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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER 1-7823
DECEMBER 31, 1993
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ANHEUSER-BUSCH COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 43-1162835
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE BUSCH PLACE, ST. LOUIS, MISSOURI 63118
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 314-577-2000
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<TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK-$1 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
8 5/8% SINKING FUND DEBENTURES, DUE DECEMBER 1, 2016 NEW YORK STOCK EXCHANGE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No __.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant.
$13,033,120,000 AS OF FEBRUARY 28, 1994
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
$1 PAR VALUE COMMON STOCK 265,804,242 SHARES AS OF MARCH 8, 1994
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DOCUMENTS INCORPORATED BY REFERENCE
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Portions of Annual Report to Shareholders for the Year ended December 31, 1993.... PART I, PART II, and PART IV
Portions of Definitive Proxy Statement for Annual Meeting of Shareholders on April
27, 1994......................................................................... PART I and PART III
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PART I
ITEM 1. BUSINESS
Anheuser-Busch Companies, Inc. (the "Company") is a Delaware
corporation that was organized in 1979 as the holding company parent of
Anheuser-Busch, Incorporated ("ABI"), a Missouri corporation whose
origins date back to 1875. In addition to ABI, which is the world's
largest brewer of beer, the Company is also the parent corporation to a
number of subsidiaries that conduct various other business operations,
including those related to the brewing of beer, the manufacture of
metal beverage containers, the recycling of metal and glass beverage
containers, the production and sale of food and food-related products,
and the operation of theme parks.
Financial information with respect to the Company's business segments
appears in financial statement note 15, "Business Segments," on page 57
of the 1993 Annual Report to Shareholders, which note hereby is
incorporated by reference.
BEER AND BEER-RELATED OPERATIONS
The Company's principal product is beer, produced and distributed by
its subsidiary, ABI, in a variety of containers primarily under the
brand names Budweiser, Bud Light, Bud Dry Draft, Michelob, Michelob
Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft
Light, Michelob Classic Dark, Busch, Busch Light, Natural Light,
Natural Pilsner, King Cobra, and O'Doul's (a non-alcoholic malt
beverage). Additionally, ABI imports Carlsberg and Carlsberg Light
beers and Elephant Malt Liquor in U.S. markets as part of an agreement
with the Denmark based Carlsberg A/S (formerly United Breweries, Ltd.),
brewer of the brands. A new brand, Ice Draft from Budweiser, was
introduced in the fourth quarter of 1993.
Sales of beer by the Company aggregated 87.3 million barrels in 1993
as compared with 86.8 million barrels in 1992 and accounted for
approximately 66% of consolidated net sales dollars in 1993. In 1992
and 1991 the percentage was 67%.
Budweiser, Bud Light, Bud Dry Draft, Ice Draft from Budweiser,
Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob
Golden Draft Light, Michelob Classic Dark, Busch, Busch Light, Natural
Light, Carlsberg, Elephant Malt Liquor, and O'Doul's are sold in both
draught and packaged form. Natural Pilsner, King Cobra, and Carlsberg
Light are sold only in packaged form. Budweiser, Bud Light, Bud Dry
Draft, Ice Draft from Budweiser, Michelob, Michelob Light, Michelob
Dry, Michelob Classic Dark, Natural Light, and O'Doul's are distributed
and sold on a nationwide basis. Busch and Busch Light are distributed
in 46 states, Natural Pilsner in 6 states, and King Cobra is
distributed in 45 states. Michelob Golden Draft and Michelob Golden
Draft Light are sold in 13 states. ABI's imported beer, Carlsberg is
distributed in 45 states, Carlsberg Light in 28 states, and Elephant
Malt Liquor is distributed in 38 states.
Normally, due to the seasonality of the industry, sales of ABI's
beers are at their lowest volume level in the first and fourth quarters
of each year and at their highest in the second and third quarters. In
1993 the barrels sold in the lowest quarter (first quarter) differed by
almost 19% from the barrels sold in the highest quarter (third
quarter). ABI's 1994 quarterly sales to wholesalers volume growth is
not expected to follow a consistent pattern; first quarter shipments in
1994 increased more significantly due to the roll-out of Ice Draft from
Budweiser and higher planned inventory levels.
ABI has developed a system of thirteen breweries, strategically
located across the country, to economically serve its distribution
system. (See Item 2 of Part I-Properties.) A major modernization of the
St. Louis brewery is continuing. The thirteenth brewery, located near
Cartersville, Georgia, began operation in the second quarter of 1993.
ABI utilizes wholesaler and ABI owned branch warehouses to build
inventory in early spring to support peak summer sales. By using
controlled environment warehouses and stringent inventory monitoring
policies, the quality and freshness of the product are protected, while
maximizing the utilization of production facilities throughout the
entire year.
During 1993 approximately 96% of the beer sold by ABI, measured in
barrels, reached retail channels through approximately 900 independent
wholesalers. ABI utilizes its regional vice presidents, sales
directors, key account and retail sales managers, as well as certain
other field sales personnel, to provide merchandising and sales
assistance to its wholesalers. In addition, ABI provides national and
local media advertising, point-of-sale advertising, and sales
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promotion programs to help stimulate sales. The remainder of ABI's
domestic beer sales in 1993 were made through ten ABI owned and
operated branches, which perform similar sales, merchandising, and
delivery services as wholesalers in their respective areas.
There are over 100 companies engaged in the highly competitive
brewing industry in the United States. ABI's domestic beers are
distributed and sold in competition with other nationally distributed
beers, with locally and regionally distributed beers and, to a lesser
extent, with imported beers. Although the methods of competition in the
industry vary widely among industry members and among states due to
differences in applicable state laws, the principal methods of
competition are the quality, taste and freshness of the products,
packaging, price, advertising including television, radio,
sponsorships, billboards, stadium signs, and print media, point-of-sale
materials and service to retail customers including the replacement of
over-age products with fresh products at no cost to the retailer. ABI's
beers compete in different price categories. Although all brands
compete against the total market, Budweiser, Bud Light, Bud Dry Draft,
Ice Draft from Budweiser, Michelob Golden Draft, and Michelob Golden
Draft Light compete primarily with premium priced beers. Michelob,
Michelob Light, Michelob Dry, and Michelob Classic Dark compete
primarily with super-premium priced beers. Busch, Busch Light, Natural
Light, and Natural Pilsner compete with the sub-premium or popular
priced beers. King Cobra competes against other brands in the malt
liquor segment. Carlsberg, Carlsberg Light beers, and Elephant Malt
Liquor compete primarily with imported malt beverages. O'Doul's
competes in the premium priced non-alcoholic malt beverage category.
Since 1957, ABI has led the United States brewing industry in total
sales volume. In 1993 its sales exceeded those of its nearest
competitor by over 44 million barrels and constituted approximately
44.3% of industry sales volume, including imports and non-alcohol malt
beverage sales. Major competitors in the United States brewing industry
during 1993 included Philip Morris, Inc. (through its subsidiary Miller
Brewing Co.), Adolph Coors Co., Stroh Brewery Co., and G. Heileman
Brewing Co.
Through various subsidiaries, the Company is involved in a number of
beer-related operations. Anheuser-Busch International, Inc. ("ABII"), a
wholly-owned subsidiary of the Company, negotiates and administers
licensed brewing contracts on behalf of ABI with various foreign
brewers. The Labatt Brewing Company Limited ("Labatt") brews Budweiser
and Bud Light for sale in Canada. ABI, through ABII, participates in a
joint venture in Japan, Budweiser Japan Company, Ltd., of which the
Company is a 90% shareholder, with Kirin Brewery Company, Ltd. for
production, distribution and sale of Budweiser. Through Anheuser-Busch
European Trade Limited ("ABET"), an indirect, wholly-owned subsidiary
of the Company, ABI's beer brands are sold, marketed and distributed in
nineteen European countries. In the United Kingdom (U.K.), ABET has
full control of sales, marketing and distribution for the Budweiser and
Michelob brands to both the on- and off-trade sectors. Budweiser for
the U.K. market is brewed under the terms of a contract brewing
agreement with Courage Ltd., with Michelob imported by ABII. Guinness
Ireland, Ltd. markets and brews Budweiser under license for sale in The
Republic of Ireland. Oriental Brewery Ltd. brews Budweiser under
license for sale in the Republic of Korea. ABI's beer products are also
being sold under import-distribution agreements in more than 60
countries and U.S. territories and to the U.S. military and diplomatic
corps outside the continental United States. ABII also oversees the
Company's 17.7% equity investment in Mexico's largest brewer, Grupo
Modelo, S.A. de C.V. and its subsidiaries, and the Company's 5%
interest in Tsingtao Brewery Company Limited, China's largest brewer.
Both of these investments occurred in 1993.
The Company's wholly-owned subsidiary, Metal Container Corporation
("MCC"), manufactures beverage cans at eight plants and beverage can
lids at three plants for sale to ABI and to soft drink and export
customers. (See Item 2 of Part 1-Properties). MCC's eighth can plant
located in Rome, Georgia began operation in the fourth quarter of 1993.
Construction is in progress on a can plant in Mira Loma, California,
which is scheduled to begin production in 1995. The Mira Loma can plant
will replace MCC's can plant in Carson, California. Another wholly-
owned subsidiary of the Company, Anheuser-Busch Recycling Corporation
("ABRC"), recycles non-refillable cans and bottles and operates
refillable bottle sorting facilities in Marion, Ohio and Nashua, New
Hampshire; ABRC's facilities in Union City, California, Cocoa, Florida,
and Charlotte, North Carolina recycle aluminum beverage cans and its
facility in Bridgeport, New Jersey recycles glass containers from
curbside collections from municipal systems in Pennsylvania and New
Jersey.
The Company's wholly-owned subsidiary, Busch Agricultural Resources,
Inc. ("BARI"), operates rice drying, milling and research facilities in
Arkansas and California, twelve grain elevators in the western and
midwestern United States, barley seed processing plants in Moorhead,
Minnesota, Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming,
a barley research facility in Colorado, and a wild rice processing
facility in Minnesota. Through
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wholly-owned subsidiaries, BARI operates land application farms in
Jacksonville, Florida, Robersonville, North Carolina, Fayetteville,
Tennessee, and Fort Collins, Colorado, hop farms in northern Idaho and
Germany, and an international office in Mar del Plata, Argentina. BARI
also owns malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and
Idaho Falls, Idaho.
The Company has owned for several years a joint venture interest in
International Label Company. On December 31, 1993, the Company acquired
the remaining interest in the joint venture from Illochroma
International, S.A. The Company's wholly owned subsidiary, Precision
Printing and Packaging, Inc. ("Precision Printing") now conducts the
business previously conducted by International Label Company. Precision
Printing produces metalized and paper labels at its plant in
Clarksville, Tennessee and produces plain and printed folding cartons
at its plant in Paris, Texas.
Another wholly-owned subsidiary, Anheuser-Busch Investment Capital
Corporation, shares equity positions with qualified partners in ABI
independent wholesalerships and is currently invested in 21
wholesalerships.
Through other wholly-owned subsidiaries, the Company owns and
operates a marketing communications business (Busch Creative Services
Corporation) and a transportation service business (Manufacturers
Railway Co. and St. Louis Refrigerator Car Co.).
FOOD PRODUCTS
The Company's wholly-owned subsidiary, Campbell Taggart, Inc.
("CTI"), is a holding company whose operating subsidiaries are
principally involved in the production and distribution of baked goods,
refrigerated and frozen dough products, and edible oil products for
sale to retail and food service companies.
CTI's domestic bakery subsidiary operates a total of 41 bakeries; one
subsidiary operates three refrigerated dough plants, four cake, variety
bread and snack food plants, a cookie plant, a crouton plant, two
refrigerated salad dressing, snack dips and toppings manufacturing
plants; and one subsidiary operates a refrigerated warehouse in Puerto
Rico. CTI's domestic bakeries and manufacturing plants are located in
19 states. CTI affiliated European companies operate eight bakeries in
Spain, and one refrigerated dough plant in France, and distribute
salted snacks under the Eagle Snacks line in Spain.
The principal products of CTI's baking and refrigerated dough
operations are baked bread, rolls, snack cake and other sweet goods and
crackers, and refrigerated biscuits, rolls, and sweet goods. Baked
products are sold principally on a wholesale basis throughout the
southeast, midwest, and southwest United States (including parts of
California), and in Spain. Refrigerated dough products, most of which
are sold under private or controlled label agreements, are distributed
throughout the United States and in the European Economic Community
("EEC"). The majority of the domestic bakery products are sold under
the brand names Colonial, Rainbo, Kilpatrick's, Ironkids, Break Cake,
Grant's Farm, and Earth Grains. These sales are to grocers,
restaurants, and institutions, in areas generally within a range of 100
to 400 miles of the producing bakery, through a variety of distribution
systems. In the U.S., refrigerated dough product distribution is
principally by direct sales to large wholesale purchasers or through
independent brokers, for delivery by refrigerated tractor-trailer
units. In the EEC, selling is principally through contract packing
arrangements with other food companies. Certain products produced by
CTI's bakery subsidiary are also sold on a retail basis through bakery
stores operated by the CTI bakeries.
The bakeries compete with other wholesale bakeries, large grocery
chains that have vertically integrated and in-store bakeries, small
retail bakeries, and with many producers of alternative foods. The
baking business is, to a large extent, a localized business, and the
names and number of competitors vary from city to city. The
refrigerated dough division competes primarily with Pillsbury Co.
(owned by Grand Metropolitan (U.K.)), the other major company in that
industry, and its refrigerated dough product line competes with other
alternative foods. Due to the seasonality of the industry, sales of
CTI's food products were at their lowest level in the first quarter of
1993 and at their highest in the fourth quarter. Based upon aggregate
sales, the Company believes that CTI baking and refrigerated dough
subsidiaries collectively are the second largest producer of bread,
bread-type products, and refrigerated dough products in the United
States.
The Company's wholly-owned subsidiary, Eagle Snacks, Inc. ("ESI"),
produces and distributes (through ABI's beer distribution network,
independent wholesalers, and CTI) a line of salted snacks and nut items
under the Eagle Snacks and Cape Cod brand names. ESI products are
distributed nationally and in selected international markets. ESI
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operates a kettle-cooked chip manufacturing facility in Hyannis,
Massachusetts and snack food manufacturing plants in Robersonville,
North Carolina, Fayetteville, Tennessee, Visalia, California, and York,
Pennsylvania.
The food business is highly competitive. There is intense price,
product, and service competition with respect to all of the Company's
food products. Sales of the Company's food products accounted for
approximately 20% of consolidated net sales dollars in each of the last
three years.
FAMILY ENTERTAINMENT
The Company is active in the family entertainment field, primarily
through its wholly-owned subsidiary, Busch Entertainment Corporation
("BEC"), which owns, directly and through subsidiaries, ten theme
parks.
BEC operates Busch Gardens theme parks in Tampa, Florida and
Williamsburg, Virginia, and Sea World theme parks in Orlando, Florida,
San Antonio, Texas, Aurora, Ohio, and San Diego, California. BEC also
operates water park attractions in Tampa, Florida (Adventure Island)
and Williamsburg, Virginia (Water Country, U.S.A.), an educational play
park for children near Philadelphia, Pennsylvania (Sesame Place),
Cypress Gardens in Winter Haven, Florida, and the Baseball City Sports
Complex near Orlando, Florida. Due to the seasonality of the theme park
business, in 1993 BEC experienced higher revenues in the second and
third quarters and lower revenues in the first and fourth quarters.
Through a Spanish affiliate, the Company also holds a minority
interest in Grand Peninsula, S.A., which is constructing a theme park
and resort near Barcelona, Spain. The park is scheduled to open in
1995.
The Company is also active in the family entertainment field through
its ownership of the St. Louis National Baseball Club, Inc. (St. Louis
Cardinals). The Company faces competition in the family entertainment
field from other theme and amusement parks, public zoos, public parks,
sporting events and other family entertainment events and attractions.
Through its wholly-owned subsidiary, Busch Properties, Inc. ("BPI"),
the Company is engaged in the business of real estate development. BPI
also owns and operates a resort and conference center in Williamsburg,
Virginia (Kingsmill). Through another wholly-owned subsidiary, Civic
Center Corporation, the Company owns Busch Stadium and other properties
in downtown St. Louis.
SOURCES AND AVAILABILITY OF RAW MATERIALS
The products manufactured by the Company require a large volume of
various agricultural products, including barley for malt; hops, malt,
rice, and corn grits for beer; peanuts, cashews, vegetable oils, corn,
flour, and potatoes for the products of ESI; flours, sugars, and
vegetable oils for the bakery products of CTI's subsidiaries; and rice
for the rice milling and packaging operations of BARI. The Company
fulfills its commodities requirements through purchases from various
sources, including purchases from its subsidiaries, through contractual
arrangements, and through purchases on the open market. The Company
believes that adequate supplies of the aforementioned agricultural
products are available at the present time, but cannot predict future
availability or prices of such products and materials. The commodity
markets have experienced and will continue to experience major price
fluctuations. The price and supply of raw materials will be determined
by, among other factors, the level of crop production, weather
conditions, export demand, and government regulations and legislation
affecting agriculture.
ENERGY MATTERS
The Company uses natural gas, fuel oil, and coal as its primary fuel
materials. All of ABI's breweries can operate with either natural gas
or fuel oil. The St. Louis brewery has the additional capability to use
coal. Natural gas is the basic fuel used to fire the ovens in CTI's
bakeries, and gasoline and diesel fuel are used in the route trucks and
tractor-trailer units in distributing CTI's and ESI's products.
Supplies of fuels in quantities sufficient to meet ABI's, CTI's and
ESI's total requirements are expected to be available on a year-round
basis during 1994. In an effort to prepare against possible future
shortages, CTI and its subsidiaries have added standby propane systems
to provide an alternate source of oven fuel and have improved fuel
storage facilities in areas where it is believed most likely that
shortages could occur in the future. The supply of natural gas, fuel
oils and coal is normally covered by yearly contracts and no difficulty
has been experienced in entering into these contracts. The cost of
fuels used by ABI increased in 1993 and is expected to increase
slightly in 1994. The cost of boiler fuel utilized by CTI increased
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significantly in 1993 while the cost of road fuels was steady. The cost
of fuels utilized by CTI are expected to increase only moderately in
1994. Based upon information presently available, there can be no
assurance that adequate supplies of fuel will always be available to
the Company and, should such supplies not be available, the Company's
sales and earnings would be adversely affected.
BRAND NAMES AND TRADEMARKS
The Company's major brand names used in its principal business
segments are mentioned in the discussion above. The Company's major
trademarks used in its principal business segments are described under
the caption "Trademarks" on page 64 of the Company's 1993 Annual Report
to Shareholders, which description is incorporated herein by reference.
The Company regards consumer recognition of and loyalty to its brand
names and trademarks as being extremely important to the long-term
success of its principal business segments.
RESEARCH AND DEVELOPMENT
The Company is involved in a number of research activities relating
to the development of new products or services or the improvement of
existing products or services. The dollar amounts expended by the
Company during the past three years on such research activities and the
number of employees engaged full time therein during such period,
however, are not considered to be material in relation to the total
business of the Company.
ENVIRONMENTAL PROTECTION
All of the Company's plants are subject to federal, state, and local
environmental protection laws and regulations, and the Company is
operating within existing laws and regulations or is taking action
aimed at assuring compliance therewith. Various proactive strategies
are utilized to help assure this compliance. Compliance with such laws
and regulations is not expected to materially affect the Company's
capital expenditures, earnings, or competitive position. The Company
has devoted considerable effort to research and engineering of cost
effective innovative systems to minimize emission effects on the
environment. A significant portion of pollution control expenditures in
1993 and projected for 1994 was or will be justified on the basis of
cost reduction. Considerable efforts were directed toward the
development and implementation of innovative and economical solutions
to control emissions from our operating facilities.
These projects, coupled with an overall Company emphasis on improving
efficiencies and creating saleable by-products from residuals, have
generally resulted in low cost operating systems while reducing the
quantities of materials entering the air, water, and land environments.
ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS
The states of California, Connecticut, Delaware, Florida, Iowa,
Maine, Massachusetts, Michigan, New York, Oregon, and Vermont, and a
small number of local jurisdictions, have adopted certain restrictive
packaging laws and regulations for beverages that generally require
deposits or advanced disposal fees on packages or restrict certain
packaging options. ABI continues to do business in these states and
local jurisdictions. Such laws have not had a significant effect on
ABI's sales, but have had a significant adverse impact on beer industry
growth and are considered by the Company to be inflationary, costly,
and inefficient for recycling packaging materials. Congress and a
number of additional states continue to consider similar legislation,
the adoption of which by Congress or a substantial number of states or
additional local jurisdictions might require the Company to incur
significant capital expenditures.
NUMBER OF EMPLOYEES
As of December 31, 1993, the Company had 43,345 employees.
Approximately 13,522 employees are represented by the International
Brotherhood of Teamsters. Nineteen other unions represent approximately
9,873 employees. ABI and the Brewery and Soft Drink Workers Conference
of the International Brotherhood of Teamsters, which represents the
majority of brewery workers, have tentatively agreed to a new labor
agreement, which will be presented to the union membership for a
ratification vote in late March, 1994. The current labor agreement which
was scheduled to expire on February 28, 1994, has been extended pending
the vote.
