based on
Y
budget
figures
corrected for
all
variances expected to be valid for the Y+
l
budget. For new articles created in Y+1, the calculation for each item will
have
to be based on
Y+ l
budget data.
4.
Transfer prices will be calculated once a year based on budget volumes and
fixed
pursuant to the average selling exchange rate between the Real and the
applicable currency as per item 2 for the month of March 2005, in respect
to the
year ended December 31, 2005, and for the month of November for each subsequent
calendar year; provided
that in
the event annual cumulative budgeted volumes diverge more than 20% from the
corresponding annual real shipped volumes, new transfer prices will be
calculated and applied to reflect the actual volumes; and provided further
that new
transfer prices will be calculated and applied in the event of a 10% devaluation
or appreciation between the Real, on the one hand, and the CAD, USD, £ or EURO,
on the other.
5.
All
transfer prices will be calculated FOB.
6.
The
transfer price calculation is the sum of 6 elements:
| |
TP
= VIC + VPLC + FILC + DEP + T +
CC
|
6.1
Variable Industrial Cost (VIC).
VIC
includes all variable industrial costs, including, without
limitation:
- purchase
& transport of beer in tank
- direct
wages and salaries
- outsourcing
booked as VIC
- license
fees to third parties
6.2
Variable Primary Logistic Costs (VPLC)
VPLC
includes all primary logistic costs:
- variable
primary warehousing costs (VWC)
- variable
primary transport cost (VTC)
6.3
Fixed
Industrial and Logistics Costs (FILC)
FILC
is
composed of Fixed Industrial Cost (FIC) and Fixed Logistic
costs (FLC), as follows:
FIC
includes all fixed industrial costs properly allocated, including, without
limitation:
| |
-
|
management
site: full cost of site director & secretary, site-controller,
indirect worker attached to the department of security, consultancy
fees,
...
|
| |
-
|
production
(manufacturing and filling): full cost of indirect workers, rental
fees
and operational leasing of machinery, consultancy fees,
...
|
| |
-
|
factory
laboratory: full costs of indirect workers, consultancy
fees,...
|
| |
-
|
maintenance:
full cost of indirect workers, consumption of spare parts, external
maintenance fees
|
| |
-
|
full
cost of indirect workers attached to the purchasing & planning
department within the site
|
| |
-
|
indirect
energy & fluids (including wastewater
station)
|
| |
-
|
technical
assistance fees
|
| |
-
|
site
related
taxes and insurance
|
FLC
includes all fixed logistic costs properly allocated, mainly for
example:
| |
-
|
fixed
primary
warehousing costs
|
| |
-
|
fixed
primary transport costs (including customer services and (international)
shipping department)
|
6.4
Depreciation (DEP):
DEP
is
based on the local statutory accounts and includes all depreciation
cost/expenses properly
allocated, including, without limitation:
| |
-
|
brewery
and conditioning equipment
|
| |
-
|
returnable
packaging (kegs, bottles, crates,
pallet)
|
| |
-
|
trucks
(in case of transport between primary warehouses within the producing
country)
|
6.5
Tax
(T)
In
the
event transfer pricing rules in the exporter’s country require the exporter to
pay taxes by reference to a price higher than the actual price of the exported
products, the corresponding additional tax costs (T) will be included in
the
transfer price established pursuant to this Annex
C.
Alternatively,
Parties may agree to increase the transfer price to the minimum price required
by local tax authorities, provided, however, that the difference between
the
transfer price as calculated prior to such increase and the minimum price
required by local tax authorities shall be used for the purposes of the
calculation of royalty payments under Section 13.
6.6
Cost
of Capital (CC)
CC
should
be equal to the capital employed, as depreciated, multiplied by the appropriate
cost of capital rate.
The
capital employed includes:
| |
-
|
Property,
plant and equipment exclusively dedicated to the-
products
|
| |
-
|
The
properly allocated portion of property, plant and equipment shared
by the
products
|
The
allocation of such CC will be made on a straight line basis over time, provided,
however, that its net present value, as deferred in the above manner, equals
the
net present value of the CC if such CC were to be computed in line with the
depreciation rate of the above
items.
Dear
Sirs,
Reference
is made to the License Agreement (the “License Agreement”) entered into on the
date hereof between ourselves and Companhia de Bebidas das Américas - AmBev.
Terms used but not defined herein shall have the same meanings as set forth
in
the License Agreement.
This
is
to confirm that InBev shall indemnify AmBev and its employees, officers,
directors, agents and Affiliates (jointly, the “AmBev Indemnified Persons”)
from, and shall hold AmBev and the AmBev Indemnified Persons harmless against,
an amount equal to 50% (fifty percent), of all Losses which may be imposed
upon
or incurred by AmBev or
the
AmBev
Indemnified Persons, including reasonable attorney’s fees and disbursements and
settlement payments, in connection with any claim, action, dispute or other
proceeding or threat thereof (including fines and other governmentally-imposed
charges), made or instituted by Carlsberg Breweries A/S or any Affiliate
thereof
in connection with a Cooperation Agreement and a License Agreement, both
dated
as of December 8, 1996, entered into between, inter alia, Cervej arias Reunidas
Skol Caracu S.A. and Carlsberg A/S.
The
Parties agree that, notwithstanding the provisions of Section 2.2 of the
License
Agreement,
the exclusive right granted by InBev to AmBev pursuant to Section 2.1 of
the
License
Agreement shall come into force and effect immediately upon the date a
settlement is reached with Carlsberg A/S and/or its Affiliates in connection
with the Cooperation Agreement and the License Agreement referred to in the
preceding paragraph.
Truly
yours,
InBev
S.A.
|
/s/
Jo Van Biesbroeck
|
|
/s/
Brent Willis
|
|
|
|
|
Title: Chief
Strategy & Business
|
|
Title: Chief
Commercial Officer
|
|
|
|
|
[SIGNATURE
PAGE TO LETTER SENT BY INBEV S.A. TO COMPANHIA DE
Agreed
and accepted:
Companhia
de Bebidas das Americas - AmBev
/s/
Luiz Fernando Ziegler de Saint Edmond
Name: Luiz
Fernando Ziegler de Saint Edmond
/s/
Joao Mauricio Giffoni de Castro Neves
Name: Joao
Mauricio Giffoni de Castro Neves
Title: Director
Financeiro e de Relacôes com Investidores
