Investment Agreement

INVESTMENT AGREEMENT


By and Among


ANHEUSER-BUSCH COMPANIES, INC.,


ANHEUSER-BUSCH INTERNATIONAL, INC.


and


ANHEUSER-BUSCH INTERNATIONAL HOLDINGS, INC.


and


GRUPO MODELO, S.A. DE C.V.,


DIBLO, S.A. DE C.V.


and


CERTAIN SHAREHOLDERS THEREOF


Dated as of June 16, 1993


2


TABLE OF CONTENTS
----------------- I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 2


II. TERMS OF THE SUBSCRIPTION OF SERIES P-C SHARES AND
THE PURCHASE AND SALE OF INITIAL DIBLO COMMON SHARES


2.1 Subscription of Series P-C Shares
and Purchase and Sale of the Initial
Diblo Common Shares. . . . . . . . . . . . . 7
2.2 The Closing. . . . . . . . . . . . . . . . . 8
2.3 Purchase Price . . . . . . . . . . . . . . . 8
2.4 Deliveries at the Closing. . . . . . . . . . 8


III. REPRESENTATIONS AND WARRANTIES OF THE G-MODELO
SIGNATORIES


3.1 Capital Stock of G-Modelo. . . . . . . . . . 11
3.2 Capital Stock of Diblo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 13
3.3 USA Export . . . . . . . . . . . . . . . . . 15
3.4 Power and Authority; Effect of Agreement . . 16
3.5 Investments. . . . . . . . . . . . . . . . . 17
3.6 Organization; Assets . . . . . . . . . . . . 17
3.7 Financial Information. . . . . . . . . . . . 18
3.8 Undisclosed Liabilities; Absence of
Certain Changes. . . . . . . . . . . . . . . 19
3.9 Title and Related Matters. . . . . . . . . . 20
3.10 Patents, Trademarks, Etc.. . . . . . . . . . 20
3.11 Litigation . . . . . . . . . . . . . . . . . 22
3.12 Compliance with Laws . . . . . . . . . . . . 22
3.13 Tax Matters. . . . . . . . . . . . . . . . . 23
3.14 Shareholder Agreements . . . . . . . . . . . 24
3.15 Consents . . . . . . . . . . . . . . . . . . 25
3.16 Environmental Matters. . . . . . . . . . . . 25
3.17 Absence of Certain Changes or Events . . . . 26
3.18 Material Contracts . . . . . . . . . . . . . 26
3.19 Employee Benefits; Employment Contracts. . . 27
3.20 Real Property. . . . . . . . . . . . . . . . 28
3.21 Tied House Prohibitions. . . . . . . . . . . 29
3.22 Insurance. . . . . . . . . . . . . . . . . . 29


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IV. REPRESENTATIONS AND WARRANTIES OF A-B, A-BI AND
THE INVESTOR


4.1 Corporate Power and Authority; Effect
of Agreement . . . . . . . . . . . . . . . . 30
4.2 Consents . . . . . . . . . . . . . . . . . . 31
4.3 Availability of Funds. . . . . . . . . . . . 31
4.4 Management of G-Modelo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 31


V. COVENANTS OF THE PARTIES


5.1 Access to Information. . . . . . . . . . . . 32
5.2 Further Assurances . . . . . . . . . . . . . 33
5.3 Filings; Tax Returns . . . . . . . . . . . . 34
5.4 Internal Reorganization. . . . . . . . . . . 35
5.5 Election of A-B Director . . . . . . . . . . 36
5.6 Environmental and Safety Laws. . . . . . . . 36
5.7 USA Export Agreement . . . . . . . . . . . . 37
5.8 Consummation of Public Offerings;
Registration of Shares . . . . . . . . . . . 37
5.9 Dividend Policies. . . . . . . . . . . . . . 38
5.10 Equity Participations. . . . . . . . . . . . 41
5.11 Operation of G-Modelo. . . . . . . . . . . . 41
5.12 Government Officials . . . . . . . . . . . . 41
5.13 Sale of Series C Shares to Employees . . . . 42
5.14 Real Estate Transfers. . . . . . . . . . . . 42
5.15 Technical Committees . . . . . . . . . . . . 42
5.16 Failure by the Investor to Acquire
all Diblo Option Shares. . . . . . . . . . . 43