The Company considers its employee relations to be good.
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ITEM 2. PROPERTIES
ABI has thirteen breweries in operation at the present time, located
in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield,
California; Jacksonville and Tampa, Florida; Houston, Texas; Columbus,
Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville,
New York; Fort Collins, Colorado; and Cartersville, Georgia. Title to
the Baldwinsville, New York brewery is held by the Onondaga County
Industrial Development Agency ("OCIDA") pursuant to a Sale and Agency
Agreement with ABI, which enabled OCIDA to issue tax exempt pollution
control and industrial development revenue notes and bonds to finance a
portion of the cost of the purchase and modification of the brewery.
The brewery is not pledged or mortgaged to secure any of the notes or
bonds, and the Sale and Agency Agreement with OCIDA gives ABI the
unconditional right to require at any time that title to the brewery be
transferred to ABI. ABI's breweries operated at approximately 94% of
capacity in 1993.
The Company, through wholly-owned subsidiaries, operates malt plants
in Manitowoc, Wisconsin, Moorhead, Minnesota and Idaho Falls, Idaho;
rice mills in Jonesboro, Arkansas and Woodland, California; a wild rice
processing facility in Clearbrook, Minnesota; can manufacturing plants
in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor,
Colorado, Carson, California, Newburgh, New York, Ft. Atkinson,
Wisconsin, and Rome, Georgia; can lid manufacturing plants in
Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside,
California; refillable bottle sorting facilities in Marion, Ohio and
Nashua, New Hampshire; and snack food production plants in
Robersonville, North Carolina, Hyannis, Massachusetts, Fayetteville,
Tennessee, Visalia, California, and York, Pennsylvania.
BEC operates its principal family entertainment facilities in Tampa,
Florida; Williamsburg, Virginia; San Diego, California; Aurora, Ohio;
Orlando, Florida; San Antonio, Texas; and Winter Haven, Florida. The
Tampa facility is 265 acres, Williamsburg is 364 acres, San Diego is
165 acres, Aurora is 90 acres, Orlando is 224 acres, San Antonio is 496
acres, and the Winter Haven facility is 223 acres.
The Company's wholly-owned subsidiary, CTI, through its domestic
subsidiaries, operates 41 bakeries and 11 manufacturing plants in 19
states. CTI's international subsidiaries own and operate eight bakeries
in Spain and a refrigerated dough manufacturing plant in France. CTI's
domestic bakeries operate at approximately 75% of capacity, which is
about average for the baking industry.
Except for the Baldwinsville brewery, the can manufacturing plants in
Carson, California and in Newburgh, New York, eleven CTI facilities,
one ESI plant, and the Sea World park in San Diego, California, all of
the Company's principal properties are owned in fee. The lease for the
land used by the Sea World park in San Diego, California expires in
2033. Title to eight CTI facilities is currently held by development
authorities for the jurisdictions in which the facilities are located
pursuant to Industrial Development Bonds; the remaining CTI facilities
are leased. The Company considers its buildings, improvements, and
equipment to be well maintained and in good condition, irrespective of
dates of initial construction, and adequate to meet the operating
demands placed upon them. The production capacity of each of the
manufacturing facilities is adequate for current needs and, except as
described above, substantially all of each facility's capacity is
utilized.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending or threatened litigation,
the outcome of which would be expected to have a material adverse
effect upon its financial condition or its operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the fourth
quarter ended December 31, 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
AUGUST A. BUSCH III (age 56) is presently Chairman of the Board and
President, and Director of the Company and has served in such
capacities since 1977, 1974, and 1963, respectively. Since 1979 he has
also served as Chairman of the Board and Chief Executive Officer of the
Company's subsidiary, Anheuser-Busch, Incorporated. During the past
five years he also served as President of that subsidiary (1987-1990).
JERRY E. RITTER (age 59) is presently Executive Vice President-Chief
Financial and Administrative Officer of the Company and was appointed
to serve in such capacity in 1990. He is also Vice President-Finance of
the
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Company's subsidiary, Anheuser-Busch, Incorporated, and has served in
such capacity since 1982. During the past five years he also served as
Vice President and Group Executive of the Company (1984-1990).
MICHAEL J. ROARTY (age 65) is presently Executive Vice President-
Corporate Marketing and Communications of the Company and was appointed
to serve in such capacity in 1990. He is also presently Chairman of the
Board of the Company's subsidiary, Busch Media Group, Inc., and
Chairman of the Board and Chief Executive Officer of the Company's
subsidiary, Busch Creative Services Corporation, and was appointed to
serve in each such capacity in 1990. During the past five years he also
served as Vice President of the Company (1988-1990) and Executive Vice
President-Marketing of the Company's subsidiary, Anheuser-Busch,
Incorporated (1983-1990). Mr. Roarty has elected to retire from his
positions with the Company and its subsidiaries in September 1994.
Details of Mr. Roarty's retirement are set forth on page 18 in the
Company's Proxy Statement for the Annual Meeting of Shareholders on
April 27, 1994.
PATRICK T. STOKES (age 51) is presently Vice President and Group
Executive of the Company and has served in such capacity since 1981. He
is also presently President of the Company's subsidiary, Anheuser-
Busch, Incorporated, and was appointed to serve in such capacity in
1990. During the past five years he also served as Chairman of the
Board and Chief Executive Officer of the Company's subsidiary, Campbell
Taggart, Inc. (1985-1990) and Chairman of the Board and President of
the Company's subsidiary, Eagle Snacks, Inc. (1987-1990).
BARRY H. BERACHA (age 52) is presently Vice President and Group
Executive of the Company and has served in such capacity since 1976. He
is also presently Chairman of the Board and Chief Executive Officer of
the Company's subsidiary, Campbell Taggart, Inc. and has served in such
capacity since September 1993. He is also Chairman of the Board of the
Company's subsidiary, Metal Container Corporation and has served in
such capacity since 1976. During the past five years he also served as
Chief Executive Officer of Metal Container Corporation (1976-September
1993) and Chairman of the Board and Chief Executive Officer of the
Company's subsidiary, Anheuser-Busch Recycling Corporation (1978-1993).
JOHN H. PURNELL (age 52) is presently Vice President and Group
Executive of the Company and has served in such capacity since January
1991. He is also Chairman of the Board and Chief Executive Officer of
the Company's subsidiary, Anheuser-Busch International, Inc., and has
served as Chairman since 1980 and as Chief Executive Officer since
January 1991. During the past five years he also served as Senior Vice
President-Corporate Planning and Development (1987-1991).
W. RANDOLPH BAKER (age 47) is presently Vice President and Group
Executive of the Company and has served in such capacity since 1982.
During the past five years he also served as Chairman of the Board and
President of the Company's subsidiaries, Busch Properties, Inc. and
Busch Entertainment Corporation (1978-1991).
STEPHEN K. LAMBRIGHT (age 51) is presently Vice President and Group
Executive of the Company and has served in such capacity since 1984.
STUART F. MEYER (age 60) is presently Vice President and Group
Executive of the Company and has served in such capacity since April
1991 and has also served as Vice President-Corporate Human Resources of
the Company (1984-March 1991). He was appointed President and Chief
Executive Officer of the Company's subsidiary, St. Louis National
Baseball Club, Inc., in January 1992 and prior to that served as
Executive Vice President and Chief Operating Officer (April
1991-December 1991). He is also President and Chief Executive Officer
of the Company's subsidiary, Civic Center Corporation, and has served
in such capacity since April 1991.
RAYMOND E. GOFF (age 48) is presently Vice President and Group
Executive of the Company and has served in such capacity since 1986. He
is also presently Chairman of the Board and Chief Executive Officer of
the Company's subsidiary, Busch Agricultural Resources, Inc., and has
served in such capacity since 1986.
JAIME IGLESIAS (age 63) is presently Chairman of the Board and Senior
Vice President-Europe of the Company's subsidiary, Anheuser-Busch
Europe, Inc. ("ABEI") and was appointed to these positions in January
1993. Prior to that he served as Chief Executive Officer (1989-January
1993) and as President (1988-January 1993) of ABEI. He was appointed
President-International Operations of the Company's subsidiary,
Campbell Taggart, Inc. ("CTI"), in 1991 and prior to that served as
Vice President-International (1983-1991). He is also Chairman of CTI's
subsidiary, Bimbo S.A., and President and Senior Vice President-Europe
of the Company's subsidiary, Anheuser-Busch International, Inc.
("ABII"), and has served in such capacities since 1978 and January
1993, respectively. He also served as President and Managing Director-
Europe of ABII (1988-January 1993).
7
<PAGE> 9
ALOYS H. LITTEKEN (age 53) is presently Vice President-Corporate
Engineering of the Company and has served in such capacity since 1981.
WILLIAM L. RAMMES (age 52) is presently Vice President-Corporate
Human Resources of the Company and has served in such capacity since
June 1992. During the past five years he also served as Vice President-
Operations of the Company's subsidiary, Anheuser-Busch Incorporated
(1990-June 1992) and Vice President-Administration (1986-1989).
JOHN B. ROBERTS (age 49) is presently Chairman of the Board and
President of the Company's subsidiary, Busch Entertainment Corporation,
and has served in such capacities since June 1992 and May 1991,
respectively. During the past five years he also served as Executive
Vice President and General Manager of Busch Entertainment Corporation
(1990-May 1991) and Vice President and General Manager (1987-1990) and
Vice President-Operations (1979-1987).
JOSEPH L. GOLTZMAN (age 52) is presently Vice President and Group
Executive of the Company and has served in such capacity since
September 1993. He is also presently Chairman, Chief Executive Officer
and President of the Company's subsidiary, Anheuser-Busch Recycling
Corporation, President and Chief Executive Officer of the Company's
subsidiary, Metal Container Corporation, and President of the Company's
subsidiary, Metal Label Corporation, and has served in such capacities
since January 1993, September 1993, and 1988, respectively. During the
past five years he also served as President of Anheuser-Busch Recycling
Corporation (1988-December 1992) and Vice President-Recycling and
Metals Planning (January 1992-September 1993) and Director-Metals
Planning and Recycling (1988-December 1991) of the Company.
PART II
The information required by Items 5, 6, 7, and 8 of this Part II are
hereby incorporated by reference from pages 32 through 65 of the
Company's 1993 Annual Report to Shareholders.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with Price Waterhouse, the Company's
independent accountants since 1961, on accounting principles or
practices or financial statement disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required with respect to Directors is hereby
incorporated by reference from pages 3 through 5 of the Company's Proxy
Statement for the Annual Meeting of Shareholders on April 27, 1994. The
information required by this Item with respect to Executive Officers is
presented on pages 6 through 8 of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated by
reference from page 7 and pages 15 through 21 of the Company's Proxy
Statement for the Annual Meeting of Shareholders on April 27, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is hereby incorporated by
reference from pages 2 and 6 of the Company's Proxy Statement for the
Annual Meeting of Shareholders on April 27, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is hereby incorporated by
reference from pages 21 through 23 of the Company's Proxy Statement for
the Annual Meeting of Shareholders on April 27, 1994.
8
<PAGE> 10
PART IV
<TABLE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<CAPTION>
PAGE IN
ANNUAL
REPORT*
-----------
<S> <C>
(a) The following documents are filed as part of this report:
1. Financial Statements:
Report of Independent Accountants.............................................................................. 41
Consolidated Balance Sheet at December 31, 1993 and 1992....................................................... 42-43
Consolidated Statement of Income for the three years ended December 31, 1993................................... 44
Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 1993........... 45
Consolidated Statement of Cash Flows for the three years ended December 31, 1993............................... 46
Notes to Consolidated Financial Statements..................................................................... 47-59
Report of Independent Accountants on Financial Statement Schedules
2. Financial Statement Schedules For the Years 1993, 1992, and 1991:
Property, plant and equipment (Schedule V)
Accumulated depreciation of property, plant and equipment (Schedule VI)
Guarantees of securities of other issuers (Schedule VII) (1993 only)
Valuation and qualifying accounts and reserves (Schedule VIII)
Short-term borrowings (Schedule IX)
</TABLE>
3. Exhibits
Exhibit 3.1 - Amendment to Article Fourth of the Restated
Certificate of Incorporation of the Company
dated June 10, 1992. (Restated Certificate of
Incorporation with amendments previously filed
and incorporated by reference to Exhibit 3.1 to
Form 10-K for the fiscal year ended December 31,
1987.)
Exhibit 3.2 - Certificate of Designation, Rights and
Preferences of the Series C Convertible
Preferred Stock of the Company dated November 3,
1989. (Incorporated by reference to Exhibit 3.2
to Form 10-K for the fiscal year ended December
31, 1990.)
Exhibit 3.3 - By-Laws of the Company (as amended and restated
October 27, 1993). (Incorporated by reference to
Exhibit 3 to Form 10-Q for the quarter ended
September 30, 1993.)
Exhibit 4.1 - Form of Rights Agreement, dated as of December
18, 1985 between Anheuser-Busch Companies, Inc.
and Centerre Trust Company of St. Louis (now
Boatmen's Trust Company), as amended and
restated as of December 17, 1986.
Exhibit 4.2 - Indenture between the Company and Manufacturers
Hanover Trust Company. (Incorporated by
reference to Exhibit 4 to Registration Statement
on Form S-3, Registration No. 33-14685, filed
with the Commission on June 3, 1987.) (Other
indentures are not filed, but the Company agrees
to furnish copies of such instruments to the
Securities and Exchange Commission upon
request.)
[FN]
- - - -----
*Incorporated by reference from the indicated pages of the 1993 Annual
Report to Shareholders.
9
<PAGE> 11
Exhibit 10.1 - Anheuser-Busch Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors (as
amended and restated February 22, 1989.)
(Incorporated by reference to Exhibit 10.1 to
Form 10-K for the fiscal year ended December 31,
1988.)*
Exhibit 10.2 - First Amendment to Anheuser-Busch Companies,
Inc. Deferred Compensation Plan for Non-Employee
Directors (as amended and restated February 22,
1989) effective April 24, 1991. (Incorporated by
reference to Exhibit 10.2 to Form 10-K for the
fiscal year ended December 31, 1991.)*
Exhibit 10.3 - Second Amendment to Anheuser-Busch Companies,
Inc. Deferred Compensation Plan for Non-Employee
Directors (as amended and restated February 22,
1989) effective January 1, 1994.*
Exhibit 10.4 - Anheuser-Busch Companies, Inc. Retirement
Program for Non-Employee Directors.
(Incorporated by reference to Exhibit 10.1 to
Registration Statement on Form S-14 filed
September 14, 1982.)*
Exhibit 10.5 - Anheuser-Busch Companies, Inc. 1981 Incentive
Stock Option/Non-Qualified Stock Option Plan (as
amended December 18, 1985, December 16, 1987,
December 20, 1988 and July 22, 1992.)
(Incorporated by reference to Exhibit 10.4 to
Form 10-K for the fiscal year ended December 31,
1992.)*
Exhibit 10.6 - Excerpts from resolutions adopted by the
Anheuser-Busch Companies, Inc. Board of
Directors on September 22, 1993 amending the
Anheuser-Busch Companies, Inc. 1981 Incentive
Stock Option/Non-Qualified Stock Option Plan.*
Exhibit 10.7 - Anheuser-Busch Companies, Inc. 1981 Non-
Qualified Stock Option Plan (as amended December
18, 1985, June 24, 1987, December 20, 1988 and
July 22, 1992.) (Incorporated by reference to
Exhibit 10.5 to Form 10-K for the fiscal year
ended December 31, 1992.)*
Exhibit 10.8 - Anheuser-Busch Companies, Inc. 1989 Incentive
Stock Plan (as amended December 20, 1989,
December 19, 1990 and December 15, 1993.)*
Exhibit 10.9 - Anheuser-Busch Companies, Inc. Excess
Benefit Plan.*
Exhibit 10.10- First Amendment to Anheuser-Busch Companies,
Inc. Excess Benefit Plan.*
Exhibit 10.11- Second Amendment to Anheuser-Busch Companies,
Inc. Excess Benefit Plan effective as of July 1,
1989. (Incorporated by reference to Exhibit
10.10 to Form 10-K for the fiscal year ended
December 31, 1989.)*
Exhibit 10.12- Excerpts from resolutions adopted by the
Anheuser-Busch Companies, Inc. Board of
Directors on September 22, 1993 amending the
Anheuser-Busch Companies, Inc. Excess Benefit
Plan.*
Exhibit 10.13- Anheuser-Busch Companies, Inc. Supplemental
Executive Retirement Plan Amended and Restated
as of July 1, 1989. (Incorporated by reference
to Exhibit 10.11 to Form 10-K for the fiscal
year ended December 31, 1989.)*
Exhibit 10.14- First Amendment to Anheuser-Busch Companies,
Inc. Supplemental Executive Retirement Plan.
(Incorporated by reference to Exhibit 10.11 to
Form 10-K for the fiscal year ended December 31,
1990.)*
Exhibit 10.15- Excerpts from resolutions adopted by the
Anheuser-Busch Companies, Inc. Board of
Directors on September 22, 1993 amending the
Anheuser-Busch Companies, Inc. Supplemental
Executive Retirement Plan.*
10
<PAGE> 12
Exhibit 10.16- Anheuser-Busch Executive Deferred Compensation
Plan effective January 1, 1994.*
Exhibit 10.17- Anheuser-Busch 401(k) Restoration Plan effective
January 1, 1994.*
Exhibit 10.18- Form of Indemnification Agreement with Directors
and Executive Officers.*
Exhibit 10.19- 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.
Exhibit 10.20- Letter agreement between Anheuser-Busch
Companies, Inc. and the Controlling Shareholders
regarding Section 5.5 of the Investment Agreement
filed as Exhibit 10.19 of this report.
Exhibit 13 - Pages 32 through 65 of the Anheuser-Busch
Companies, Inc. 1993 Annual Report to
Shareholders, a copy of which is furnished for
the information of the Securities and Exchange
Commission. Portions of the Annual Report not
incorporated herein by reference are not deemed
"filed" with the Commission.
Exhibit 21 - Subsidiaries of the Company
Exhibit 23 - Consent of Independent Accountants, filed as
page 16 of this report.
[FN]
- - - -----
* A management contract or compensatory plan or arrangement required to
be filed by Item 14(c) of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1993.
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ANHEUSER-BUSCH COMPANIES, INC.
...................................
(Registrant)
By AUGUST A. BUSCH III
...................................
August A. Busch III
Chairman of the
Board and President
Date: March 23, 1994
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<S> <C> <C>
AUGUST A. BUSCH III Chairman of the Board and President and March 23, 1994
- - - -------------------------------------------------------------- Director (Principal Executive Officer)
(August A. Busch III)
JERRY E. RITTER Executive Vice President-Chief Financial March 23, 1994
- - - -------------------------------------------------------------- and Administrative Officer (Principal
(Jerry E. Ritter) Financial Officer)
GERALD C. THAYER Vice President and Controller (Principal March 23, 1994
- - - -------------------------------------------------------------- Accounting Officer)
(Gerald C. Thayer)
PABLO ARAMBURUZABALA O. Director March 23, 1994
- - - --------------------------------------------------------------
(Pablo Aramburuzabala O.)
RICHARD T. BAKER Director March 23, 1994
- - - --------------------------------------------------------------
(Richard T. Baker)
ANDREW B. CRAIG III Director March 23, 1994
- - - --------------------------------------------------------------
(Andrew B. Craig III)
BERNARD A. EDISON Director March 23, 1994
- - - --------------------------------------------------------------
(Bernard A. Edison)
PETER M. FLANIGAN Director March 23, 1994
- - - --------------------------------------------------------------
(Peter M. Flanigan)
JOHN E. JACOB Director March 23, 1994
- - - --------------------------------------------------------------
(John E. Jacob)
CHARLES F. KNIGHT Director March 23, 1994
- - - --------------------------------------------------------------
(Charles F. Knight)
VERNON R. LOUCKS, JR. Director March 23, 1994
- - - --------------------------------------------------------------
(Vernon R. Loucks, Jr.)
12
<PAGE> 14
VILMA S. MARTINEZ Director March 23, 1994
- - - --------------------------------------------------------------
(Vilma S. Martinez)
SYBIL C. MOBLEY Director March 23, 1994
- - - --------------------------------------------------------------
(Sybil C. Mobley)
JAMES B. ORTHWEIN Director March 23, 1994
- - - --------------------------------------------------------------
(James B. Orthwein)
DOUGLAS A. WARNER III Director March 23, 1994
- - - --------------------------------------------------------------
(Douglas A. Warner III)
WILLIAM H. WEBSTER Director March 23, 1994
- - - --------------------------------------------------------------
(William H. Webster)
EDWARD E. WHITACRE, JR. Director March 23, 1994
- - - --------------------------------------------------------------
(Edward E. Whitacre, Jr.)