VI. TRANSFER, SALE AND PURCHASE RIGHTS


6.1 General. . . . . . . . . . . . . . . . . . . 44
6.2 Offer to Sell; Right of First Refusal. . . . 45
6.3 The Investor's Option to Purchase
Shares of G-Modelo Capital Stock . . . . . . 49
6.4 The Investor's Option to Purchase
Diblo Common Shares. . . . . . . . . . . . . 52
6.5 Consequences of Failure to Convert
Series P-C Shares. . . . . . . . . . . . . . 54
6.6 Restriction on Dispositions to
Competitors. . . . . . . . . . . . . . . . . 59
6.7 Restrictions on Acquiring Series C
Shares . . . . . . . . . . . . . . . . . . . 59
6.8 Extension of Time Periods. . . . . . . . . . 59


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VII. BOARDS OF DIRECTORS; VOTING


7.1 Boards of Directors. . . . . . . . . . . . . 60
7.2 Corporate Actions. . . . . . . . . . . . . . 62


VIII. CONDITIONS TO THE INVESTOR'S OBLIGATIONS


8.1 Representations, Warranties of the
G-Modelo Signatories . . . . . . . . . . . . 68
8.2 No Prohibition . . . . . . . . . . . . . . . 68
8.3 No Action. . . . . . . . . . . . . . . . . . 69
8.4 HSR Act. . . . . . . . . . . . . . . . . . . 69
8.5 Certificates . . . . . . . . . . . . . . . . 69
8.6 Opinion. . . . . . . . . . . . . . . . . . . 69


IX. CONDITIONS TO THE G-MODELO SIGNATORIES' AND THE
BANAMEX TRUST'S OBLIGATIONS


9.1 Representations and Warranties of A-B,
A-BI and the Investor. . . . . . . . . . . . 69
9.2 No Prohibition . . . . . . . . . . . . . . . 70
9.3 No Action. . . . . . . . . . . . . . . . . . 70
9.4 HSR Act. . . . . . . . . . . . . . . . . . . 70
9.5 Certificates . . . . . . . . . . . . . . . . 70
9.6 Opinion. . . . . . . . . . . . . . . . . . . 70


X. INDEMNIFICATION


10.1 The Controlling Shareholders', G-Modelo
and Diblo Indemnification. . . . . . . . . . 71
10.2 The Investor's Indemnification . . . . . . . 71
10.3 Conditions of Indemnification. . . . . . . . 72
10.4 Remedies Cumulative. . . . . . . . . . . . . 73


XI. TERMINATION PRIOR TO CLOSING


11.1 Termination. . . . . . . . . . . . . . . . . 73
11.2 Procedure and Effect of Termination. . . . . 74


XII. DISPUTE RESOLUTION


12.1 Arbitration. . . . . . . . . . . . . . . . . 75
12.2 Business Disagreements . . . . . . . . . . . 76


XIII. MISCELLANEOUS


13.1 Survival of Representations, Warranties
and Covenants. . . . . . . . . . . . . . . . 78
13.2 Entire Agreement . . . . . . . . . . . . . . 78


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13.3 Successors and Assigns . . . . . . . . . . . 78
13.4 Counterparts . . . . . . . . . . . . . . . . 79
13.5 Interpretation . . . . . . . . . . . . . . . 79
13.6 Amendment and Modification . . . . . . . . . 79
13.7 Waiver of Compliance; Consents . . . . . . . 79
13.8 Broker's Fees. . . . . . . . . . . . . . . . 80
13.9 Expenses . . . . . . . . . . . . . . . . . . 80
13.10 Notices. . . . . . . . . . . . . . . . . . . 80
13.11 Governing Law. . . . . . . . . . . . . . . . 82
13.12 Public Announcements . . . . . . . . . . . . 82


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 83


EXHIBIT A -- Capital Stock of G-Modelo as of
Closing EXHIBIT B -- Calculation of G-Modelo Free Cash
Flow EXHIBIT C -- Procermex Pricing Policies EXHIBIT D -- Opinion of Santamarina Y Steta, S.C. EXHIBIT E -- Opinion of Stephen J. Volland, Esq.,
Senior Associate General Counsel of
Anheuser-Busch Companies, Inc. EXHIBIT F -- Opinion of Skadden, Arps, Slate,
Meagher & Flom EXHIBIT G -- Opinion of Creel, Garcia-Cuellar y
Muggenburg


SCHEDULES - ---------


Schedule 3.2(a)
Schedule 3.2(c)
Schedule 3.10
Schedule 3.11
Schedule 3.17
Schedule 3.18
Schedule 3.19