13
<PAGE> 15
</TABLE>
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES
<CAPTION>
PAGE
----
<S> <C>
Report of independent accountants on Financial Statement Schedules..................................... 15
Consent of independent accountants..................................................................... 16
Financial schedules for the years 1993, 1992 and 1991:
Property, plant and equipment (Schedule V)........................................................... 17
Accumulated depreciation of property, plant and equipment (Schedule VI).............................. 18
Guarantees of securities of other issuers (Schedule VII) (1993 only)................................. 19
Valuation and qualifying accounts and reserves (Schedule VIII)....................................... 20
Short-term borrowings (Schedule IX).................................................................. 21
</TABLE>
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes
thereto.
Separate financial statements of subsidiaries not consolidated have
been omitted because, in the aggregate, the proportionate share of
their profit before income taxes and total assets are less than 20% of
the respective consolidated amounts, and investments in such companies
are less than 20% of consolidated total assets.
14
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Anheuser-Busch Companies, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 7, 1994 appearing on page 41 of the 1993 Annual
Report to Shareholders of Anheuser-Busch Companies, Inc. (which report
and consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the
Financial Statement Schedules listed in Item 14(a) of this Form 10-K.
In our opinion, these Financial Statement Schedules present fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE
St. Louis, Missouri
February 7, 1994
15
<PAGE> 17
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Forms S-3 (No.
33-31735 and No. 33-49051) and in the Registration Statements on Forms
S-8 (No. 2-71762, No. 2-77829, No. 33-4664, No. 33-36132, No. 33-39714,
No. 33-39715, and No. 33-46846) of Anheuser-Busch Companies, Inc. of
our report dated February 7, 1994 appearing on page 41 of the Annual
Report to Shareholders which is incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears on page 15
of this Form 10-K.
PRICE WATERHOUSE
St. Louis, Missouri
March 23, 1994
16
<PAGE> 18
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(IN MILLIONS)
<CAPTION>
ADDITIONS
-----------------------------
ASSETS
BALANCE AT OF RETIRE- BALANCE AT
BEGINNING ADDITIONS COMPANIES MENTS OTHER END OF
CLASSIFICATION OF PERIOD AT COST ACQUIRED OR SALES CHANGES PERIOD
-------------- ---------- --------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
1991
- - - ----
Land............................. $ 307.7 $ 6.4 $ - $ 1.1 $ (4.1) $ 308.9
Buildings........................ 2,825.2 211.9 - 11.4 2.1 3,027.8
Machinery and equipment.......... 6,080.3 597.0 - 87.6 (5.8) 6,583.9
Construction in progress......... 803.5 (112.8) - .1 (21.6) 669.0
--------- ------- ---- ------ ------- ---------
$10,016.7 $ 702.5 $ - $100.2 $ (29.4)(1) $10,589.6
========= ======== ==== ====== ======== =========
1992
- - - ----
Land............................. $ 308.9 $ 4.4 $ .7 $ 61.5 $ 20.8 $ 273.3
Buildings........................ 3,027.8 144.1 8.4 10.1 125.0 3,295.2
Machinery and equipment.......... 6,583.9 480.0 13.6 81.7 91.1 7,086.9
Construction in progress......... 669.0 108.7 - 39.5 (8.5) 729.7
--------- -------- ---- ------ -------- ---------
$10,589.6 $ 737.2 $22.7 $192.8 $ 228.4 (2) $11,385.1
========= ======== ===== ====== ======= =========
1993
- - - ----
Land............................. $ 273.3 $ 3.4 $ .7 $ .8 $ 5.3 $ 281.9
Buildings........................ 3,295.2 284.0 8.5 32.4 (109.8) 3,445.5
Machinery and equipment.......... 7,086.9 856.3 8.8 203.2 (92.3) 7,656.5
Construction in progress......... 729.7 (366.8) 4.1 (.3) (24.1) 343.2
--------- -------- ----- ------- ------- ---------
$11,385.1 $ 776.9 $22.1 $236.1 $(220.9)(3) $11,727.1
========= ======== ===== ====== ======= =========
<FN>
- - - -----
The company provides for depreciation of plant and equipment on methods
and at rates designed to amortize the cost of such equipment over its
useful life (buildings 2% to 10% and machinery and equipment 4% to
25%). Depreciation is computed principally on the straight-line method.
(1) Primarily represents the effect of translating foreign subsidiaries
into U.S. dollars and the reclassification of Busch Properties
developed properties to inventory.
(2) Primarily represents the adjustment to the asset write-up at
acquisition of Campbell Taggart due to adoption of FAS-109 as of
January 1, 1992. Also includes the effect of translating foreign
subsidiaries into U.S. dollars and the reclassification of Busch
Properties developed properties to inventory.
(3) Primarily represents asset write-downs to net realizable values in
connection with the company's Restructuring Program. Also includes
the effect of translating foreign subsidiaries into U.S. dollars.
</TABLE>
17
<PAGE> 19
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
(IN MILLIONS)
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO RETIRE- BALANCE AT
BEGINNING COSTS AND MENTS OTHER END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES CHANGES PERIOD
----------- ---------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
1991
- - - ----
Buildings........................................ $ 648.5 $ 95.3 $ 9.1 $ (.7) $ 734.0
Machinery and equipment.......................... 2,304.4 424.6 65.6 (4.3) 2,659.1
-------- ------ ------ ------ --------
$2,952.9 $519.9 $ 74.7 $ (5.0)(1) $3,393.1
======== ====== ====== ====== ========
1992
- - - ----
Buildings........................................ $ 734.0 $103.1 $ 6.9 $ 2.8 $ 833.0
Machinery and equipment.......................... 2,659.1 449.7 71.8 (8.6) 3,028.4
-------- ------ ------ ------ --------
$3,393.1 $552.8 $ 78.7 $ (5.8)(1) $3,861.4
======== ====== ====== ====== ========
1993
- - - ----
Buildings........................................ $ 833.0 $107.6 $ 21.0 $(14.9) $ 904.7
Machinery and equipment.......................... 3,028.4 486.5 166.8 (22.8) 3,325.3
-------- ------ ------ ------ --------
$3,861.4 $594.1 $187.8 $(37.7)(2) $4,230.0
======== ====== ====== ====== ========
<FN>
- - - -----
(1) Primarily represents the effect of translating foreign subsidiaries
into U.S. dollars.
(2) Primarily represents the effect of asset write-downs to net
realizable values in connection with the company's Restructuring
Program. Also includes the effect of translating foreign
subsidiaries into U.S. dollars.
</TABLE>
18
<PAGE> 20
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
(1993)
<CAPTION>
NATURE OF ANY
DEFAULT BY ISSUER
OF SECURITIES
AMOUNT GUARANTEED IN
NAME OF ISSUER TITLE OF OWNED BY PRINCIPAL,
OF SECURITIES ISSUE OF TOTAL PERSON OR AMOUNT IN INTEREST, SINKING
GUARANTEED BY EACH CLASS AMOUNT PERSONS TREASURY OF FUND OR REDEMP-
PERSON FOR OF GUARANTEED FOR WHICH ISSUER OF TION PROVISIONS,
WHICH STATEMENT SECURITIES AND STATEMENT SECURITIES NATURE OF OR PAYMENT
IS FILED GUARANTEED OUTSTANDING IS FILED GUARANTEED GUARANTEE OF DIVIDENDS
------------ ---------- ----------- --------- ---------- --------- -----------------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Anheuser-Busch, Inc. ..............Notes $15.8 100% - Guarantee of None
loans
Anheuser-Busch ....................Loan 3.3 100% - Guarantee of None
Investment Capital principal and
Corporation interest
Anheuser-Busch ....................Loan 8.5 100% - Guarantee of None
Companies, Inc. loans
</TABLE>
19
<PAGE> 21
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN MILLIONS)
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Reserve for doubtful accounts (deducted from related assets):
Balance at beginning of period.......................................... $ 4.9 $ 5.5 $ 6.2
Additions charged to costs and expenses................................. 3.8 1.3 2.4
Additions (recoveries of uncollectible accounts previously written off). 1.2 .7 .6
Deductions (uncollectible accounts written off)........................ (3.2) (2.6) (3.7)
------ ----- -----
Balance at end of period................................................ $ 6.7 $ 4.9 $ 5.5
====== ===== =====
Deferred income tax asset valuation allowance under FAS 109:
Balance at beginning of period.......................................... $ 35.6 $36.8 $ -
Additions to valuation allowance charged to costs and expenses.......... 16.3 5.1 -
Deductions from valuation allowance (utilizations and expirations)...... (10.9) (6.3) -
------ ----- ----
Balance at end of period................................................ $ 41.0 $35.6 $ -
====== ===== ====
<FN>
- - - -----
Note: Anheuser-Busch Companies, Inc. adopted FAS 109 effective January 1, 1992.
</TABLE>
20
<PAGE> 22
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
(IN MILLIONS)
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
CATEGORY OF BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
AGGREGATE SHORT- END OF AVERAGE DURING DURING DURING
TERM BORROWINGS PERIOD INTEREST RATE THE PERIOD THE PERIOD(1) THE PERIOD(2)
---------------- ---------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1991
- - - ----
Commercial paper and bank line of credit......... $ - (3) - (3) $638.2 $293.6 6.57%
1992
- - - ----
Commercial paper and bank line of credit......... - (3) - (3) 382.0 122.0 4.04%
1993
- - - ----
Commercial paper and bank line of credit......... - (3) - (3) 696.0 221.7 3.25%
<FN>
- - - -----
(1) Calculated by multiplying the amount borrowed by the number of days
outstanding and dividing the sum of the above by the number of days
in the year.
(2) Calculated by dividing the total interest expense on the borrowings
during the year by the average borrowings outstanding during the
year.
(3) At December 31, 1993, 1992 and 1991, there was $569.1 million, $79.7
million and $104.4 million, respectively, of commercial paper
borrowings outstanding at a weighted average interest rate of 3.35%
for 1993, 3.44% for 1992 and 6.66% for 1991. The commercial paper
is classified as long-term debt as it is expected to be maintained
on a long-term basis, with ongoing credit provided by the Company's
revolving credit agreements.
</TABLE>
21
<PAGE>1
EX-4.1
- - - -----------------------------------------------------------------------
ANHEUSER-BUSCH COMPANIES, INC.
and
CENTERRE TRUST COMPANY OF ST. LOUIS
Rights Agent
----------------
Rights Agreement
Amended and Restated as of December 17, 1986
- - - --------------------------------------------------------------------------
<PAGE>
<PAGE>2
Table of Contents
-----------------
Section Page
- - - ------- ----
l Certain Definitions . . . . . . . . . . . . . . . . l
2 Appointment of Rights Agent . . . . . . . . . . . . 5
3 Issue of Rights Certificates . . . . . . . . . . . . 5
4 Form of Rights Certificates . . . . . . . . . . . . 7
5 Countersignature and Registration . . . . . . . . . 8
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates . . . . . . . . . . . 9
7 Exercise of Rights; Purchase
Price; Expiration Date of Rights . . . . . . . . 10
8 Cancellation and Destruction of
Rights Certificates . . . . . . . . . . . . . . . 13
9 Reservation and Availability of
Capital Stock . . . . . . . . . . . . . . . . . . 13
10 Preferred Stock Record Date . . . . . . . . . . . . 15
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights . . . . . . . . . . . . . . . . 16
12 Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . . . . . . 29
13 Consolidation, Merger or Sale
or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . 30
14 Fractional Rights and Fractional
Shares . . . . . . . . . . . . . . . . . . . . . 33
15 Rights of Action . . . . . . . . . . . . . . . . . . 34
16 Agreement of Rights Holders . . . . . . . . . . . . 35
i
<PAGE>
<PAGE>3
Section Page
- - - ------- ----
17 Rights Certificate Holder Not Deemed
a Stockholder . . . . . . . . . . . . . . . . . . 36
18 Concerning the Rights Agent . . . . . . . . . . . . 36
19 Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . . . . 37
20 Duties of Rights Agent . . . . . . . . . . . . . . . 38
21 Change of Rights Agent . . . . . . . . . . . . . . . 41
22 Issuance of New Rights Certificates . . . . . . . . 42
23 Redemption and Termination . . . . . . . . . . . . . 42
24 Notice of Certain Events . . . . . . . . . . . . . . 44
25 Notices . . . . . . . . . . . . . . . . . . . . . . 45
26 Supplements and Amendments . . . . . . . . . . . . . 46
27 Successors . . . . . . . . . . . . . . . . . . . . . 46
28 Determinations and Actions
by the Board of Directors, etc . . . . . . . . . . 47
29 Benefits of this Agreement . . . . . . . . . . . . . 47
30 Severability . . . . . . . . . . . . . . . . . . . . 48
31 Governing Law . . . . . . . . . . . . . . . . . . . 48
32 Counterparts . . . . . . . . . . . . . . . . . . . . 48
33 Descriptive Headings . . . . . . . . . . . . . . . . 48
Exhibit A -- Certificate of Designation,
Preferences and Rights
Exhibit B -- Form of Rights Certificate
ii
<PAGE>
<PAGE>4
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of December 18,
1985, amended as of July 23, 1986, and amended and
restated as of December 17, 1986 (the "Agreement"),
between Anheuser-Busch Companies, Inc., a Delaware
corporation (the "Company"), and Centerre Trust Company
of St. Louis, a trust company organized under the laws
of the State of Missouri (the "Rights Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on December 18, 1985 (the "Rights
Dividend Declaration Date"), the Board of Directors of
the Company authorized and declared a dividend
distribution of one Right for each share of common
stock, par value $1.00 per share, of the Company (the
"Common Stock") outstanding at the close of business on
December 27, 1985 (the "Record Date"), and has
authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions
of Section 11(p) hereof) for each share of Common Stock
of the Company issued between the Record Date (whether
originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right
initially representing the right to purchase one
one-hundredth of a share of Series B Junior
Participating Preferred Stock of the Company having the
rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights
attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the
premises and the mutual agreements herein set forth,
the parties hereby agree as follows:
Section 1. Certain Definitions. For
-------------------
purposes of this Agreement, the following terms have
the meanings indicated:
(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial
Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any
Subsid-<PAGE>
<PAGE>5
iary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such
plan.
(b) "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in
effect on the date of this Agreement (the "Exchange
Act").
(c) A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to
"beneficially own," any securities:
(i) which such Person or any of
such Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in
writing) or upon the exercise of conversions
rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a
--------
Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's
Affiliates or Associates until such tendered
securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of
a Triggering Event which Rights were acquired by
such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of
such Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the
2
<PAGE>6
General Rules and Regulations under the Exchange
Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall
--------
not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security
if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the
applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not
also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph
(c)) or disposing of any voting securities of the
Company.
(d) "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the State of Missouri are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given
date shall mean 4:45 P.M., St. Louis time, on such
date; provided, however, that if such date is
--------
not a Business Day it shall mean 4:45 P.M., St. Louis
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the
common stock, par value $1.00 per share, of the
Company, except that "Common Stock" when used with
reference to any Person other than the Company shall
mean the capital stock of such Person with the greatest
voting power, or the
3
<PAGE>
<PAGE>7
equity securities or other equity interest having power
to control or direct the management, of such Person.
(g) "Continuing Director" shall mean
(i) any member of the Board of Directors of the
Company, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the
date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring
Person or of any such Affiliate or Associate, if such
Person's nomination for election or election to the
Board is recommended or approved by a majority of the
Continuing Directors.
(h) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(i) "Preferred Stock" shall mean shares
of Series B Junior Participating Preferred Stock, par
value $1.00 per share, of the Company and, to the
extent that there are not a sufficient number of shares
of Series B Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights,
any other series of Preferred Stock of the Company
designated for such purpose containing terms
substantially similar to the terms of the Series B
Junior Participating Preferred Stock.
(j) "Section 11 (a)(ii) Event" shall
mean any event described in Section 11(a)(ii)(A) or (B)
hereof.
(k) "Section 13 Event" shall mean any
event described in clauses (x), (y) or (z) of Section
13(a) hereof.
(l) "Stock Acquisition Date" shall mean
the first date of public announcement (which, for
purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
4
<PAGE>
<PAGE>8
(m) "Subsidiary" shall mean, with
reference to any Person, any corporation of which an
amount of voting securities sufficient to elect at
least a majority of the directors of such corporation
is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.
(n) "Triggering Event" shall mean any
Section 11(a) (ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
---------------------------
Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior
to the Distribution Date also be the holders of the
Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary
or desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the earlier of (i) the close
of business on the tenth day after the Stock
Acquisition Date, or (ii) the close of business on the
tenth business day after the date that a tender or
exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or
given within the meaning of Rule 14d2(a) of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the
Beneficial Owner of 30% or more of the shares of Common
Stock then outstanding (the earlier of (i) and (ii)
being herein referred to as the "Distribution note"),
(x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the
names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the
Company). As soon as practicable after the
Distribution Date, the Rights Agent will
5
<PAGE>
<PAGE>9
send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close
of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or
more right certificates, in substantially the form of
Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of
the Right Certificates, the company shall make the
necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) Rights shall be issued in respect
of all shares of Common Stock which are issued after
the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as setforth in
the Rights Agreement between Anheuser-Busch
Companies, Inc. and Centerre Trust Company of St.
Louis dated as of December 18, 1985, amended as of
July 23, 1986, and amended and restated as of
December 17, 1986 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of Anheuser-Busch Companies,
Inc. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no
longer be evidenced by this certificate.
Anheuser-Busch Companies, Inc. will mail to
the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of
a written request therefor. Under certain
circumstances set forth in the Rights Agreement,
Rights is-
6
<PAGE>
<PAGE>10
sued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or
Associates thereof (as such terms are defined in
the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the
foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by
such certificates shall be evidenced by such
certificates alone and registered holders of Common
Stock shall also be the registered holders of the
associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by
such certificates.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the
forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth
therein (such exercise price per one one-hundredth of a
share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued
pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a
7
<PAGE>11
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,
arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred
to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person
who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of
the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates shall
be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights
8
<PAGE>12
Agent and issued and delivered by the Company with the
same force and effect as though the person who signed
such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may
be signed on behalf of the Company by any person who,
at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date
of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date,
the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the
appropriate place for surrender of Rights Certificates
upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination
-------------------------------
and Exchange of Rights Certificates; Mutilated,
- - - -----------------------------------------------
Destroyed, Lost or Stolen Rights Certificates. (a)
- - - ---------------------------------------------
Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered
holder to purchase a like number of one one-hundredths
of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash
or other assets, as the case may be) as, the Rights
Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the
registered holder shall have completed and
9
<PAGE>
<PAGE>13
signed the certificate contained in the form of
assignment on the reverse side of such Rights
Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign
and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be,
as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer,
split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a
Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
-----------------------------------
Expiration Date of Rights. (a) Subject to Section
- - - -------------------------
7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without
limitation, the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii) and Section
23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one
one-hundredths of a share (or other securities, cash or
other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to
the earlier of (i) the close of business on December
27, 1995 (the "Final Expiration Date"), or (ii) the
time
10
<PAGE>
<PAGE>14
at which the Rights are redeemed as provided in Section
23 hereof (the earlier of (i) and (ii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each One
one-hundredth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $50, and
shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-hundredth
of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal
to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares
of Preferred Stock (or make available, if the Rights
Agent is the transfer agent for such shares)
certificates for the total number of one one-hundredths
of a share of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary
receipts representing such number of one one-hundredths
of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the
order of the registered holder of such Rights
Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)
(iii) hereof) may
11
<PAGE>
<PAGE>15
be made (x) in cash or by certified bank check or bank
draft payable to the order of the Company, or (y) by
delivery of a certificate or certificates (with
appropriate stock powers executed in blank attached
thereto) evidencing a number of shares of Common Stock
equal to the then Purchase Price divided by the closing
price (as determined pursuant to Section 11(d) hereof)
per share of Common Stock on the Trading Date
immediately preceding the date of such exercise. In
the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities,
cash and/or other property are available for
distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first oc-
currence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,
arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action
and no holder of such
12
<PAGE>16
Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its
failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section
7 unless such registered holder shall have (i)
completed and signed the certificate contained in the
form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of
-------------------------------
Rights Certificates. All Rights Certificates
- - - -------------------
surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered
to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
-------------------------------
Capital Stock. (a) The Company covenants and agrees
- - - -------------
that it will cause to be reserved and kept available
out of its authorized and unissued shares of Preferred
Stock (and, following the occurrence of a Triggering
Event, out
13
<PAGE>
<PAGE>17
of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and
issued shares held in its treasury), the number of
shares of preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or
other securities) that, as provided in this Agreement
including Section 11(a)(iii) hereof, will be sufficient
to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred
Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be
listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best
efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section
11(a)(iii) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933
(the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become
effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration
of the Rights. The Company will also take such action
as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the
date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement
and permit it to become effective. Upon any such
suspension, the Company shall issue a public
announcement stating that the exercisability of the
Rights has been temporar-
14
<PAGE>
<PAGE>18
ily suspended, as well as a public announcement at such
time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(d) The Company covenants and agrees
that it will take all such action as may be necessary
to ensure that all one one-hundredths of a share
of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and
all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for
a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than,
or the issuance or delivery of a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in
respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any
certificates for a number of one one-hundredths of a
share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such
tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no
such tax is due.
Section 10. Preferred Stock Record Date.