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INVESTMENT AGREEMENT


THIS INVESTMENT AGREEMENT, made and entered
into as of this 16th day of June, 1993, by and among
ANHEUSER-BUSCH COMPANIES, INC., a Delaware corporation
("A-B"), ANHEUSER-BUSCH INTERNATIONAL, INC., a Delaware
corporation ("A-BI"), ANHEUSER-BUSCH INTERNATIONAL HOLD-
INGS, INC., a Delaware corporation (the "Investor"), and
the other signatories hereto set forth on the signature
pages of this Investment Agreement (such signatories
other than the Option Trust and the Banamex Trust are
hereinafter referred to collectively as the "G-Modelo
Signatories");


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, Srs. Antonino Fernandez R., Pablo
Aramburuzabala, Nemesio Diez R., Juan Sanchez-Navarro y
P. and Valentin Diez M. have transferred and caused each
of the other shareholders (collectively, the "Controlling
Shareholders") of Diblo, S.A. de C.V., a Mexican corpora-
tion ("Diblo"), to transfer to Grupo Modelo, S.A. de
C.V., a Mexican corporation ("G-Modelo"), approximately
75 percent of the issued and outstanding shares of capi-
tal stock of Diblo, in exchange for 169,701,202 common
shares of G-Modelo; and


WHEREAS, the Controlling Shareholders have
caused each of Consorcio Distributivo, S.A. de C.V., a
Mexican corporation ("Consorcio"), and Expansion Inte-
gral, S.A. de C.V., a Mexican corporation ("Expansion"),
to merge into Diblo, which is now the owner of all of the
outstanding shares of capital stock of all of the former
subsidiaries of Consorcio and Expansion which the latter
two owned prior to such merger; and


WHEREAS, A-B and the Controlling Shareholders
desire to create an association or joint venture to
conduct and expand G-Modelo's and Diblo's current busi-
nesses, which shall be managed by the Controlling Share-
holders, with the participation of A-B, A-BI and the
Investor as provided in this Agreement; and


WHEREAS, in furtherance of and in consideration
for the creation of such association or joint venture,
the Investor desires, among other things, (i) to sub-
scribe and fully pay for 20,323,498 shares of Series P-C
Convertible Preferred Stock, no par value (the "Series P-


7


C Shares"), of G-Modelo, representing all of the autho-
rized Series PC Shares of GModelo, which Series P-C
Shares represent in excess of 10 percent of the total
outstanding capital stock of G-Modelo and which shall be
part of G-Modelo's Class II capital stock, and (ii) to
purchase from Banco Nacional de Mexico, S.A., as Trustee
of the Trust (the "Banamex Trust") established under the
Trust Agreement dated as of November 28, 1991, as amended
and restated on June 11, 1993 (the "Banamex Trust Agree-
ment"), among the Controlling Shareholders and the Trust-
ee of the Banamex Trust, and the Trustee of the Banamex
Trust desires to sell to the Investor, 24,329,922 shares
(the "Initial Diblo Shares") of Series B Common Stock, no
par value (the "Diblo Series B Shares"), of Diblo, which
Initial Diblo Shares represent in excess of 10 percent of
the total outstanding capital stock of Diblo and which
shall be part of Diblo's Class II capital stock;


NOW, THEREFORE, in consideration of the forego-
ing premises and the respective representations, warran-
ties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, and
intending to be legally bound hereby the parties do
hereby agree as follows:


ARTICLE I


DEFINITIONS
-----------
Capitalized terms used herein shall have the
meaning ascribed to them in this Article I unless such
terms are defined elsewhere in this Agreement.


1.1. A-B. "A-B" shall have the meaning set
---
forth in the first paragraph of this Agreement.


1.2. A-BI. "A-BI" shall have the meaning set
----
forth in the first paragraph of this Agreement.


1.3. Amended Diblo By-laws. "Amended Diblo
---------------------
By-laws" shall mean the By-laws of Diblo as amended and
provided to the Investor pursuant to Section 2.4(b)(v).


1.4. Amended G-Modelo By-laws. "Amended
------------------------
G-Modelo By-laws" shall mean the By-laws of G-Modelo as
amended and provided to the Investor pursuant to Section
2.4(b)(v).


2


8


1.5. Banamex Trust. "Banamex Trust" shall
-------------
have the meaning set forth in the fourth preamble of this
Agreement.


1.6. Banamex Trust Agreement. "Banamex Trust
-----------------------
Agreement" shall have the meaning set forth in the fourth
preamble of this Agreement.


1.7. Closing. "Closing" shall mean the com-
-------
pletion of the purchase and sale of the Series P-C Shares
and the Initial Diblo Shares.