---------------------------
Each person in whose name any certificate for a number
of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may
be) is issued upon the exercise of Rights shall for all
purposes
15
<PAGE>
<PAGE>19
be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be)
represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of
--------
such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred
Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price,
-----------------------------
Number and Kind of Shares or Number of Rights. The
- - - ---------------------------------------------
Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company
shall at any time after the date of this Agree-
ment (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares
of its capital stock in a reclassification of the
preferred Stock (including any such
reclassification in connection with a
consolidation or merger in which the Company is
the continuing or surviving corporation),
except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such
16
<PAGE>20
dividend or of the effective date of such
subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted
so that the holder of any Right exercised after
such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred
Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately
prior to such date and at a time when the
Preferred Stock transfer books of the Company were
open, he would have owned upon such exercise and
been entitled to receive by virtue of such
dividend, subdivision, combination or
reclassification. If an event occurs which would
require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event:
(A)(1) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any
time after the date of this Agreement, directly or
indirectly, shall merge into the Company or otherwise
combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall
remain outstanding and unchanged, or (2) any Person
(other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for
or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of 30% or more of the
shares of Common Stock then outstanding, other than
pursuant to any transaction set forth in Section 13(a)
hereof, or pursuant to an offer for all outstanding
17
<PAGE>
<PAGE>21
shares of Common Stock at a price and upon such
terms and conditions as a majority of the
Continuing Directors determine to be in the best
interests of the Company and its stockholders,
other than such Person, its Affiliates and its
Associates, or
(B) during such time as there is an
Acquiring Person, there shall be any
reclassification of securities (including any
reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other
transaction or series of transactions involving
the Company or any of its Subsidiaries, other than
a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not
with or into or otherwise involving an Acquiring
Person) which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of
any class of equity securities of the Company or
any of its Subsidiaries which is directly or
indirectly beneficially owned by any Acquiring
Person or any Associate or Affiliate of any
Acquiring Person,
then, promptly following the occurrence of a Section
11(a)(ii) Event, proper provision shall be made so that
each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of
a share of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase
Price by the then number of one one-hundredths of a
share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by
50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the
date of such first occurrence (such number of shares,
the "Adjustment Shares").
18
<PAGE>
<PAGE>22
(iii) In the event that the number of
shares of Common, Stock which are authorized by
the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the
Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (l) the
value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current value") over (2)
the Purchase Price (such excess, the "Spread"),
and (B) with respect to each Right, make
adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without
limitation, shares, or units of shares, of
preferred stock which the Board of Directors of
the Company has deemed to have the same value as
shares of Common Stock (such shares of preferred
stock, "common stock equivalents")), (4) debt
securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where
such aggregate value has been determined by the
Board of Directors of the Company based upon the
advice of a nationally recognized investment
banking firm selected by the Board of Directors of
the Company; provided, however, if the Company
-------- -------
shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of
redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein
as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. If the
Board of Directors of the Com-
19
<PAGE>
<PAGE>23
pany shall determine in good faith that it is
likely that sufficient additional shares of Common
Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30)
day period set forth above may be extended to the
extent necessary, but not more than ninety (90)
days after the Section 11(a) (ii) Trigger Date, in
order that the Company may seek shareholder
approval for the authorization of such additional
shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the
Company determines that some action need be taken
pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the
Substitution Period in order to seek any
authorization of additional shares and/or to
decide the appropriate form of distribution to be
made pursuant to such first sentence and to
determine the value thereof. In the event of any
such suspension, the Company shall issue a public
announcement stating that the exercisability of
the Rights has been temporarily suspended, as
well as a public announcement at such time as the
Suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price
(as determined pursuant to Section 11(d) hereof)
per share of the Common Stock on the Section 11(a)
(ii) Trigger Date and the value of any "common
stock equivalent" shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a
record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after
such record date) Preferred Stock (or shares having the
same rights, privileges and preferences as the shares
of Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of
Preferred Stock or per share of equiv-
20<PAGE>
<PAGE>24
alent preferred stock (or having a conversion price per
share, if a security convertible into Preferred Stock
or equivalent preferred stock) less than the current
market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of
the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered and/or the
aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such
current market price, and the denominator of which
shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent
preferred stock to be offered for subscription
or purchase (or into which the convertible securities
so to be offered are initially convertible). In case
such subscription price may be paid by delivery of
consideration part or all of which may be in a form
other than cash, the value of such consideration shall
be as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the
holders of the Rights Shares of Preferred Stock owned
by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such
computation. Such adjustment shall be made
successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such
record date had not been fixed.
(b) In case the Company shall fix a re-
cord date for a distribution to all holders of
Preferred Stock (including any such distribution made
in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences
of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable
in Preferred Stock, but including any dividend payable
in stock other than Preferred stock) or subscription
rights or warrants (exclud-
21
<PAGE>25
ing those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the
current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as
determined in good faith by the Board of Directors of
the Company, whose determination shall be described in
a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and
the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is
fixed, and in the event that such distribution is not
so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such
record date had not been fixed.
(d)(i) For the purpose of any
computation hereunder, other than computations
made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock
on any date shall be deemed to be the average of
the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading
Days (as such term is herein after defined)
immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)
(iii) hereof, the "current market price" per share
of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share
of such Common Stock for the ten (10) consecutive
Trading Days immediately following such date;
provided, however, that in the event that
--------
the current market price per share of the Common
Stock is determined during a period following the
announcement by the issuer of such Common Stock
22
<PAGE>
<PAGE>26
of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or
securities convertible into shares of such Common
Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of
such Common Stock, and prior to the expiration of
the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, after the
ex-dividend date for such dividend or
distribution, or the record date for such
subdivision, combination or reclassification,
then, and in each such case, the "current market
price" shall be properly adjusted to take into
account ex-dividend trading. The closing price
for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such
day, the average of the closing bid and asked
prices, regular way, in either case as reported in
the principal consolidated transaction reporting
system with respect to securities listed or
admitted to trading on the New York Stock Exchange
or, if the shares of Common Stock are not listed
or admitted to trading on the New York Stock
Exchange, as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the shares
of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed
or admitted to trading on any national securities
exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported
by the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by
any such organization, the average of the closing
bid and asked prices as furnished by a
professional market maker making a market in the
Common Stock selected by the Board of Directors of
the Company. If on any such date no market maker
is making a market in the Common Stock, the fair
value of such shares on such date as determined in
good faith by the Board of Directors of the
Company shall be used. The term
23
<PAGE>
<PAGE>27
"Trading Day" shall mean a day on which the
principal national securities exchange on which
the shares of Common Stock are listed or admitted
to trading is open for the transaction of business
or, if the shares of Common Stock are not listed
or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded,
"current market price" per share shall mean the
fair value per share as determined in good faith
by the Board of Directors of the Company, whose
determination shall be described in a statement
filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any
computation hereunder, the "current market price"
per share of Preferred Stock shall be determined
in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the
current market price per share of Preferred Stock
cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market
price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to
100 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends
and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement)
multiplied by the current market price per share
of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so
listed or traded, "current market price" per share
of the preferred Stock shall mean the fair value
per share as determined in good faith by the Board
of Directors of the Company, whose determination
shall be described in a statement filed with the
Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the
"current market price" of one one-hundredth of a
share of Preferred Stock
24
<PAGE>
<PAGE>28
shall be equal to the "current market price"
of one share of Preferred Stock divided by
100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require
an increase or decrease of at least one percent (l%) in
the Purchase Price; provided, however, that any
--------
adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth
of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment
made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital
stock other than Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m), and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to
purchase at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have
exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c),
each Right
25
<PAGE>
<PAGE>29
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number
of one one-hundredths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of
a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the
purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after
the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment
in the number of one one-hundredths of a share of
preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable
for the number of one one-hundredths of a share
of preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated
to the nearest one-ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price
in effect immediately after adjustment of the Purchase
Price. The Company, shall make a public announcement
of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be
made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the
public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be
distributed to such holders of record in substitution
and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new
Rights Certificates evidenc-
26
<PAGE>30
ing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so
to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted
Purchase price) and shall be registered in the names of
the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of one one-
hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to
express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredth of a share
which were expressed in the initial Rights Certificates
issued here under.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below
the then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
such number of one one-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section
11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a
specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder
of any Right exercised after such record date the
number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company
--------
shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the
event requiring such adjustment.
27
<PAGE>
<PAGE>31
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by
this Section 11, as and to the extent that in their
good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that
any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are
convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees
that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than
a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or
into any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section
11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or
a series of related transactions, assets or earning
power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and
Associates.
28
<PAGE>
<PAGE>32
(o) The Company covenants and agrees
that, after the Distribution Date, it will not, except
as permitted by Section 23 or Section 26 hereof, take
(or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable
that such action will diminish substantially or
otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller
number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share
of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately
prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total
number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase
--------------------------------
Price or Number of Shares. Whenever an adjustment is
- - - -------------------------
made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a
copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
29
<PAGE>
<PAGE>33
Section 13. Consolidation, Merger or Sale or
--------------------------------
Transfer of Assets or Earning Power.
- - - -----------------------------------
(a) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such
consolidation or merger, (y) any person (other than a
Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the
Company shall be the continuing or surviving
corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or
(z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power
aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o)
hereof), then, and in each such case, proper provision
shall be made so that: (i) each holder of a Right,
except as provided in Section 7(e) thereof, shall
thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common
Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share for
which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such
first occurrence), and
30
<PAGE>
<PAGE>34
dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to
as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the current
market price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13
Event; (ii) such principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section
13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to
such Principal Party following the first occurrence of
a Section 13 Event; (iv) such Principal Party shall
take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its
Common stock) in connection with the consummation of
any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of
Common Stock of the Company are converted in such
merger or consolidation, and if no securities are
so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any
transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the
party receiving the greatest portion of the assets
or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the
- - - --------
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
31
<PAGE>
<PAGE>35
month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which
is and has been so registered, "principal Party" shall
refer to such other person; and (2) in case such Person
is a Subsidiary, directly or indirectly of more than
one Person, the Common Stocks of two or more of which
are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer
of the Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate
any such consolidation, merger, sale or transfer unless
the principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not
been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and
such principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger
or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a
registration statement under the Act, with respect
to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and
will use its best efforts to cause such
registration statement to (A) become effective as
soon as practicable after such filing and (B)
remain effective (with a prospectus at all times
meeting the requirements of the Act) until the
Expiration Date; and
(ii) will deliver to holders of
the Rights historical financial statements for the
principal Party and each of its Affiliates
which comply in all respects with the requirements
for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or
other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a
Section
32
<PAGE>
<PAGE>36
11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional
--------------------------------
Shares.
- - - ------
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof,
or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the
Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either
case as reported in the principal consolidated
transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting
system with respect to securities listed on the
principal national securities exchange on which the
Rights are listed or admitted to trading, or if the
Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use or,
if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and
asked prices as furnished by a professional market
maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights
the fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company
shall be used.
33
<PAGE>
<PAGE>37
(b) The Company shall not be required
to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-hundredth of a share
of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current
market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-hundredth of a
share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a
Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the
current market value of one (l) share of Common Stock.
For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing
price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(d) The holder of a Right by the
acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
----------------
action in respect of this Agreement are vested in the
respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior
to the Distribution
34
<PAGE>
<PAGE>38
Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be
entitled to specific performance of the obligations
hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of
any person subject to this Agreement.
Section 16. Agreement of Rights Holders. Ev-
---------------------------
ery holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully
executed;
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary;
and
35
<PAGE>
<PAGE>39
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of
a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best
- - - --------
efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
-----------------------------
Deemed a Stockholder. No holder, as such, of any
- - - --------------------
Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of
the number of one one-hundredths of a share of
Preferred Stock or any other securities of the Company
which may at any time be issuable on the exercise of
the Rights represented there by, nor shall anything
contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or
otherwise, until the Right, or Rights evidenced by such
Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
--------------------------
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred
in the administration and execution of this Agreement
and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any
36
<PAGE>
<PAGE>40
loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs
and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and
shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company,
instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or
--------------------------
Change of Name of Rights Agent.
- - - ------------------------------
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or
filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such
--------
corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section
21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature
of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name
of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights
Certificates shall have the full
37
<PAGE>
<PAGE>41
force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have
been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The
----------------------
Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person and the determination of "current
market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement
in reliance upon such certificate.
38
<PAGE>
<PAGE>42
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except
as to its countersignature on such Rights
Certificates), but all such statements and recitals are
and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company
of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common
Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will,
when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman
of the Board, the President, any Vice President, the
Secre-
39
<PAGE>
<PAGE>43
tary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to
such officers for advice or instructions in connection
with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good
faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily
interested in any transaction in which the Company may
be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in
it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, de-
fault, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided,
--------
however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Right
Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as
the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of
transfer without first consulting with the Company.
40
<PAGE>44
Section 21. Change of Rights Agent. The
----------------------
Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail,
and to the holders of the Rights CertificateS by first-
class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of
such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then
any registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and
doing business under the laws of the United States or
of the State of Missouri (or of any other state of the
United States so long as such corporation is authorized
to do business as a banking institution in the State of
Missouri), in good standing, having a principal office
in the State of Missouri, which is authorized under
such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or
state authority and which has at the time of its
appointment as Rights Agent a combined capital and
surplus of at least $100,000,000. After appointment,
the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder,
and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment,
the Company shall file notice thereof in writing with
the predecessor
41
<PAGE>
<PAGE>45
Rights Agent and each transfer agent of the Common
Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case
may be.
Section 22. Issuance of New Rights
----------------------
Certificates. Notwithstanding any of the provisions of
- - - ------------
this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities
or property purchasable under the Rights Certificates
made in accordance with the provisions of this
Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following
the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued
by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in
connection with such issuance or sale; provided,
--------
however, that (i) no such Rights Certificate shall be
issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a
significant risk of material adverse tax consequences
to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the
Company may, at its option, at any time prior to the
earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.025
per Right, as such
42
<PAGE>
<PAGE>46
amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption
Price"); provided, however, that if, following the
--------
occurrence of a Stock Acquisition Date and following
the expiration of the right of redemption hereunder but
prior to any Triggering Event (i) a Person who is an
Acquiring Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or
indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of
a Triggering Event such that such Person is thereafter
a Beneficial Owner of 10% or less of the outstanding
shares of Common Stock, and (ii) there are no other
Persons, immediately following the occurrence of the
event described in clause (i), who are Acquiring
Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions
of this Section 23. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right
of redemption hereunder has expired.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any
further action and without any notice, the right to
exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last
address as it appears upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common
Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of
redemption will state the method by which the payment
of the Redemption Price will be made.
43
<PAGE>
<PAGE>47
Section 24. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders
of Preferred Stock or to make any other distribution to
the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect
any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series
of related transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record
date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein
by the holders of the shares of Preferred Stock if any
such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i)
or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the
case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed
action or the date of participation therein by the
holders of the shares of Preferred Stock whichever
shall be the earlier.
44
<PAGE>
<PAGE>48
(b) In case any of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such
case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section
25 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter
to refer to Common Stock and/or, if appropriate, other
securities.
Section 25. Notices. Notices or demands
-------
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing
with the Rights Agent) as follows:
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118-1852
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Centerre Trust Company of St. Louis
510 Locust Street
St. Louis, Missouri 63101
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books
of the Company.
45
<PAGE>
<PAGE>49
Section 26. Supplements and Amendments.
--------------------------
Prior to the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company
and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement
without the approval of any holders of certificates
representing shares of Common Stock. From and after
the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder, or (iv) to change
or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the
holders of Rights Certificates; provided, this
--------
Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number
of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of
the holders of Common Stock.
Section 27. Successors. All the covenants
----------
and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure
to the benefit of their respective successors and
assigns hereunder.
46
<PAGE>50
Section 28. Determinations and Actions by
-----------------------------
the Board of Directors, etc. For all purposes of this
- - - ---------------------------
Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the
Company (with, where specifically provided for herein,
the concurrence of the Continuing directors) shall have
the exclusive power and authority to administer this
Agreement and to exercise all rights and powers
specifically granted to the Board (with, where
specifically provided for herein, the concurrence of
the Continuing Directors) or to the Company, or as may
be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this
Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and
determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing)
which are done or made by the Board (with, where
specifically provided for herein, the concurrence of
the Continuing Directors) in good faith, shall (x) be
final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board or the
Continuing Directors to any liability to the holders of
the Rights.
Section 29. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of
the Common stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common stock).
47
<PAGE>51
Section 30. Severability. If any term,
------------
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that
--------
notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith
judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day
following the date of such determination by the Board
of Directors.
Section 31. Governing Law. This
-------------
Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all
purposes shall be governed by and construed in
accordance with the laws of such State applicable to
contracts made and to be performed entirely within such
State.
Section 32 Counterparts. This Agreement
------------
may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 33. Descriptive Headings.
--------------------
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of
any of the provisions hereof.
48
<PAGE>
<PAGE>52
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above
written.
Attest: ANHEUSER-BUSCH COMPANIES, INC.
By s/JOHN L. HAYWARD By s/AUGUST A. BUSCH III
--------------------- --------------------------
Name: John L. Hayward Name: August A. Busch III
Title: Vice President and Title: Chairman of the Board
Secretary and President
Attest: CENTERRE TRUST COMPANY OF
ST. LOUIS
By s/H. WHELAN By s/H. E. BRADFORD
--------------------- ---------------------------
Name: H. Whelan Name: H. E. Bradford
Title: Assistant Secretary Title: Vice President
49
<PAGE>
<PAGE>53
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
ANHEUSER-BUSCH COMPANIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, August A. Busch III, Chairman of the Board
and President, and John L. Hayward, Vice President and
Secretary, of Anheuser-Busch Companies, Inc., a
corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance
with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon
the Board of Directors by the Restated Certificate of
Incorporation of the said Corporation, the said Board of
Directors on December 18, 1985, adopted the following
resolution creating a series of four million (4,000,000)
shares of Preferred Stock designated as Series B Junior
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested
in the Board of Directors of this Corporation in
accordance with the provisions of its Restated
Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created and that
the designation and amount thereof, and the voting
powers, preferences and relative, participating, optional
and other special rights of the shares of such series,
and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares
of such series shall be designated as "Series B Junior
Participating Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting such series
shall be 4,000,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series B Preferred
Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in
cash on the fifteenth day of January, April, July and
<PAGE>
<PAGE>54
October in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a
share of Series B Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a)
$20 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, par value $1
per share, of the Corporation (the "Common Stock") since
the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or
fractional of a share of Series B Preferred Stock. In
the event the Corporation shall at any time declare or
pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series
B Preferred Stock were entitled immediately prior to such
event under clause (b) the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
The Corporation shall declare a dividend or
distribution on the Series B Preferred Stock as provided
in this paragraph (A) above immediately after it declares
a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a
dividend of $20 per share on the Series B Preferred Stock
shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
2
<PAGE>
<PAGE>55
Dividends shall begin to accrue and be
cumulative on outstanding shares of Series B Preferred
Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B
Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or Is a date after the record date
for the determination of holders of shares of Series B
Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the
determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be
no more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of
shares of Series B Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series B Preferred
Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on Common Stock
payable in shares of Common Stock; or effect a
subdivision or combination of the outstanding shares of
Common Stock (by reclassificatiOn or otherwise) into a
greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which
holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is
3
<PAGE>
<PAGE>56
the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by
law, the holders of shares of Series B Preferred Stock
and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series
B Preferred Stock shall be in arrears in an amount equal
to six quarterly dividends thereon, the occurrence of
such contingency shall mark the beginning of a period
(herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series
B Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each
default period, the holders of Preferred Stock, voting as
a class, irrespective of series, shall have the right to
elect two Directors.
(ii) During any default period, such voting
right of the holders of Series B Preferred Stock may be
exercised initially at a special meeting called pursuant
to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such
voting right nor the right of the holders of Preferred
Stock as hereinafter provided to increase in certain
cases the authorized number of Directors shall be exer-
cised unless the holders of 25% in number of shares of
Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders
of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise
such voting right initially during an existing default
period, they shall have the right, voting as a class, to
elect Directors to fill such vacancies, if any, in the
Board of Directors as may then exist up to two Directors
or, if such right is exercised at an annual meeting, to
elect two Directors. If the number which may be so
elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of
Directors as shall be necessary to permit the election by
4
<PAGE>
<PAGE>57
them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect
Directors in any default period and during the
continuance of such period, the number of Directors shall
not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided.
(iii) Unless the holders of Preferred Stock
shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of
Directors may order, or any stockholder or stockholders
owning in the aggregate not less than 10% of the total
number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder
of record of Preferred Stock by mailing a copy of such
notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later
than 60 days after such order or request or in default of
the calling of such meeting within 60 days after such
order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the
aggregate, not less than 10% of the total number of
shares of Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of
Common Stock, and other classes of stock of the
Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to
elect two Directors voting as a class, after the exercise
of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders
or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be
filled by vote of a majority of the remaining Directors
theretofore
5
<PAGE>
<PAGE>58
elected by the holders of the class of stock which
elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors
elected by the holders of a particular class of stock
shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a
default period, (x) the right of the holders of Preferred
Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in
the by-laws irrespective of any increase pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change thereafter in
any manner provided by law or in the by-laws). Any va-
acancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of
Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series B
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of
Series B Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on,
make any other distributions on, or redeem or
purchase or otherwise acquire for
consideration any shares of stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series B Preferred Stock;
(ii) declare or pay dividends on or
make any other distributions on any shares
6
<PAGE>59
of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred
Stock, except dividends paid ratably on the
Series B Preferred Stock and all such parity
stock on which dividends are payable or in
arrears in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(iii) redeem or purchase or
otherwise acquire for consideration shares of
any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred
Stock, provided that the Corporation may at
any time redeem, purchase or otherwise
acquire shares of any such parity stock in
exchange for shares of any stock of the
Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or
winding up) to the Series B Preferred Stock;
or
(iv) purchase or otherwise
acquire for consideration any shares of
Series B Preferred Stock, any shares of stock
ranking on a parity with the Series B
Preferred Stock, except in accordance with a
purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and
classes, shall determine in good faith will
result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series B Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the
acquisition
7
<PAGE>
<PAGE>60
thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of
Preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or
Winding Up. Upon any voluntary liquidation,
dissolution or wind of the Corporation, no distribution
shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of
shares of Series B Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided
that the holders of shares of Series B Preferred Stock
shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred
Stock, except distributions made ratably on the Series
B Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the
Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of
shares of Series B Preferred Stock were entitled
immediately prior to such event under the proviso in
clause (1) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In
case the Corporation shall enter into any consolidation,
8
<PAGE>
<PAGE>61
merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other
property, then in any such case the shares of Series B
Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
Lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding
sentence with respect to the exchange or change of
shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of
Series B Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series B Preferred
Stock shall rank pari passu to all other series of the
Corporation's Preferred Stock outstanding as of
December 27, 1985 as to the payment of dividends and
the distribution of assets.
Section 10. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended
in any manner which would materially alter or change
the powers, preferences or special rights of the Series
B Preferred Stock so as to affect them adversely
without
9
<PAGE>
<PAGE>62
the affirmative vote of the holders of two-thirds or
more of the outstanding shares of Series B Preferred
Stock, voting together as a single class.
IN WITNESS WHEREOF, we have executed and
subscribed this Certificate and do affirm the foregoing
as true under the penalties of perjury this ----- day
of December, 1985.
-------------------------
August A. Busch III,
Chairman of the Board
and President
------------------------
John L. Hayward,
Vice President and
Secretary
10
<PAGE>
<PAGE>63
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- --------- Rights
NOT EXERCISABLE AFTER DECEMBER 27, 1995 OR
EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.025 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]*
Rights Certificate
ANHEUSER-BUSCH COMPANIES, INC.
This certifies that , or
registered assigns, is the registered owner of the
number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement,
dated as of December 18, 1985, amended as of July 23,
1986, and amended and re-
- - - ----------------------
* The portion of the legend in brackets shall be
inserted only if applicable and shall replace
the preceding sentence.
<PAGE>
<PAGE>64
stated as of December 17, 1986 (the "Rights
Agreement"), between Anheuser-Busch Companies, Inc., a
Delaware corporation (the "Company"), and Centerre
Trust Company of St. Louis, a trust company organized
under the State of Missouri (the "Rights Agent"), to
purchase from the Company at any time prior to 4:45
P.M. (St. Louis time) on December 27, 1995 at the
office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, nonassessable share of
Series B Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price
of $50 per one one-hundredth of a share (the "Pur-
chase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to
Purchase and related Certificate duly executed. The
Purchase Price shall be paid, at the election of the
holder, in cash or shares of Common Stock of the
Company having an equivalent value. The number of
Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase
Price as of December 17, 1986, based on the Preferred
Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, such Rights shall
become null and void and no holder hereof shall have
any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares of
Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and
adjustment upon the happening of certain events,
including Triggering Events.
2
<PAGE>
<PAGE>65
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is
hereby made for a full description of the rights,
limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension
of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also
available upon written request to the Rights Agent.
This Rights Certificate, with or without
other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-
hundredths of a share of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall
be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate may
be redeemed by the Company at its option at a
redemption price of $.025 per Right at any time prior
to the earlier of the close of business on (i) the
tenth day following the Stock Acquisition Date (as such
time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. After
the expiration of the redemption period, the Company's
right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less
of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the
Company.
No fractional shares of Preferred Stock will
be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are
integral multiples
3<PAGE>
<PAGE>66
of one one-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced
by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for
any purpose the holder of shares of Preferred Stock or
of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or
other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ------------ --, 19--
ATTEST: ANHEUSER-BUSCH COMPANIES, INC.
- - - ------------------- By ---------------------------
Secretary Title:
Countersigned:
CENTERRE TRUST COMPANY OF ST. LOUIS
By --------------------------------
Authorized Signature
4
<PAGE>
<PAGE>67
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ----------------------------------------------
hereby sells, assigns and transfers unto ------------------------
- - - -----------------------------------------------------------------
(Please print name and address of transferee)
- - - -----------------------------------------------------------------
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ------------------- Attorney, to transfer the within
rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ---------------, 19--
--------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person
<PAGE>
<PAGE>68
who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ----------, 19 -- --------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
<PAGE>69
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: ANHEUSER-BUSCH COMPANIES, INC.:
The undersigned hereby irrevocably elects to exercise
- - - ------------ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or other identifying number
- - - ----------------------------------------------------------------
(Please print name and address)
- - - ----------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security
or other identifying number
- - - ----------------------------------------------------------------
(Please print name and address)
- - - ----------------------------------------------------------------
- - - ----------------------------------------------------------------
Dated:------------, 19--
--------------------------
Signature
<PAGE>
<PAGE>70
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are [ ] are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ---------, 19-- ---------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>1
EX-10.3
SECOND AMENDMENT TO ANHEUSER-BUSCH COMPANIES, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED AND RESTATED FEBRUARY 22, 1989)
The Anheuser-Busch Companies, Inc. Deferred Compensation Plan for
Non-Employee Directors (as amended and restated February 22,
1989) (the "Plan") hereby is amended as follows:
1. By adding the following subsection (jj) to section 1 in
appropriate alphabetical order:
(jj) "Prime Rate" - The annual prime interest rate
charged on commercial loans by The Boatmen's National
Bank of St. Louis.
2. By deleting section 3 in its entirety and substituting
the following therefor:
3. Elections under the Plan
------------------------
(a) Each Non-Employee Director who desires to
participate in the Plan for a calendar year shall
execute and deliver to the Secretary an appropriate
election form designating the portion of Compensation
for the calendar year to be deferred and the account(s)
to which it is to be credited before the beginning of
the calendar year. Failure to execute and deliver such
a form before the beginning of a calendar year shall
cause termination of any existing election to defer
Compensation then in force, effective as of January 1
of the calendar year, subject to resumption of the Non-
Employee Director's election to defer future
Compensation as of the first day of any succeeding
calendar month pursuant to section 3(c).
(b) (1) Each Non-Employee Director for whom any
Cash Account is maintained at any time during a
calendar year shall execute and deliver to the
Secretary an appropriate election form designating the
Rate/Term combinations which shall apply to the amounts
in the Non-Employee Director's Cash Accounts as
provided for in section 5(d) for the calendar year.
(2) If a Non-Employee Director executes and
delivers such a form before the beginning of a calendar
year, it shall become effective as of January 1 of such
calendar year. If a Non-Employee Director does not
execute and deliver such a form before the beginning of
a calendar year, the Non-Employee Director shall make
such an election in connection with the Non-Employee
Director's next election pursuant to section 3(a) or
3(c), whichever applies.
(c) In addition to the elections provided for in
sections 3(a) and (b), each Non-Employee Director may
<PAGE>
<PAGE>2
from time to time execute and deliver to the Secretary
an appropriate election form designating the portion of
future Compensation to be deferred and the account(s)
to which it is to be credited and the time and form of
payment of Deferred Amounts attributable to such future
Compensation.
(d) (1) Any election under this section 3 shall
be applicable on and after the first day of the month
next following the month in which the election form is
received by the Secretary.
(2) The receipt by the Secretary of a new
election form shall constitute a revocation of any
previously filed inconsistent form as to future
Compensation, provided that a Non-Employee Director
shall not be able to change the elections provided for
in section 3(b) for a calendar year before the later of
the first day of the following calendar year or the
expiration of the fixed Term, if any, the Non-Employee
Director chose for any Deferred Amounts subject to the
election.
(3) No revocation of a prior election under
the Plan shall be effective with respect to any
Deferred Amount credited before the first day of the
month next following the month in which notice of the
revocation is received by the Secretary.
3. By deleting section 5 in its entirety and substituting
the following therefor:
5. Cash Account
------------
(a) Each Cash Account shall consist of the
Deferred Amount credited under a specific election to
defer.
(b) Crediting of interest on Deferred Amounts in
a Non-Employee Director's Cash Accounts shall be
governed by this section 5.
(c) (1) Before the beginning of each calendar
year, the Company shall offer one or more combinations
of interest rates (hereinafter "Rates") and time
periods (hereinafter "Terms") which shall apply to
Compensation allocated to Non-Employee Directors' Cash
Accounts for the calendar year, to all Deferred Amounts
allocated to the Non-Employee Director's Cash Accounts
in prior calendar years which were subject to the Prime
Rate as of the prior December 31, and to other Deferred
Amounts allocated to the Non-Employee Director's Cash
-2-<PAGE>
<PAGE>3
Accounts as to which the previous Terms expired on
December 31 of the prior calendar year.
(2) The fixed Rates and Terms for each
calendar year shall be determined by the Chief
Financial Officer of the Company and shall be identical
to the Rates and Terms available for the calendar year
under the Anheuser-Busch Executive Deferred
Compensation Plan.
(3) All fixed Terms shall commence on a
January 1 and expire on a December 31, provided that a
Non-Employee Director's election of a fixed Rate after
the first day of a calendar year shall not apply to any
Deferred Amounts until the effective date of the
election. For example: (i) if before January 1, 1995,
a Non-Employee Director elects a combination of a 3-
year Term and a 3% Rate for 1995, the 3% Rate shall
apply to affected Deferred Amounts from January 1, 1995
through December 31, 1997; (ii) if a Non-Employee
Director elects a combination of a 3-year Term and a 3%
Rate as of April 1, 1995, the 3% Rate shall apply to
affected Deferred Amounts from April 1, 1995 through
December 31, 1997.
(4) The fixed Terms elected by a Non-
Employee Director need not be limited to the deferral
period for the amount subject to the Term elected. For
example, a Non-Employee Director may elect a 10-year
Term for an amount that will become payable after 5
calendar years.
(5) In addition to any fixed Rate/Term
combinations provided for in this section 5(c), the
Prime Rate shall be offered to Non-Employee Directors
for each calendar year. Deferred Amounts subject to
the Prime Rate shall be credited as of the end of each
calendar quarter with an amount equal to the product of
one-fourth of the Prime Rate in force at the end of
that calendar quarter, multiplied by the average daily
balance of such Deferred Amounts for that calendar
quarter.
(d) (1) Each Non-Employee Director shall elect
among the Rate/Term combinations available under
section 5(c) which shall apply to the Non-Employee
Director's Compensation allocated to the Non-Employee
Director's Cash Accounts for the calendar year, to all
Deferred Amounts allocated to the Non-Employee
Director's Cash Accounts in prior calendar years which
were subject to the Prime Rate as of the prior December
-3-<PAGE>
<PAGE>4
31, and to other Deferred Amounts allocated to the Non-
Employee Director's Cash Accounts in prior calendar
years as to which the previous Terms expired on
December 31 of the prior calendar year.
(2) The number of Rate/Term combinations a Non-
Employee Director may select for a calendar year shall not
exceed the number of Rate/Term combinations a participant
may select under the Anheuser-Busch Executive Deferred
Compensation Plan for the same calendar year.
(3) If a Non-Employee Director does not execute
and deliver the appropriate election form before the
beginning of a calendar year, the Non-Employee Director
shall be deemed to have elected that any amounts subject to
such an election as of the beginning of the calendar year be
credited with the Prime Rate from January 1 of the calendar
year until the effective date of the Non-Employee Director's
next such election.
(e) Interest shall accrue on the Deferred Amounts
of a Non-Employee Director for each calendar year in
accordance with the Non-Employee Director's elections
as provided for in this section 5 until payment becomes
due with respect to such amounts.
(f) If any Cash Account is paid in installments
pursuant to a Non-Employee Director's election,
interest shall accrue on any balance thereof remaining
to be paid in installments from time to time at the
Rate in effect with respect to such Cash Account on the
day prior to the due date of the first installment.
This Second Amendment shall be effective from and after
January 1, 1994.
IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has caused
this Amendment to be executed this 22d day of December, 1993.
---
ANHEUSER-BUSCH COMPANIES, INC.
By s/JERRY E. RITTER
------------------------------
Executive Vice President,
Chief Financial and
Administrative Officer
-4-
<PAGE>1
EX-10.6
EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH
COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22, 1993 AMENDING
THE ANHEUSER-BUSCH COMPANIES, INC. 1981 INCENTIVE STOCK
OPTION/NON-QUALIFIED STOCK OPTION PLAN
RESOLVED, that Section 7(f) of the 1981 ISO/NQSO Plan
(relating to the Post-Termination Exercise Period) is amended
to read as follows:
(f) An Option may be exercised only by the Optionee during
his or her lifetime, and only by the Optionee's Post-Death
Representatives after his or her death. Option Agreements may
contain any provision approved by the Committee, not
inconsistent with Sections 7(d), 8, and 9 of the Plan,
relating to the period for exercise of Options after
termination of employment, death, or disability.
RESOLVED, that Section 8 of the 1981 ISO/NQSO Plan (relating
to the Two-Year Forfeiture Rule) is amended by adding to the
end thereof the following new sentence:
The Committee may waive, in whole or part and for any reason
the Committee deems appropriate, any termination caused by
this Section 8 of any Option or group of Options.
RESOLVED, that the appropriate officers are authorized and
directed to take whatever actions are necessary or appropriate
to carry out the substance and intent of these resolutions and
the amendments of the 1981 ISO/NQSO Plan referred to above.
<PAGE>1
EX-10.8
ANHEUSER-BUSCH COMPANIES, INC.
1989 INCENTIVE STOCK PLAN
(AS AMENDED DECEMBER 20, 1989, DECEMBER 19, 1990 AND DECEMBER 15, 1993)
SECTION 1. PURPOSE.
The purpose of the Plan is to attract, retain, motivate and reward
employees of the Company, its Subsidiaries and Affiliates with
compensatory arrangements that involve Options and SARs.
SECTION 2. DEFINITIONS.
(a) "Act" means the Securities Exchange Act of 1934, as amended from
time to time.
(b) "Affiliate" means any entity in which the Company has a
substantial direct or indirect equity interest (other than a Subsidiary),
as determined by the Committee.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code as in effect from time
to time.
(e) "Committee" means the Stock Option Committee described in
Section 12 hereof.
(f) "Company" means Anheuser-Busch Companies, Inc. and its
successors.
(g) "Disability" means the condition of being "disabled" within the
meaning of Section 422(c)(6) of the Code or any successor provision.
(h) "Eligible Employee" means a person who is eligible to receive
an option under Section 4 of the Plan.
(i) "Employer" means the Company, the Subsidiary, or the Affiliate
which employs the Optionee.
(j) "Fair Market Value" of Stock on a given date means (i) the
average of the highest and lowest selling prices per share of Stock
reported on the New York Stock Exchange Composite Tape or similar facility
for such date, (ii) if Stock is not listed on the New York Stock Exchange,
the average of the highest and lowest selling prices per share of Stock
as reported for such date on the principal stock exchange in the U.S. on
which Stock is listed (as determined by the Committee), or (iii) if
neither of the preceding clauses is applicable, the value per share
determined by the Committee in a manner consistent with the Treasury
Regulations under Section 2031 of the Internal Revenue Code. If no sale
of Stock occurs on such date, but there were sales reported within a
reasonable period both before and after such date, the weighted average
of the means between the highest and lowest selling prices on the nearest
date before and the nearest date after such date shall be used, with the
average to be weighted inversely by the respective numbers of trading days
between the selling dates and such date.
(k) "ISO" or "Incentive Stock Option" means an option to purchase
Stock which is designated by the Committee as an "Incentive Stock Option"
and which qualifies as an "incentive stock option" under Section 422 (or
any successor provision) of the Code.
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(l) "Limited Right" has the meaning given in Section 7.
(m) "NQSO" or "Non-Qualified Stock Option" means an option to
purchase Stock which is designated by the Committee as a "Non-Qualified
Stock Option," or which is designated by the Committee as an ISO but which
fails or ceases to qualify as an "incentive stock option" under the Code.
(n) "Option" means an ISO or an NQSO.
(o) "Option Agreement" means the written agreement referred to in
Section 5(a) between the Company and the Optionee evidencing an Option or
SAR.
(p) "Optionee" means a person to whom an Option or SAR is granted
pursuant to the Plan.
(q) "Plan" means the Anheuser-Busch Companies, Inc. 1989 Incentive
Stock Plan, as amended from time to time.
(r) "Reporting Person," as of a given date, means an Optionee who
would be required to report a purchase or sale of Stock occurring on such
date to the Securities and Exchange Commission pursuant to Section 16(a)
of the Act and the rules and regulations thereunder.
(s) "Rule 16b-3" means Rule 16b-3 (as amended from time to time)
promulgated by the Securities and Exchange Commission under the Act, and
any successor thereto, as in effect as to the Plan.
(t) "SAR" means a stock appreciation right, which is the right to
receive cash, Stock, or other property having a value on the date the SAR
is exercised equal to (i) the excess of the Fair Market Value of one share
of Stock on the exercise date over (ii) the base price of the SAR. The
term "SAR" does not include a Limited Right.
(u) "Stock" means shares of the common stock of the Company, par
value $1.00 per share, or such other class or kind of shares or other
securities as may be applicable under Section 10.
(v) "Subsidiary" means a "subsidiary corporation" of the Company as
defined in Section 424 (or any successor provision) of the Code.
(w) "Withholding Taxes" means, in connection with an Option or SAR
(including without limitation the receipt of Stock pursuant to the
exercise of an NQSO or SAR or the disposition of ISO shares), (a) the
total amount of Federal and state income taxes, social security taxes and
other taxes which the Employer of the Optionee is required to withhold
("Required Withholding Taxes") plus (b) any other such taxes which the
Employer, in its sole discretion, withholds at the request of the
Optionee.
SECTION 3. MAXIMUM SHARES.
(a) The maximum number of shares of Stock which may be issued to
Eligible Employees pursuant to Options and SARs under the Plan shall be
22,000,000 shares, subject to adjustment as provided in Section 10. For
this purpose:
(i) Only shares actually issued pursuant to the grant or
exercise of an Option or SAR shall be counted against the Plan
maximum.
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(ii) Except to the extent prohibited by Rule 16b-3, Shares which
are forfeited by an Optionee after issuance shall be deemed to have
never been issued under the Plan and accordingly shall not be
counted against the Plan maximum.
(iii) The number of shares available for the grant of new Options
and SARs at any particular time shall be (A) the maximum number of
shares specified above (as adjusted), minus (B) the sum of the
number of shares issued under the Plan prior to that time and the
number of shares issuable upon exercise of Options and SARs
outstanding at that time.
In its discretion, the Company may issue treasury shares or authorized but
previously unissued shares.
(b) Notwithstanding paragraph (a) above, the maximum number of
shares for which ISOs may be granted under the Plan shall be 22,000,000
shares, subject to adjustment as provided in Section 10, regardless of the
fact that a lesser number of shares is issued pursuant to the exercise of
ISOs.
(c) Shares issued under other plans of the Company shall not be
counted against the Plan maximum.
(d) Notwithstanding any other provisions of this Plan, the maximum
number of options that may be granted to any Eligible Employee during any
calendar year shall be 500,000, subject to adjustment as provided in
Section 10.
SECTION 4. ELIGIBILITY.
Officers and management employees of the Company, Subsidiaries or
Affiliates shall be eligible to receive Options and SARs under the Plan.
A Director of the Company or a Subsidiary or an Affiliate shall be
eligible only if he or she also is an officer or employee of the Company,
a Subsidiary or an Affiliate. Notwithstanding the foregoing, persons
employed only by Affiliates shall not be eligible to receive ISOs.
SECTION 5. OPTION AND SAR GRANTS.
(a) Subject to the limitations in this Plan, the Committee may cause
the Company to grant Options and/or SARs to such Eligible Employees, at
such times, in such amounts, for such periods, becoming exercisable at
such times, with such option prices or base prices, and subject to such
other terms, conditions, and restrictions as the Committee deems
appropriate. Each Option or SAR shall be evidenced by a written Option
Agreement between the Company and the Optionee. In granting an Option or
SAR, the Committee may take into account any factor it deems appropriate
and consistent with the purpose of the Plan. Options and/or SARs may be
granted as additional compensation to the Optionee, or in lieu of other
compensation.