1.8. Closing Date. "Closing Date" shall mean
------------
the date on which the Closing occurs.


1.9. C&L. "C&L" shall mean Despacho Roberto
---
Casas Alatriste, S.C., the Mexican affiliate of Coopers &
Lybrand, independent certified public accountants for
G-Modelo and the G-Modelo Corporations or such other
Mexican affiliate of a "Big 6" international accounting
firm appointed by the G-Modelo Board of Directors to
audit the accounts of G-Modelo and the G-Modelo Corpora-
tions.


1.10. Consorcio. "Consorcio" shall have the
---------
meaning set forth in the second preamble of this Agreement.


1.11. Controlling Shareholders. "Controlling
------------------------
Shareholders" shall have the meaning set forth in the
first preamble of this Agreement.


1.12. Control Trust. "Control Trust" shall
-------------
mean the trust established under the Control Trust Agree-
ment.


1.13. Control Trust Agreement. "Control Trust
-----------------------
Agreement" shall mean the agreement dated as of June 11,
1993, among the Controlling Shareholders, A-B and Banco
Nacional de Mexico, S.A., as Trustee for the Control Trust.


1.14. Diblo. "Diblo" shall have the meaning
-----
set forth in the first preamble of this Agreement.


1.15. Diblo Series A Shares. "Diblo Series A
---------------------
Shares" shall be the Class I authorized shares of Series
A Common Stock, no par value, of Diblo.


3


9


1.16. Diblo Series B Shares. "Diblo Series B
---------------------
Shares" shall have the meaning set forth in the fourth
preamble of this Agreement.


1.17. Diblo P-C Shares. "Diblo P-C Shares"
----------------
shall mean the Class II authorized shares of Series P-C
Convertible Preferred Stock, no par value, of Diblo.


1.18. Encumbrances. "Encumbrances" shall mean
------------
all liens, claims, options, security interests or other
encumbrances of any character whatsoever.


1.19. Expansion. "Expansion" shall have the
---------
meaning set forth in the second preamble of this Agree-
ment.


1.20. Free Exchange Rate. "Free Exchange
------------------
Rate" shall mean the average of the U.S. dollar/Mexican
Peso free exchange rates for the sale of U.S. dollars
based on the amount of money to be converted quoted by
Banco Nacional de Mexico, S.A. and Bancomer, S.A. at
10:00 a.m. on the date of payment for which such free
exchange rate is being used.


1.21. G-Modelo. "G-Modelo" shall have the
--------
meaning set forth in the first preamble of this Agree-
ment.


1.22. G-Modelo Corporations. "G-Modelo Corpo-
---------------------
rations" shall mean Diblo and the other Subsidiaries of
G-Modelo.


1.23. G-Modelo Signatories. "G-Modelo Signa-
--------------------
tories" shall have the meaning set forth in the first
paragraph of this Agreement.


1.24. Heads of Agreement. "Heads of Agree
------------------
ment" shall mean the Heads of Agreement dated as of March
24, 1993, among A-B, A-BI, G-Modelo, Diblo and certain
Controlling Shareholders.


1.25. HSR Act. "HSR Act" shall mean the
-------
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.


4


10


1.26. Initial Diblo Shares. "Initial Diblo
--------------------
Shares" shall have the meaning set forth in the fourth
preamble of this Agreement.


1.27. Internacionales. "Internacionales"
---------------
shall mean Cervezas Internacionales, S.A. de C.V., a
Mexican corporation and a Subsidiary of Diblo.


1.28. Investor. "Investor" shall have the
--------
meaning set forth in the first paragraph of this Agree-
ment.


1.29. LRMI. "LRMI" shall mean the Law and
----
Regulations to Promote Mexican Investment and Regulate
Foreign Investment.


1.30. Mexican GAAP. "Mexican GAAP" shall
------------
mean Mexican generally accepted accounting principles.


1.31. Mexican Pesos. "Mexican Pesos" shall
-------------
mean New Mexican pesos as of the date of this Agreement.


1.32. Option Shares. "Option Shares" shall
-------------
have the meaning set forth in Section 6.3.


1.33. Option Trust. "Option Trust" shall mean
------------
the trust established under the Option Trust Agreement.


1.34. Option Trust Agreement. "Option Trust
----------------------
Agreement" shall mean the agreement dated as of June 11,
1993, among the Controlling Shareholders and Banco
Nacional de Mexico, S.A., as Trustee for the Option
Trust.


1.35. Person. The term "person" shall mean
------
and include an individual, a partnership, a joint ven-
ture, a corporation, a trust, an unincorporated organiza-
tion and a government or any department or agency there-
of.