(b) Options and SARs may be granted separately or as alternatives
to each other, except that (i) Options and SARs shall be granted as
alternatives to each other only if the option prices and the base prices
are equal, (ii) Limited Rights shall not be granted separately, and shall
be granted only as alternatives to Options and/or SARs, (iii) SARs and/or
Limited Rights which are alternatives to ISOs may be granted only at the
same time the ISO is granted, and (iv) SARs which are alternatives to
Options, and Limited Rights which are
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alternatives to Options or SARs, shall expire or terminate at the same time as
the Option or SARs to which they are alternatives.
(c) All or any portion of any payment to an Optionee whether in cash
or shares of Stock, may be deferred to a later date if and as provided in
the Option Agreement. Deferrals may be for such periods and upon such
terms and conditions (including the provision of interest, dividend
equivalents, or other return on such amounts) as the Committee may
determine.
(d) Option Agreements may contain any provision approved by the
Committee, not inconsistent with Section 9, relating to the period for
exercise after termination of employment, death or Disability.
(e) Option Agreements may, in the discretion of the Committee,
contain a provision permitting an Optionee to designate the person who may
exercise an Option or SAR upon the Optionee's death, either by Will or by
appropriate notice to the Company.
(f) Notwithstanding any other provision of this Section 5, (i) no
Option or SAR shall contain a so-called "reload" feature under which
Options or SARs are automatically granted to Optionees upon exercise of
Options or SARs, and (ii) no Option or SAR shall be granted in exchange
for a so-called "underwater" Option or SAR which has an option price or
base price in excess of the Fair Market Value of the Stock (nor shall an
underwater Option or SAR be amended to reduce its option price or base
price).
SECTION 6. PROVISIONS GOVERNING OPTIONS AND SARS.
(a) If Options and SARS are alternatives to each other, the exercise
of all or part of one automatically shall cause an immediate equal and
corresponding termination of the other.
(b) An Optionee shall have none of the rights of a shareholder with
respect to shares of Stock subject to his or her Option or SAR until
shares are issued in his or her name.
(c) Nothing in the Plan or any Option Agreement shall confer on any
person any right or expectation to continue in the employ of his or her
Employer, or shall interfere in any manner with the absolute right of the
Employer to change or terminate such person's employment at any time for
any reason or for no reason.
(d) Options and SARs shall not be transferable other than by will
or the laws of descent and distribution, and shall be exercisable during
the Optionee's lifetime only by the Optionee or his or her guardian or
legal representative.
(e) Except as provided in Section 10(b), (A) the option price per
share of an Option or the base price of an SAR shall not be less than Fair
Market Value on the Option's or the SAR's grant date, nor less than the
par value of a share of Stock, except that an SAR which is an alternative
to an Option but which is granted at a later time may have a base price
equal to the option price even though the base price is less than Fair
Market Value on the date the SAR is granted.
(f) The grant of an Option and the Option Agreement for an Option
must clearly identify the Option as either an ISO or as an NQSO.
(g) In the case of an SAR, the Option Agreement may specify the form
of payment of SARs or may provide that the form is to be determined at a
later date, and may require the satisfaction of any rules or conditions
in connection with receiving payment in any particular
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form. If the Optionee is a Reporting Person at the time of grant or during
the SAR's term and is given an election to receive cash in full or partial
settlement of an SAR, the Committee shall have sole discretion to approve
or disapprove such election at any time after it is made.
SECTION 7. LIMITED RIGHTS.
(a) The Committee shall have authority to grant limited stock
appreciation rights ("Limited Rights") to the holder of any Option or SARs
granted under the Plan (the "Related Option or SAR") with respect to all
or some of the shares of Stock covered by such Related Option or SAR. A
Limited Right may be granted either at the time of grant of the Related
Option or SAR or (except in the case of an ISO) at any time thereafter
during its term. A Limited Right may be granted to an Optionee with
respect to Options irrespective of whether such Optionee is being granted
or has been granted an SAR. Limited Rights shall be transferable only
when the Related Option or SAR is transferable and under the same
conditions, and shall be exercisable during the Optionee's lifetime only
by the Optionee or his or her guardian or legal representative. If an ISO
is a Related Option to Limited Rights, the Limited Rights may be exercised
only if the Fair Market Value per share of Stock on the exercise date
exceeds the option price per share of the ISO. A Limited Right may be
exercised only during the sixty-day period beginning on an "Acceleration
Date" (as defined in Section 11(a) hereof); provided, however, that if the
Acceleration Date occurs within the six month period following the grant
of the Limited Right or the grant of the Related Option or SAR, whichever
is applicable as provided below, to a Reporting Person, then the Limited
Right will be exercisable by the Reporting Person for a period of thirty
days following expiration of such six-month period, or, if earlier, thirty
days following the Optionee's death or Disability. Each Limited Right
shall be exercisable only if, and to the extent that, the Related Option
or SAR is exercisable (ignoring paragraph (j) below). Notwithstanding the
provisions of the two immediately preceding sentences, no Limited Right
may be exercised by a Reporting Person until the expiration of six months
from the date of grant of the Limited Right unless otherwise permitted by
Rule 16b-3 in the case of an SAR granted prior to the grant of the Limited
Right.
(b) Upon the exercise of Limited Rights, the holder thereof shall
receive in cash whichever of the following amounts is applicable:
(i) in the case of an exercise of Limited Rights by reason of an
acquisition of Stock described in Section 11(a), an amount equal to
the Acquisition Spread (as defined in paragraph (d) below); or
(ii) in the case of an exercise of Limited Rights by reason of
shareholder approval of an agreement described in Section 11(a), an
amount equal to the Merger Spread (as defined in paragraph (f)
below);
(iii) in the case of an exercise of Limited Rights by reason of a
change in the composition of the Board of Directors as described in
Section 11(a), an amount equal to the Board Change Spread (as
defined in paragraph (g) below);
(iv) in the case of an exercise of Limited Rights by reason of
stockholder approval of a plan of liquidation described in Section
11(a), an amount equal to the Liquidation Spread (as defined in
paragraph (i) below);
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provided, however, that if an ISO is a Related Option to the Limited
Rights, the cash received for each Right shall not exceed 100% of the
spread under the ISO, i.e., the difference between the option price of the
ISO and the Fair Market Value of Stock on the date the Limited Right is
exercised.
(c) The term "Acquisition Price per Share" as used in this Section
shall mean, with respect to the exercise of any Limited Right by reason
of an acquisition of Stock described in Section 11(a), the greater of (i)
the highest price per share of Stock stated on the Schedule 13D, 14D-1 or
similar schedule (or amendment thereto) filed by the holder of 50% or more
of the Company's voting power which gives rise to the exercise of such
Limited Right, and (ii) the highest Fair Market Value per share of Stock
during the sixty-day period ending on the date the Limited Right is
exercised.
(d) The term "Acquisition Spread" as used in this Section shall mean
an amount equal to the product computed by multiplying (i) the excess of
(A) the Acquisition Price per Share over (B) the option or base price per
share of Stock at which the Related Option or SAR is exercisable, by (ii)
the number of Limited Rights being exercised.
(e) The term "Merger Price per Share" as used in this Section shall
mean, with respect to the exercise of any Limited Right by reason of
shareholder approval of an agreement described in Section 11(a), the
greater of (i) the fixed or formula price for the acquisition of shares
of Stock specified in such agreement if such fixed or formula price is
determinable on the date on which such Limited Right is exercised, and
(ii) the highest Fair Market Value per share of Stock during the sixty-day
period ending on the date on which such Limited Right is exercised. Any
securities or property which are part or all of the consideration paid for
shares of Stock pursuant to such agreement shall be valued in determining
the Merger Price per share at the higher of (A) the valuation placed on
such securities or property by the corporation, person or other entity
which is a party with the Company to such agreement or (B) the valuation
placed on such securities or property by the Committee.
(f) The term "Merger Spread" as used in this Section shall mean an
amount equal to the product computed by multiplying (i) the excess of (A)
the Merger Price per Share over (B) the option or base price per share of
Stock at which the Related Option or SAR is exercisable, by (ii) the
number of Limited Rights being exercised.
(g) The term "Board Change Spread" as used in this Section shall
mean, with respect to the exercise of any Limited Rights by reason of a
change in the composition of the Board described in Section 11(a), an
amount equal to the product computed by multiplying (i) the excess of (A)
the highest Fair Market Value per share of Stock during the sixty-day
period ending on the date the Limited Rights are exercised over (B) the
option or base price per share of Stock at which the Related Option or SAR
is exercisable, by (ii) the number of Limited Rights being exercised.
(h) The term "Liquidation Price per Share" as used in this Section
shall mean, with respect to the exercise of any Limited Right by reason
of shareholder approval of a plan of liquidation described in Section
11(a) the greater of (i) the highest amount paid or to be paid per share
of Stock pursuant to the plan of liquidation as determined by the
Committee and (ii) the highest Fair Market Value per share of Stock during
the sixty-day period ending on the date on which such Limited Right is
exercised. Any securities or property which (A) are part or all of the
consideration paid for shares of Stock pursuant to such plan of
liquidation
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or (B) are to be sold and the proceeds distributed in liquidation shall be
valued in determining the Liquidation Price per share at the higher of (i) the
valuation placed on such securities or property by the Company upon the
distribution of such securities or property in accordance with the plan of
liquidation, if known, at the time of the exercise of such Limited Right, or
(ii) the valuation placed on such securities or property by the Committee.
(i) The term "Liquidation Spread" as used in this Section shall mean
an amount equal to the product computed by multiplying (i) the excess of
(A) the Liquidation Price per Share over (B) the option or base price per
share of Stock at which the Related Option or SAR is exercisable, by (ii)
the number of Limited Rights being exercised.
(j) Notwithstanding any other provision of the Plan, an SAR may not
be exercised at a time when any Limited Rights held by the holder of such
SAR may be exercised.
(k) Notwithstanding the provisions of Section 7(a) above, if an
Acceleration Date specified in Section 11(a)(i) occurs and if such Date
occurs in connection with a Window Period Situation, then each Optionee
who is a Restricted Reporting Person may exercise his or her Limited
Rights only during the Window Period immediately following the
Acceleration Date, subject to the following exceptions: (i) if the
Acceleration Date occurs during the six-month period following the grant
of a Limited Right or the grant of the Related Option or SAR, whichever
is applicable as provided in the last sentence of Section 7(a) above, then
such Limited Right may be exercised by such Optionee only during the
Window Period immediately following the expiration of such six-month
period or, if earlier, following the death or Disability of such Optionee;
and (ii) if such Acceleration Date or the expiration of such six-month
period (as applicable) occurs during a Window Period, such Optionee may
exercise such Limited Right either during the remainder of such Window
Period or during the next whole Window Period thereafter. For the
purposes of this paragraph, a "Window Period Situation" exists (A) if one
or more Reporting Persons are the "Person" or members of the group
constituting the "Person" specified in Section 11(a)(i) below, or (B) if,
by excluding all voting securities acquired by the "Person" directly from
the Company, no Acceleration Date would occur. Each Reporting Person
specified in clause (A) above, and all Reporting Persons in the case of
a clause (B) Window Period Situation, are "Restricted Reporting Persons"
for the purposes of this paragraph. A "Window Period" is the period
defined from time to time in paragraph (e)(3)(iii) of Rule 16b-3, or the
corresponding paragraph(s) of any successor to Rule 16b-3.
SECTION 8. STOCK ISSUANCE, PAYMENT, AND WITHHOLDING.
(a) An Optionee may pay the option price of an Option in cash, Stock
(including shares of previously-owned Stock, or Stock issuable in
connection with the Option), or other property, to the extent permitted
or required by the Option Agreement or the Committee from time to time.
The Committee may permit deemed or constructive transfers of shares in
lieu of actual transfer and physical delivery of certificates. Except to
the extent prohibited by applicable law, the Committee or its delegate may
take any necessary or appropriate steps in order to facilitate the payment
of any such purchase price. Without limiting the foregoing, the Committee
may allow the Optionee to defer payment of the option price, or may cause
the Company to loan the option price to the Optionee or to guaranty that
any shares to be issued will be delivered to a broker or lender in order
to allow the Optionee to borrow the purchase price. The Committee may
require satisfaction of any rules or conditions in
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connection with paying the Option price at any particular time, in any
particular form, or with the Company's assistance.
(b) When the Optionee's Employer becomes required to collect and pay
Required Withholding Taxes, the Optionee shall promptly reimburse the
Company or Employer (as required by the Committee) for the amount of such
Required Withholding Taxes in cash, unless the Option Agreement or the
Committee permits or requires payment in another form. In the discretion
of the Committee or its delegate and at the Optionee's request, the
Committee or its delegate may cause the Company or Employer to pay
Withholding Taxes in excess of Required Withholding Taxes on behalf of an
Optionee, which shall be reimbursed by the Optionee. The Committee may
allow an Optionee to reimburse the Company or Employer for payment of
Withholding Taxes with shares of Stock or other property. The Committee
may require the satisfaction of any rules or conditions in connection with
any non-cash payment of Withholding Taxes. If an Optionee is a Reporting
Person at the time of grant or during the Option's term and is given an
election to pay any Withholding Taxes with Stock, the Committee shall have
sole discretion to approve or disapprove such election at any time after
the election is made.
(c) If provided in the Option Agreement relating to an ISO, the
Committee may prohibit the transfer by an Optionee of shares of Stock
issued to him or her upon exercise of an ISO into the name of a nominee,
and the Committee may require the placement of a legend on certificates
for such shares reflecting such prohibition.
SECTION 9. FORFEITURES.
(a) If any Optionee voluntarily terminates employment within two
years of the grant of an Option or SAR, or is dismissed from employment
at any time for any reason, such Option or SAR shall immediately terminate
and be forfeited to the extent not previously exercised.
(b) Notwithstanding any other provision in this Plan except
paragraph (c) below, the receipt of any Option or SAR, and the receipt of
any share of Stock, cash, or other benefit in connection with such Option
or SAR, shall be subject to the following provisions:
(i) At all times during his or her employment with the Company
or a Subsidiary or Affiliate, the Optionee shall continuously
satisfy his or her duties of loyalty and faithful service to the
Company and his or her Employer and shall refrain from engaging in
any undisclosed conflict of interest or from otherwise acting in any
manner inimical to or contrary to the best interests of the Company
or Employer. Any violation of law or of any Company or Employer
policy or the Business Practices and Ethics Manual (or any manual,
or portion thereof, which replaces such Manual) of the Company shall
be considered conduct inimical to or contrary to the best interests
of the Company and Employer for the purposes of this Section 9(b).
The exercise of any Option or SAR, or the acceptance of any share
of stock, cash, or other benefit hereunder in connection with any
Option or SAR shall be deemed to be the certification by the
Optionee that he or she has satisfied this condition. In addition,
the Optionee shall furnish to the Committee on request any other
information concerning satisfaction of such condition which the
Committee may request.
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(ii) This Section 9(b) is intended to establish, as a condition
to the realization of economic benefits under the Plan, a standard
of conduct consistent with (A) the duties of loyalty and faithful
performance of services imposed on an employee by the common law,
and (B) the Company's and Employer's published standards and
policies which the Optionee is bound to observe. This Section 9(b)
shall in no way impair or derogate from the rights or remedies which
the Company or Employer may have at law or in equity or under any
employment contract or agreement with an Optionee to prevent or to
recover damages for the disclosure of trade secrets, or to recover
any restitution or damages properly owing the Company or Employer
because of any theft, fraud, embezzlement, or other illegal conduct
on the part of an Optionee.
(iii) If the Committee determines that an Optionee has not
observed the standard of conduct required by this Section 9(b), the
Committee may require the Optionee to forfeit any right to or in any
outstanding Option or SAR, as of the date such determination is
made, and may require repayment of any Stock or cash received in
connection with any Option or SAR by such Optionee after the act or
acts of misconduct which gave rise to the Committee's determination.
(iv) This Section 9(b) shall not be interpreted as requiring the
Committee to take action in each and every instance of suspected
misconduct, and in determining to attempt to enforce the forfeiture
and repayment provisions of this Section 9(b), the Committee may
consider, among other things, the nature of the misconduct, its
seriousness, the impact on the Company, the possible economic
effects, the circumstances surrounding the discontinuance of the
Optionee's employment with the Employer, and the amount of proof
which the Employer may have of any alleged misconduct. Any decision
by the Committee to forego enforcement of this Section 9(b) in whole
or in part in any particular instance shall in no way constitute a
waiver of the right to enforce such Section in any other instance.
(v) During the period of any investigation into whether an
Optionee has engaged in conduct prohibited by this Section 9(b), the
Optionee's rights to receive delivery of any Stock or cash, or to
have any transfer of Stock recognized on the stock books of the
Company, shall be suspended. An Optionee may exercise Options or
SARs subject to the prior sentence.
(c) The provisions of this Section 9 shall terminate upon the
occurrence of an Acceleration Date described in Section 11.
SECTION 10. ADJUSTMENTS AND ACQUISITIONS.
(a) In the event of (i) any change in the outstanding shares of
Stock by reason of any stock split, combination of shares, stock dividend,
reorganization, merger, consolidation, or other corporate change having
a similar effect, (ii) any separation of the Company including a spin-off
or other distribution of stock or property by the Company, or (iii) any
distribution to stockholders generally other than a normal dividend, the
Committee shall make such equitable adjustments to the Plan and to
outstanding Options, SARs and Limited Rights as it shall deem appropriate
in order to prevent the dilution or enlargement of (a) the Options, SARs
and Limited Rights which may be granted, the shares of Stock which may be
issued, or the shares for which ISOs may be granted under the Plan, (b)
the economic value of
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outstanding Options, SARs and Limited Rights or (c) the limitations imposed by
Section 3(d) of this Plan, provided, however, that the Committee shall not
make any adjustment which would constitute or result in an increase in the
aggregate number of Shares available under the Plan, or the annual limit on
the number of options which may be granted to an Eligible Employee under
Section 3(d) of this Plan, requiring shareholder approval under Section 422 or
Section 162(m) of the Code. Any such determination by the Committee shall be
conclusive and binding on all concerned.
(b) In the event the Company or a Subsidiary enters into a
transaction described in Section 424(a) of the Code with any other
corporation, the Committee may grant Options, SARs, or Limited Rights to
employees or former employees of such corporation in substitution of stock
options, stock appreciation rights or limited stock appreciation rights
previously granted to them by such corporation upon such terms and
conditions as shall be necessary to qualify such grant as a substitution
described in Section 424(a) of the Code.
SECTION 11. ACCELERATION.
(a) If, while unexercisable Options or SARs remain outstanding under
the Plan,
(i) any Person (as defined herein) becomes the beneficial owner
directly or indirectly (within the meaning of Rule 13d-3 under the
Act) of more than 50% of the Company's then outstanding voting
securities (measured on the basis of voting power);
(ii) the shareholders of the Company approve a definitive
agreement to merge or consolidate the Company with any other
corporation, other than an agreement providing for (x) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 50% of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (y) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities;
(iii) a change occurs in the composition of the Board of Directors
during any period of twenty-four consecutive months such that
individuals who at the beginning of such period were members of the
Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously
so approved; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets,
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then on the date as of which any of the events described in clauses (i)
thru (iv) occurs (such date being referred to as an "Acceleration Date"),
each Option and SAR automatically shall become exercisable. For purposes
of this paragraph, "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a Person shall not include (aa) the Company or any
of its subsidiaries, (bb) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries,
(cc) an underwriter temporarily holding securities pursuant to an offering
of such securities, or (dd) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions
as their ownership of Stock.
(b) Except to the extent prohibited by Rule 16b-3 in the case of
Reporting Persons, the Committee may accelerate the date on which any
Options and SARs become exercisable and may remove any restrictions on
such Options or SAR at any time after grant and for any reason the
Committee deems appropriate.
(c) All Options and SARs shall automatically become exercisable upon
a termination of employment caused by the death or Disability of the
Optionee.
SECTION 12. ADMINISTRATION.
(a) The Plan shall be administered by a Stock Option Committee
appointed by the Board consisting of three or more persons, each of whom
at all times shall be a member of the Board, a "disinterested person" as
defined in Rule 16b-3 and an "outside director" within the meaning of
Section 162(m)(4)(C)(i) of the Code. Committee members shall not be
eligible for selection to receive Options or SARs under the Plan. The
initial Committee shall consist of the members of the "Stock Option
Committee" administering the Anheuser-Busch 1981 Non-Qualified Stock
Option Plan at the time this Plan is adopted by the Board.
(b) A majority of the members of the Committee shall constitute a
quorum. The acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by a majority of
the members of the Committee, shall be the acts of the Committee. From
time to time the Committee may adopt, amend, and rescind such rules and
regulations for carrying out the Plan and implementing Option Agreements,
and the Committee may take such action in the administration of the Plan,
as it deems proper. The interpretation of any provisions of the Plan by
the Committee shall be final and conclusive unless otherwise determined
by the Board.
SECTION 13. AMENDMENT, TERMINATION, SHAREHOLDER APPROVAL.
(a) The Board may amend or terminate the Plan at any time, except
that without the approval of the Company's shareholders, no amendment
shall (i) increase the maximum number of shares issuable, or the maximum
number of shares for which ISOs may be granted, under the Plan, (ii)
change the class of persons eligible to be Optionees, (iii) change the
annual limit on options which may be granted to an Eligible Employee
provided in Section 3(d) or (iv) change the provisions of this Section
13(a).
(b) The Committee may amend the Plan from time to time to the extent
necessary to (i) comply with Rule 16b-3 and (ii) prevent benefits under
the Plan from constituting "applicable employee remuneration" within the
meaning of Section 162(m) of the Code.
11<PAGE>
<PAGE>12
(c) No Options or SARs may be granted under the Plan after
September 26, 1999.
(d) Notwithstanding any other provision of the Plan, no Option or
SAR granted under the Plan on or after December 15, 1993 may be exercised
unless and until either (i) the amendment to the Plan adopted by the Board
on December 15, 1993 which added Section 3(d) to this Plan is approved by
the Company's shareholders within twelve months of such adoption, or (ii)
if earlier, the Company receives an opinion of counsel or other evidence
satisfactory to it that such shareholder approval is not required by the
Code in order to prevent benefits under the Plan from constituting
"applicable employee remuneration" within the meaning of Section 162(m)
of the Code.
(e) The approval by shareholders described in this Section shall
consist of the approving vote of the holders of a majority of the
outstanding shares of Stock present (in person or by proxy) at a meeting
of the shareholders at which a quorum is present, unless a greater vote
is required by the Company's charter or by-laws or by applicable law.
SECTION 14. ADDITIONAL PAYMENTS.
The Committee may grant an Optionee the right to receive additional
compensation in cash or other property (in addition to any cash or other
property payable under the terms of the Option or SAR itself) upon an
Option or SAR becoming exercisable or being exercised provided that (i)
in the case of an ISO such compensation is includible in income under
Sections 61 and 83 of the Code at the time of such exercise and (ii) no
such right may be granted in connection with any SAR or Limited Right
which is an alternative to an ISO.
SECTION 15. MISCELLANEOUS.
(a) Each provision of the Plan and each Option Agreement relating
to an ISO shall be construed so that each ISO shall be an incentive stock
option as defined in Section 422 of the Code or any statutory provision
that may replace Section 422, and any provisions thereof which cannot be
so construed shall be disregarded. Except as provided in Section 9, no
discretion granted or allowed to the Committee under the Plan shall apply
to an ISO after its grant except to the extent the Option Agreement with
respect to the ISO grant shall so provide.
(b) Without amending the Plan, Options and SARs may be granted to
Eligible Employees who are foreign nationals or who are employed outside
the United States or both, on such terms and conditions different from
those specified in the Plan as may, in the judgment of the Committee, be
necessary or desirable to further the purposes of the Plan. Such
different terms and conditions may be reflected in Addenda to the Plan.
However, in the case of an ISO, no such different terms or conditions
shall be employed if such term or condition constitutes, or in effect
results in, an increase in the aggregate number of shares which may be
issued under the Plan or a change in the definition of Eligible Employee.
(c) Notwithstanding any other provision in the Plan, the Committee
shall not act with respect to any Reporting Person in a manner which would
contravene any requirement of Rule 16b-3 as in effect at the time of such
action.
(d) Amendments to this Plan which were adopted by the Board on
December 15, 1993 shall not apply to Options granted prior to that date
except for (i) the definition of "Required Withholding Tax" now contained
in Section 2(w) and (ii) the amendment adding the express authority for
beneficiary designations which is contained in Section 5(e).
12
<PAGE>1
EX-10.9
ANHEUSER-BUSCH EXCESS BENEFIT PLAN
Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"),
hereby establishes this Excess Benefit Plan, effective as of January l, 1984,
to provide supplemental retirement benefits to Participants in the
Anheuser-Busch Salaried Employees' Pension Plan (the "Basic Plan") who may be
adversely affected as to the amount of Retirement Benefits they might
otherwise receive by the limitations of Section 415 of the Internal Revenue
Code of 1954, as amended by the Tax Equity and Fiscal Responsibility Act of
1982. This Plan is intended to be an "excess benefit plan" as defined in
Section 3(36) of the Employee Retirement Income Security Act of 1974.
l. Definitions Applicable to this Excess Benefit Plan. All capitalized
--------------------------------------------------
terms defined in the Basic Plan and not defined herein shall have the meanings
set out in the Basic Plan. In addition, the words and terms defined below
have the meanings herein set out:
(a) "Actuarial Equivalent" means a benefit or benefits, or a
payment or payments, which are of equal value at the date of determination to
the benefits for which they are to be substituted. Equivalence of value is
determined from actuarial calculations based on actuarial assumptions as to
interest and mortality as follows:
Interest - The required return on investment used by Anheuser-Busch
-------- Companies, Inc. to evaluate capital projects associated
with existing business activities ("hurdle rate") as in
effect on the first day of the month preceding the
Participant's Effective Benefit Date.
Mortality The mortality table set forth in the Basic Plan.
---------
(b) "Pension Committee" means the same group of persons appointed
to administer the Basic Plan.
(c) "Employee" means any Salaried Employee employed by a
Participating Employer.
(d) "Participant" means an Employee who is eligible to participate
herein in accordance with Section 2 hereof. <PAGE>
<PAGE>2
-2-
(e) "Participating Employer" as used in this Plan means a
Participating Employer in the Basic Plan which has adopted this Plan.
(f) "Plan" shall mean the Anheuser-Busch Excess Benefit Plan,
effective January l, 1984, as originally adopted and as hereafter amended.
2. Eligibility to Participate. Any Employee or former Employee who
---------------------------
retires and whose Retirement Benefit under the Basic Plan will be limited by
the provisions of Section 415 of the Internal Revenue Code, or any regulations
issued thereunder, shall be a Participant in this Plan.
3. Benefits Under this Plan. The Retirement Benefit payable by a
-------------------------
Participating Employer under this Plan shall be equal to:
(i) The Retirement Benefit a Participant would be entitled to under
Section 4.1, 4.2, 4.3, 4.4 or 5.1 of the Basic Plan, determined as if Section
12 of the Basic Plan, (incorporating the Section 415 limitations) was
inapplicable, less
(ii) The Retirement Benefit actually payable to the Participant under
the Basic Plan.
4. Pre-Retirement Death Benefits. There will be no pre-retirement death
-----------------------------
benefit under this Plan.
5. Payment Method. The Retirement Benefit determined under Section 3
--------------
shall be payable under the Basic Method of payment. However, a Participant
may elect, subject to approval of the Pension Committee, to have his or her
Retirement Benefit hereunder paid under one or more of the Optional Methods of
payment set forth in the Basic Plan. All Optional Methods of payment shall be
the Actuarial Equivalent of the Basic Method of payment. A Participant may
elect an Optional Method of payment under this Plan which is different from
the method of payment elected under the Basic Plan. Only Participants
eligible for Option (e) (One-Sum Option) under the Basic Plan shall be
eligible to elect the One-Sum option under this Plan. Retirement Benefits
under this Plan shall commence as of the same date benefits commence under the
Basic Plan.
6. Obligation to Pay Benefits Hereunder. No trust fund, escrow account
------------------------------------
or other segregation of assets shall be established or made by a Participating
Employer to guarantee, secure or assure the payment of any benefit hereunder.
A Participating Employer's obligation to pay Retirement Benefits pursuant
<PAGE>3
-3-
to this Plan shall constitute only a general contractual liability to the
Participants and other payees hereunder in accordance with the terms hereof.
Payment of benefits by a Participating Employer shall be made only from the
general funds of such Participating Employer and no Participant or any other
potential payee of any amount hereunder shall have any interest in any
particular asset of a Participating Employer by reason of the existence of
this Plan. The amounts payable hereunder shall be subject in all respects to
claims of general creditors of the Participating Employer until actually paid
over to the person(s) entitled to receive the same.
7. Concerning Payment. All amounts payable during the lifetime of a
------------------
Participant shall be paid directly to the Participant or his or her legal
representative. Any amount payable after the death of a Participant shall be
payable to the Beneficiary or Beneficiaries designated by such Participant for
purposes of this Plan.
8. Payees Presumed Competent. Every person receiving or claiming
-------------------------
amounts payable under this Plan shall be conclusively presumed to be mentally
competent and of legal age until the Pension Committee receives a written
notice, in form, manner and substance acceptable to it, that any such person
is incompetent or is a minor or that a guardian or other person legally vested
with the care of his estate has been appointed.
9. Notice of Address; Lost Payees. The address of every Participant or
------------------------------
other person entitled to any payment hereunder on file for purposes of the
Basic Plan shall be used for all purposes of this Plan. If the Pension
Committee is unable to locate any person, or the estate of such person,
entitled to receive a payment hereunder within two years after an amount
becomes payable, the right and interest of such payee in and to the amount
payable shall terminate on the last day of such two year period.
10. No Liability for Participant's Debts. Amounts payable under this
------------------------------------
Plan shall not be liable for or subject to the debts or liabilities of any
payee, and no amount payable hereunder shall at any time or in any manner be
subject to anticipation, alienation, sale, transfer, assignment, pledge or
encumbrance of any kind, whether to the Participating Employer or to any other
party whomsoever, and whether with or without consideration. If any payee
shall attempt to, or shall anticipate, alienate, sell, transfer, assign,
pledge or otherwise encumber any amounts payable hereunder or any part
thereof, or if by reason of bankruptcy or other event, such amounts would at
any time be received or enjoyed by persons other than such payee, except as
otherwise permitted by this Plan, the Pension Commit-<PAGE>
<PAGE>4
-4-
tee in its sole discretion may terminate such person's interest in any such
amounts and hold or apply such amounts to or for the use of such person, his
or her spouse, children or other dependents, or any of them, as the Pension
Committee may determine.
11. Administration. The Pension Committee shall have full power and
--------------
authority to do all things necessary or appropriate to the proper
administration hereof, including, without limiting the generality of the
foregoing, full power and authority to construe the Plan and to determine all
questions which may arise.
12. Negation of Employment Contract. This Plan does not create an
-------------------------------
employment contract and nothing contained herein shall be deemed (a) to give a
Participant the right to be retained in the employ of any Participating
Employer: (b) to interfere with the right of the Participating Employer to
discharge a Participant at any time: (c) to give the Participating Employer
the right to require a Participant to remain in its employ: or (d) to
interfere with the right of a Participant to terminate his employment
voluntarily whenever he chooses.
13. Forfeiture for Activity Contrary to a Participating Employer's Best
-------------------------------------------------------------------
Interests.
---------
(a) Notwithstanding any provision of this Plan to the contrary, the
right of a Participant and his or her Beneficiary or Beneficiaries to receive
a benefit hereunder is expressly conditioned upon the Participant neither (i)
having ceased to be employed by a Participating Employer under circumstances
or conditions inimical to the best interests of the Participating Employer or
its affiliates and subsidiaries, nor (ii) thereafter engaging in any activity
(such as competing with any business of the Participating Employer or its
affiliates or subsidiaries, or disclosing secret formulae, processes or
procedures, or any customers' or suppliers' list or other confidential
information, or encouraging any other employee to leave the Participating
Employer or performing any activity inimical to the Participating Employer's
best interests) which is contrary to the best interests of his or her former
Participating Employer or its affiliates and subsidiaries.
(b) Should the Participating Employer propose to enforce the
foregoing, it shall give written notice to the Participant or other person(s)
otherwise entitled to payment, and may withhold payment pending final
resolution of the matter. The Pension Committee shall thereupon investigate
the alleged violation and shall consider, under such rules of procedure as the
Pension Committee shall deem reasonable, such evidence and <PAGE>
<PAGE>5
-5-
testimony as the Participating Employer and the Participant or other person(s)
entitled to payment may wish to submit in support or refutation of the alleged
violation. The decision of the Pension Committee shall be final and
conclusive. If the Pension Committee concludes that there has been a
violation, the right of the Participant and all Beneficiaries to receive
payment hereunder shall thereupon cease. If the Pension Committee concludes
that there has not been a violation, the amounts withheld or suspended shall
become payable as though the Participating Employer had never instituted any
proceedings or withheld or suspended payment without, however, any interest
for the period during which such amounts were withheld or suspended.
(c) The provisions of this Section authorizing the Participating
Employer to give notice of an alleged violation or possible violation of the
conditions of paragraph (a) shall not be interpreted as requiring the
Participating Employer to take such action in each and every instance of a
violation or suspected violation and in determining whether an attempt to
enforce the forfeiture provisions of this Section shall be made, the
Participating Employer may consider the possible economic damage it might
suffer from the violation or suspected violation, the circumstances
surrounding the discontinuance of the employment of the Participant with the
Participating Employer and the quantum of proof which the Participating
Employer may have of a violation of the aforesaid conditions.
(d) The provisions of this Section shall in no way impair or derogate
the rights which the Participating Employer may otherwise have under any
employment contract with a Participant or at law or in equity, to prevent the
disclosure of trade secrets or to recover damages for the disclosure thereof
or to prevent a Participant from engaging in competition with the
Participating Employer or to recover damages therefor.
(e) The Board of Directors of Anheuser-Busch Companies, Inc. (or the
Executive Committee at any time the Board of Directors is not in session) may
revoke this Section at any time, whereupon no Accrued Benefit at that time
shall ever be subject to forfeiture or revocation for any reason, including
(but not limited to) any subsequent amendment to this Plan which reinstates
the provisions of this Section or imposes similar conditions on a
Participant's right to receive benefits hereunder.
14. Amendment. The Board of Directors of Anheuser-Busch Companies, Inc.
---------
("Board") shall have the absolute right to modify or amend this Plan in whole
or in part, at any time and from time to time, effective as of any specified
prior, current <PAGE>
<PAGE>6
-6-
or future date. Any amendments to the Basic Plan shall automatically amend
the provisions of this Plan where they would so apply, except that the
interest rate assumption in this Plan shall only be amended under the
provisions of this Section.
15. Termination. The Board reserves the right to terminate this Plan as
-----------
of any specified current or future date. The Plan shall be automatically
terminated upon: (a) termination of the Basic Plan: (b) Anheuser-Busch
Companies, Inc. being legally adjudicated a bankrupt: (c) the appointment of a
receiver or trustee in bankruptcy with respect to Anheuser-Busch Companies,
Inc.'s assets and business if such appointment is not set aside within 90 days
thereafter: or (d) the making by Anheuser-Busch Companies, Inc. of an
assignment for the benefit of creditors. Upon a termination of this Plan, no
additional Employees shall become eligible to participate herein, and no
additional benefits shall be accrued hereunder. Notwithstanding the
termination of this Plan, a Participant shall remain entitled to a Retirement
Benefit under this Plan, payable at his or her Normal Retirement Date, equal
to his Accrued Benefit in the Basic Plan as of the date of Plan termination
(determined without regard to Section 415 limitations) less the amount of
Retirement Benefit actually payable under the Basic Plan.
16. Participating Employer. Any Participating Employer in the Basic Plan
----------------------
may become a Participating Employer in this Plan by submitting to the Pension
Committee a resolution of its board of directors adopting the provisions of
this Plan. The adoption of this Plan by a Participating Employer shall
constitute an automatic delegation by it to the Board of full authority to
amend or terminate the Plan. A Participating Employer may withdraw from the
Plan by action of its board of directors. Notwithstanding such withdrawal, a
Participant shall remain entitled to a Retirement Benefit from such
withdrawing Participating Employer, payable at his or her Normal Retirement
Date, equal to his or her Accrued Benefit in the Basic Plan as of the date of
the Participating Employer's withdrawal (determined without regard to Section
415 limitations), less the amount of the Retirement Benefit actually payable
under the Basic Plan.
17. Successor Participating Employer. In the event of the dissolution,
--------------------------------
merger, consolidation or reorganization of a Participating Employer, the
successor company may adopt and continue this Plan as a Participating
Employer, provided it has adopted the Basic Plan. If a successor company does
not continue this Plan, all Participants affected thereby shall be entitled to
a Retirement Benefit from such successor company calculated and payable as
provided in Section 15, with the Accrued Benefit determined as of the date of
dissolution, merger, consolidation or reorganization.<PAGE>
<PAGE>7
-7-
18. Miscellaneous.
-------------
(a) In any instance in which the Pension Committee believes such
action to be in the best interest of the party entitled to receive any payment
under this Plan, or to be in the best interests of a Participating Employer
(such as to eliminate small monthly retirement payments or to avoid the
administrative inconvenience and expense which might be incurred if relatively
small amounts were to be paid to multiple recipients over lengthy periods of
time), amounts payable hereunder may be paid in a single lump sum, the amount
of which shall be the Actuarial Equivalent of the benefits otherwise payable.
(b) In the event of the death of a Participant or any Beneficiary
designated by him or her, no payment need be made by the Plan until the
Pension Committee shall have received proof satisfactory to it of such death
and of the identity, existence and location of the party thereafter entitled
to receive payments under this Plan.
(c) In making any payment or taking any action under this Plan, the
Participating Employer and the Pension Committee shall be absolutely protected
in relying upon any finding or statement of facts believed by it to be true,
and on any written instrument believed by it to have been signed by the proper
party.
(d) This Plan shall be construed and enforced under and in accordance
with the laws of the State of Missouri.
(e) All actuarial matters hereunder shall be decided by the Actuary
then employed to provide actuarial services to the Basic Plan.
IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this Plan
to be executed, and its corporate seal to be hereunto affixed, by its officers
thereunto duly authorized, this 11th day of September, 1984, effective as of
January 1, 1984. ---- --------- -
ANHEUSER-BUSCH COMPANIES, INC.
BY s/JERRY E. RITTER
---------------------------
Vice President
(Seal)
Attest:
s/JOHN HAYWARD
- - - -------------------
Secretary
<PAGE>1
EX-10.10
FIRST AMENDMENT
TO ANHEUSER-BUSCH COMPANIES, INC.
EXCESS BENEFIT PLAN
--------------------------------
Effective as of January 1, 1984, Anheuser-Busch Companies,
Inc., a Delaware corporation (the "Company") established the
Anheuser-Busch Companies, Inc. Excess Benefit Plan (the "Plan") to
provide supplemental retirement benefits to Participants in the
Anheuser-Busch Salaried Employees' Pension Plan. Pursuant to
Section 14 of the Plan and authority granted by the Board, the Plan
is hereby amended, effective January l, 1986, as follows:
1. The Plan is hereby amended by adding a new Section 19 at
the end thereof, to read as follows:
"19. Change in Control.
-----------------
If a Change in Control (as defined herein) shall
occur, then, notwithstanding anything to the contrary herein,
the Participant's accrued benefit under the Plan to the date
of such Change in Control shall be fully vested and
nonforfeitable. At any time prior to the occurrence of a
Change in Control, a Participant may request, by completing an
application form provided to such Participant by the Pension
Committee administering the Plan, that payment of the present
value of such accrued benefit shall be made to the Participant
in a single sum as soon as practicable after the Change in
Control. For purposes hereof, present value shall be
determined by utilizing the actuarial assumptions used under
the Company's Salaried Employees' Pension Plan as in effect
immediately prior to such Change in Control. Within a
reasonable time after the receipt by the Pension Committee of
a completed application from a Participant requesting payment
upon a Change in Control, as described above, but in any event
prior to a Change in Control (unless circumstances make it
otherwise impossible), the Pension Committee shall, in its
sole discretion, determine whether to make such payment upon
the occurrence of such Change in Control or to pay the
Participant his accrued benefit in accordance with the
provisions of the Plan
<PAGE>
<PAGE>2
- 2 -
(other than this provision) as in effect immediately
prior to the Change in Control. Notwithstanding the
the provisions of Section 14 hereof, following a Change in
Control, the provisions of this Section cannot be amended in
any manner without the written consent of each individual who
was a Participant immediately prior to a Change in Control.
For purposes of this Section 19, a "Change in Control"
shall occur if any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Act")) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act) of more than fifty
percent (50%) of the then outstanding voting stock of the
Company."
2. Except as provided hereinabove, the Plan is ratified and
confirmed in all respects.
IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has
executed this Amendment this 28th day of May , 1986.
---- -------
ANHEUSER-BUSCH COMPANIES, INC.
By s/JERRY E. RITTER
----------------------------
(SEAL)
Attest:
s/JOBETH BROWN
---------------------
(Assistant) Secretary
4478J
<PAGE>1
EX-10.12
EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH
COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22, 1993
AMENDING THE ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN
RESOLVED, that the Excess Plan be amended, effective for
individuals terminating employment on or after October 1,
1993, as follows: (i) to implement the features of the
Enhanced Retirement Program which relate to the plan; (ii) to
provide for an increased benefit payment in the amount
necessary to cover any parachute or similar penalty taxes
which would be assessed against a participant if accelerated
payment occurs because of a change in control as described in
the plan; (iii) to require that the lump-sum method of payment
be the only payment method available on and after January 1,
1995, unless the participant elects another form of payment at
least one year prior to retirement; (iv) to defer commencement
of benefit payments for executives named in the Summary
Compensation Table of the Company's proxy statement for the
Annual Meeting of Shareholders ("Named Executive Officers")
until the year following retirement; (v) to recognize, under
the benefit formula, any compensation deferred in any year
under the new Executive Deferred Compensation Plan referred to
below; and (vi) to adopt such other changes as are necessary
or appropriate to carry into effect the foregoing.