1.36. Prime Rate. "Prime Rate" shall mean the
----------
rate published by the New York City Branch of Citibank,
N.A. as its prime rate on the date on which interest is
to begin to accrue.


5


11


1.37. PW. "PW" shall mean Price Waterhouse,
--
independent certified public accountants for A-B and its
Subsidiaries or such other "Big 6" international account-
ing firm appointed by the A-B Board of Directors to audit
the accounts of A-B and its Subsidiaries.


1.38. Real Estate Trust. "Real Estate Trust"
-----------------
shall mean the trust established under the Real Estate
Trust Agreement.


1.39. Real Estate Trust Agreement. "Real
---------------------------
Estate Trust Agreement" shall mean the agreement dated as
of January 22, 1993, among Diblo and Banco Nacional de
Mexico, S.A., as Trustee of the Real Estate Trust.


1.40. Related Person. "Related Person" shall
--------------
mean when used in reference to any other Person any
Person who owns or holds ten percent or more of the
outstanding capital stock of such other Person or is an
officer, director or sole administrator of such other
Person or in the case of a natural Person, his spouse,
his or his spouse's children (including by adoption), his
siblings (including half and step siblings), his estate
and any trust entirely for the benefit of any one or more
of himself or any of the foregoing individuals.


1.41. Series A Shares. "Series A Shares"
---------------
shall mean the Class I and Class II authorized shares of
Series A Common Stock, no par value, of G-Modelo.


1.42. Series B Shares. "Series B Shares"
---------------
shall mean the 71,376,124 Class II shares of Series B
Common Stock, no par value, of G-Modelo authorized for
issuance upon conversion of shares of G-Modelo capital
stock as provided in the Amended G-Modelo By-laws.


1.43. Series C Shares. "Series C Shares"
---------------
shall mean the 40,646,995 authorized Class II shares of
Series C Non-Voting Stock, no par value, of G-Modelo.


1.44. Series P-C Shares. "Series P-C Shares"
-----------------
shall have the meaning set forth in the fourth preamble
of this Agreement.


1.45. Subsidiary. The term "Subsidiary" when
----------
used in reference to any other Person shall mean (x) any
corporation of which 50 percent or more of the outstand-


6


12


ing capital stock is owned, directly or indirectly, by
such other Person, or (y) any corporation of which out-
standing securities having ordinary voting power to elect
a majority of the members of the Board of Directors of
such corporation are owned, directly or indirectly, by
such other Person, or (z) any Person or entity, directly
or indirectly, controlling, controlled by or under common
control with such other Person.


1.46. USA Export. "USA Export" shall mean
----------
Extrade, S.A. de C.V., a Mexican corporation formed by
certain Controlling Shareholders prior to Closing as con-
templated in Section 2.4(b)(ii).


1.47. U.S. GAAP. "U.S. GAAP" shall mean
---------
United States generally accepted accounting principles.


1.48. Other Definitional Provisions. Whenever
-----------------------------
the context so requires, each of the neuter, masculine or
feminine forms of any pronoun shall include all such
forms. When used in this Agreement, the phrase "to the
Controlling Shareholders' best knowledge after due inqui-
ry" shall mean the collective knowledge of all of the
Controlling Shareholders after at least one of the Con-
trolling Shareholders has made due inquiry of one or more
employees or representatives of G-Modelo or a G-Modelo
Corporation who has access to or knowledge of the infor-
mation being sought. When used in this Agreement, the
phrase "consolidated after-tax net earnings" of G-Modelo
calculated in accordance with Mexican GAAP shall mean
"utilidad neta consolidada."


ARTICLE II


TERMS OF THE SUBSCRIPTION OF SERIES
P-C SHARES AND THE PURCHASE AND SALE OF
INITIAL DIBLO COMMON SHARES
---------------------------------------


2.1. Subscription of Series P-C Shares and
-------------------------------------
Purchase and Sale of the Initial Diblo Common Shares.
----------------------------------------------------
Upon the terms and subject to the conditions of this
Agreement, at the Closing (i) G-Modelo shall sell to the
Investor, and the Investor shall subscribe and purchase
from G-Modelo, the Series P-C Shares and (ii) the Trustee
of the Banamex Trust shall sell to the Investor, and the
Investor shall purchase from the Banamex Trust, the


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Initial Diblo Shares (which shall be "ex" the previously
declared dividend that is referred to in clause (iv) of
paragraph (b) of Secti ...