<PAGE>1
EX-10.15
EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH
COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22,1993
AMENDING THE ANHEUSER-BUSCH COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
RESOLVED, that the SERP be amended, effective for individuals
terminating employment on or after October 1, 1993, as
follows: (i) to implement the features of the Enhanced
Retirement Program which relate to the plan; (ii) to index the
minimum compensation level required to participate in the plan
in accordance with the Company's annual budgeted merit
increase factor; (iii) to permit otherwise qualified
executives employed by Campbell Taggart, Inc. and Merico, Inc.
to participate in the plan; (iv) to provide for an increased
benefit payment in the amount necessary to cover any parachute
or similar penalty taxes which would be assessed against a
participant if accelerated payment occurs because of a change
in control as described in the plan; (v) to revise the benefit
accrual method, early retirement reductions and interest rate
formula for lump-sum payments, all in accordance with parallel
amendments in the SEPP; (vi) to require that the lump-sum
method of payment be the only payment method available on or
after January 1, 1995, unless the participant elects another
form of payment at least one year prior to retirement; (vii)
to permit installment payments over a five-year period using
such methodology as is adopted for the Executive Deferred
Compensation Plan referred to below; (viii) to defer
commencement of benefit payments for Named Executive Officers
until the year following retirement; (ix) to recognize, under
the benefit formula, any compensation deferred in any year
under the new Executive Deferred Compensation Plan referred to
below; and (x) to adopt such other changes as are necessary or
appropriate to carry into effect the foregoing.
<PAGE>1
EX-10.16
ANHEUSER-BUSCH
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 1994
<PAGE>
<PAGE>2
ANHEUSER-BUSCH
EXECUTIVE DEFERRED COMPENSATION PLAN
Preamble
--------
Anheuser-Busch Companies, Inc. does hereby adopt the Anheuser-
Busch Executive Deferred Compensation Plan set forth herein for
the purpose of providing deferred compensation to a select group
of management and highly compensated employees, effective as of
January 1, 1994.
I. DEFINITIONS
Base Salary: The substantially equal amounts owed by a
-----------
Participating Employer to an Employee on a regular periodic basis
in exchange for services rendered during a Year, regardless of
when paid.
Bonus: Any amount awarded by a Participating Employer to an
-----
Employee for a Year under a bonus plan, regardless of when
awarded or paid.
Company: Anheuser-Busch Companies, Inc.
-------
Effective Date: January 1, 1994.
--------------
Eligible Compensation: As to any Year, a Participant's Base
---------------------
Salary and Bonus for such Year. No payments under the Company's
Supplemental Life Insurance Program or any like program, taxable
or non-taxable fringe benefits, stock-related compensation,
international service premiums or other cash or in-kind
compensation shall be taken into account as Eligible
Compensation.
Eligible Employee: With respect to any Year, an Employee
-----------------
who satisfies the requirements for participation in the Plan for
the Year, as determined pursuant to Section II.
Employee: A salaried common-law employee of a Participating
--------
Employer as determined from time to time. In no event shall any
individual be classified as an Employee while he or she is in any
of the following categories:
(a) Independent contractors, including non-employee
directors of the Company and its subsidiaries.
(b) Leased employees.
(c) Non-resident aliens.
(d) Professional baseball players.
(e) Collective bargaining unit members.
<PAGE>
<PAGE>3
Participant: With respect to any Year, an Eligible Employee
-----------
who elects to defer a portion of his or her Eligible Compensation
for the Year or who so elected with respect to an earlier Year as
to which the entire amount deferred and all interest accrued
thereon have not been paid.
Participating Employer: The Company and any other business
----------------------
entity in which the Company has an equity interest of at least
fifty percent (50%), and which adopts this Plan, as determined
from time to time.
Plan: Anheuser-Busch Executive Deferred Compensation Plan,
----
the Plan set forth herein, as duly amended from time to time.
Related Employer: Each Participating Employer and each
----------------
other legal entity as to which the Company has at least fifty
percent (50%) of the voting power.
Year: Each calendar year commencing on or after January 1,
----
1994.
II. ELIGIBILITY
An Employee shall be an Eligible Employee for a Year only if
the sum of the Employee's annual rate of Base Salary as of
October 1 of the immediately preceding calendar year and the
Employee's Bonus for the second preceding calendar year exceeds
$250,000, as adjusted for each Year after 1994 in accordance with
the Company's budgeted internal merit increase factor for that
Year (hereinafter "$250,000 As Adjusted").
III. DEFERRAL ELECTIONS
3.01. Types of Election; Time of Election. Each
---- -----------------------------------
Participant for a Year shall make the following irrevocable
elections in writing on a form provided by the Company and
delivered to the Company not later than the Company may direct,
but in any event before the first day of the Year.
(a) The portion of the Participant's Eligible
Compensation for the Year that shall be deferred; however:
(i) The maximum portion of each installment of a
Participant's Base Salary subject to deferral election
hereunder shall be equal to a pro rata share of the
--- ----
portion of the Participant's Base Salary in excess of
$250,000 As Adjusted. If by reason of Section 3.04, an
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<PAGE>4
installment is insufficient to support any deferral, no
make-up deferral shall be made from any future Base
Salary installment.
(ii) If a Participant's annual Base Salary rate
is changed during a Year, the amounts deferred prior to
the date of change shall not be changed, but the
maximum portion of each installment that can be
deferred after the change shall be adjusted as if the
new annual Base Salary rate applied throughout the
Year.
(iii) The maximum portion of a Participant's
Bonus subject to deferral election hereunder shall be
equal to the amount by which the Participant's Eligible
Compensation exceeds the sum of the portion of the
Participant's Base Salary deferred hereunder plus
$250,000 As Adjusted.
(iv) If any portion of a Participant's total
compensation from all Participating Employers for a
Year would not be deductible for the Year by any
Participating Employer under section 162(m) of the
Internal Revenue Code, the Participant may elect to
defer an indefinite amount equal to such non-deductible
portion of the Participant's compensation, and the
Company may adopt such special rules and procedures as
it deems appropriate to carry out such election.
(b) The period of deferral for amounts deferred during
the Year, which may be a definite period of five (5), ten
(10), fifteen (15) or twenty (20) Years including the Year
of deferral, or an indefinite period ending on termination
of the Participant's employment with all Related Employers,
subject to extension provided for in Sections 3.01(e) and 3.02
or acceleration as provided for in Sections 5.01(b), 5.05, 5.06
and 5.07.
(c) The interest rates to be applied to amounts
deferred during the Year and to any previously deferred
amounts as to which a new election is required under Section 4.01.
(d) Whether payment of amounts deferred for the Year
and interest accrued thereon shall be made in a single sum
or in five (5) installments, subject to acceleration as
provided for in Sections 5.02(c), 5.05, 5.06 and 5.07.
(e) Whether payment of amounts deferred for the Year
that become due on account of termination of the
Participant's employment with all Related Employers shall
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<PAGE>5
begin as of the first day of the calendar month following
the termination or the January 1 following the termination.
3.02. Special Rule for Non-deductible Amounts. Any amount
---- ---------------------------------------
otherwise payable under the Plan in a Year for which the Company
determines that the amount would not be deductible by any
Participating Employer under section 162(m) of the Internal
Revenue Code shall not be paid until such Year as the Company
determines that the amount has ceased to be non-deductible by any
Participating Employer under section 162(m) of the Internal
Revenue Code. In the case of any inconsistency between this
Section 3.02 and any other provision of the Plan, this Section 3.02
shall govern, except in the case of Section 5.06.
3.03. Termination of Deferrals on Termination of Employment.
---- -----------------------------------------------------
If a Participant's employment with all Participating Employers is
terminated before the end of a Year as to which the Participant elected
to defer a portion of Eligible Compensation under the Plan:
(a) Except for deferrals described in Section 3.01(a)(iv),
all such deferrals shall cease upon such termination of
employment, whether or not the Participant receives any
amounts otherwise classified as Eligible Compensation after
such termination, and
(b) No portion of the Participant's Eligible
Compensation previously deferred during the Year shall be
refunded to the Participant, even though the Participant's
total Eligible Compensation for the Year may be less than
$250,000 As Adjusted.
3.04. Miscellaneous Limitations on Deferral.
---- -------------------------------------
Notwithstanding Section 3.01, a Participant's deferral election
for a Year shall be of no force or effect to the extent that it
requires deferral of: (i) any amounts the Participant elects to
contribute under the Anheuser-Busch Deferred Income Stock
Purchase and Savings Plan on either a before-tax or after-tax
basis and the Anheuser-Busch 401(k) Restoration Plan; (ii) any
amounts the Participant elects or is required to contribute under
the Group Insurance Plan for Certain Employees of Anheuser-Busch
Companies, Inc., the Anheuser-Busch Dependent Care Assistance
Plan, the Anheuser-Busch Salaried Long-Term Disability Plan, or
any other welfare benefit plan maintained by any Participating
Employer; (iii) any payroll taxes, income taxes or any other
taxes required to be withheld from the Participant's compensation
which is subject to such taxes during the Year, including but not
limited to FICA taxes and federal, state and local income taxes
required to be withheld on the Participant's wages for the Year;
and (iv) any amounts payable to a court or other individual or
entity by court order.
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<PAGE>6
IV. ACCRUAL OF INTEREST
4.01. Participant Elections.
---- ---------------------
(a) Before the beginning of each Year, the Company
shall offer one or more combinations of interest rates
(hereinafter "Rates") and time periods (hereinafter "Terms")
which shall apply to amounts deferred for the Year and to
all prior deferrals and interest accrued thereon as to which
the previous Terms expired on December 31 of the prior Year.
(b) The Rates and Terms for each Year shall be
determined by the Chief Financial Officer of the Company and
shall correspond generally to the borrowing rates and terms
that will be available to the Company for the Year on the
basis of market rates in effect prior to announcement to
Eligible Employees of the Rates and Terms for the Year.
(c) All Terms shall commence on a January 1 and expire
on a December 31. For example, if before January 1, 1995, a
Participant elects a combination of a 3-Year Term and a 3%
Rate for the amounts deferred by the Participant for 1995,
the 3% Rate shall apply to all amounts deferred for 1995
from the date of deferral through December 31, 1997.
(d) The Terms elected by a Participant need not be
limited to the deferral period for the amount subject to the
Term elected. For example, a Participant may elect a 10-
Year Term for an amount the Participant has elected to be
distributed after 5 Years.
(e) Each Participant shall elect the Rate/Term
combinations which shall apply to amounts the Participant
defers for the Year and to the Participant's prior deferrals
an interest accrued thereon as to which the previous Terms
expired on December 31 of the prior Year.
4.02. Accrual of Interest during Deferral Period. Interest
---- ------------------------------------------
shall accrue on the amounts deferred by a Participant for each
Year in accordance with the Participant's elections from time to
time as provided for in Section 4.01 until payment becomes due with
respect to such amounts pursuant to Section V.
4.03. Accrual of Interest on Installment Payments. If any
---- -------------------------------------------
amount is paid in installments pursuant to a Participant's
election in accordance with Section 3.01(d), interest shall accrue
on any balance thereof remaining to be paid in installments from
time to time at the Rate in effect with respect to such amount on
the day prior to the due date of the first installment.
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<PAGE>
<PAGE>7
4.04. If Payment Is Delayed.
---- ---------------------
(a) In the event payment of an amount due a
Participant occurs thirty (30) or fewer days after its due
date, no interest shall accrue during the period between the
due date and the date of payment.
(b) In the event payment of any amount due a
Participant occurs more than thirty (30) days after its due
date, interest shall accrue during the period between the
due date and the date of payment at an annual rate equal to
the prime rate published by The Boatmen's National Bank of
St. Louis as of the due date.
4.05. If Payment Is Accelerated. If payment of an amount
---- -------------------------
due a Participant is accelerated for any reason, no interest
shall accrue with respect to the accelerated amount after the
date scheduled for accelerated payment, notwithstanding that the
Participant previously elected a longer term or a later payment
date, except as provided for in Section 4.04(b).
V. PAYMENTS TO PARTICIPANTS
5.01. Time Payment Begins.
---- -------------------
(a) Subject to the remaining provisions of this
Section V, payment of amounts deferred for a Year and
interest accrued thereon shall begin as of January 1 of the
Year following expiration of the deferral period the
Participant elected therefor in accordance with Section 3.01(b).
(b) Notwithstanding Section 5.01(a), payment of a
Participant's deferred amounts and interest thereon shall
begin not later than the first day of the calendar month
following termination of the Participant's employment with
all Related Employers on account of retirement, death or any
reason or the January 1 following the termination, as
elected by the Participant pursuant to Section 3.01(e).
5.02. Form of Payment.
---- ---------------
(a) If a Participant elects payment of any amount in a
single sum pursuant to Section 3.01(d), such single sum amount
shall be due and payable as of the date determined pursuant
to Section 5.01.
(b) If a Participant elects payment of any amount in
five (5) installments pursuant to Section 3.01(d), the initial
installment shall be paid as of the first day of the
calendar month following termination of the Participant's
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<PAGE>
<PAGE>8
employment with all Related Employers or as of the January 1
following the termination, as elected by the Participant
pursuant to Section 3.01(e), and the remaining four (4)
installments shall be paid as of January 1 of the next four
(4) calendar years.
(c) Notwithstanding Section 5.02(b): (i) if a Participant's
employment with all Related Employers terminates before age
fifty-five (55) for any reason other than the Participant's
death or disability, or (ii) if a Participant's termination
of employment with all Related Employers occurs before the
end of the Participant's first Year of deferral under the
Plan, the Company may determine that payment of the entire
amount then accrued for the benefit of the Participant under
the Plan shall be paid in a single sum, notwithstanding any
election by the Participant to the contrary.
5.03. Set Off and Withholding.
---- -----------------------
(a) Any amount then due and payable by the Company to
any Participant or the successor to any Participant under
this Plan may be offset by any amounts owed to any Related
Employer by the Participant and/or the successor for any
reason and in any capacity whatsoever, as the Company may
determine in its sole and absolute discretion.
(b) There shall be deducted from any amount payable
under this Plan all taxes required to be withheld by any
federal, state or local government. Participants and their
beneficiaries shall bear any and all federal, state, local
and other income taxes and other taxes imposed on amounts
paid under the Plan, whether or not withholding is required
or carried out in accordance with this provision.
5.04. Determination of Installment Amounts. If payment of
---- ------------------------------------
a deferred amount occurs in installments, the amount of each
installment shall be equal to the deferred amount and accrued
interest thereon remaining unpaid as of the December 31 preceding
payment, divided by the number of installments then remaining to
be paid. For example, to determine the amount of the first
installment, divide the total amount of the deferral and accrued
interest as of the preceding December 31 by five (5); to
determine the amount of the second installment, divide the amount
of the deferral and accrued interest remaining to be paid as of
the preceding December 31 by four (4), and so on.
5.05. Acceleration of Payment for Unforeseeable Emergency.
---- ---------------------------------------------------
(a) The Company may determine that payment of any
portion of the amount then accrued for the benefit of a
Participant or beneficiary under the Plan shall be
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<PAGE>
<PAGE>9
accelerated on application of the Participant or beneficiary
on account of and subject to reasonable proof of
unforeseeable emergency as provided for in this Section 5.05.
(b) For purposes of this Section 5.05, an unforeseeable
emergency is a severe financial hardship to the Participant
or beneficiary resulting from a sudden and unexpected
illness or accident of the Participant or beneficiary or of
a dependent (as defined in section 152(a) of the Internal
Revenue Code) of the Participant or beneficiary, loss of the
Participant's or beneficiary's property due to casualty, or
other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the
Participant or beneficiary. The circumstances that will
constitute an unforeseeable emergency will depend upon the
facts of each case, but, in any case, payment may not be
made to the extent that such hardship is or may be
relieved--
(i) Through reimbursement or compensation by
insurance or otherwise,
(ii) By liquidation of the Participant's or
beneficiary's assets, to the extent the liquidation of
such assets would not itself cause severe financial
hardship, or
(iii) By cessation of deferrals under this Plan or
by cessation of elective deferrals if and when possible
under any other deferred compensation plan for which
the Participant or beneficiary is eligible; provided
that a Participant shall not be permitted to cease
deferrals under this plan as of any date other than a
January 1.
Examples of what are not considered to be unforeseeable
emergencies include the need to send a Participant's or
beneficiary's child to college or the desire to purchase a
home.
(c) Withdrawal of amounts because of an unforeseeable
emergency shall be permitted only to the extent reasonably
needed to satisfy the emergency need.
(d) All determinations under this Section 5.05 shall be made
by an Administrative Committee appointed pursuant to
Section 6.01(c).
(e) Notwithstanding any other provision of this Section 5.05,
authorization of distribution on account of hardship under
the Anheuser-Busch Deferred Income Stock Purchase and
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<PAGE>
<PAGE>10
Savings Plan shall automatically terminate any deferral
election of the Participant then in force with respect to
Eligible Compensation and further deferrals under this Plan
shall not be permitted for a period of twelve (12) months.
5.06. Change in Control.
---- -----------------
(a) If a Change in Control (as defined in Section 5.06(b))
shall occur, then, notwithstanding anything to the contrary
herein, the entire amount accrued on behalf of a Participant
under the Plan as of the Change in Control Date shall be
paid in a single sum within 30 days after the Change in
Control Date.
(b) For purposes of this Plan, a "Change in Control"
shall occur if:
(i) Any Person (as defined herein) becomes the
beneficial owner directly or indirectly (within the
meaning of Rule 13d-3 under the Securities Exchange Act
of 1934 as amended ("Act")) of more than 50% of the
Company's then outstanding voting securities (measured
on the basis of voting power);
(ii) The shareholders of the Company approve a
definitive agreement to merge or consolidate the
Company with any other corporation, other than an
agreement providing for (x) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in combination
with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of
the Company, at least 50% of the combined voting power
of the voting securities of the Company or such
surviving entity outstanding immediately after such
merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no
Person acquires more than 50% of the combined voting
power of the Company's then outstanding securities;
(iii) A change occurs in the composition of the
Board of Directors of the Company during any period of
twenty-four consecutive months such that individuals
who at the beginning of such period were members of the
Board of Directors cease for any reason to constitute
at least a majority thereof, unless the election, or
the nomination for election by the Company's
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<PAGE>
<PAGE>11
shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of
the period or whose election or nomination for election
was previously so approved; or
(iv) The shareholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of
all or substantially all the Company's assets.
A Change in Control shall be deemed to have occurred on the
date as of which any of the events described in clauses (i)
through (iv) occur (such date being referred to as "Change
in Control Date"). For purposes of this paragraph, "Person"
shall have the meaning given in Section 3(a)(9) of the Act,
as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (aa) the Company or any
of its subsidiaries, (bb) a trustee or other fiduciary
holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (cc) an underwriter
temporarily holding securities pursuant to an offering of
such securities, or (dd) a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
Company stock.
(c) Following a Change in Control, the provisions of
this Section 5.06 cannot, after the Change in Control Date, be
amended in any manner without the written consent of each
individual who was a Participant immediately prior to a
Change in Control.
(d) Following a Change in Control, this Plan may
continue in effect, notwithstanding that payment of benefits
shall have been made under Section 5.06(a).
(e) If by reason of this Section 5.06 an excise or other
special tax ("Excise Tax") is imposed on any payment under
the Plan (a "Required Payment"), the amount of each Required
Payment shall be increased by an amount which, after payment
of income taxes, payroll taxes and Excise Tax thereon, will
equal such Excise Tax on the Required Payment.
5.07. General Right to Accelerate Payment. Notwithstanding
---- -----------------------------------
Sections 5.01 and 5.02, the Company by its proper officers in its sole
discretion may direct current payment of all amounts that all
Participants have elected to defer pursuant to Section 3.01 and all
interest then accrued thereon.
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<PAGE>12
5.08. Payments After Death.
---- --------------------
(a) Except as otherwise provided in this Section 5.08, any
amount payable under this Plan as a result of or following
the death of a Participant shall be applied only for the
benefit of the beneficiary or beneficiaries designated by
the Participant pursuant to this Section 5.08. Each Participant
shall specifically designate, by name, on forms provided by
the Company, the beneficiary(ies) to whom any such amounts
shall be paid. A Participant may change or revoke a
beneficiary designation without the consent of the
beneficiary(ies) at any time by filing a new beneficiary
designation form with the Company. The filing of a new form
shall automatically revoke any forms previously filed with
the Company. A beneficiary designation form not properly
filed with the Company prior to the death of the Participant
shall have no validity under the Plan.
(b) Any such designation shall be contingent on the
designated beneficiary surviving the Participant. If a
designated beneficiary survives the Participant but dies
before receiving the entire amount payable to the designated
beneficiary hereunder, the amount which would otherwise have
been so paid shall be paid to the estate of the deceased
beneficiary unless a contrary direction was made by the
Participant, in which case such direction shall control.
More than one beneficiary, and alternative or contingent
beneficiaries, may be designated, in which case the
Participant shall specify the shares, terms and conditions
upon which amounts shall be paid to such multiple or
alternative or contingent beneficiaries, all of which must
be satisfactory to the Company.
(c) If no beneficiary designation is on file with the
Company at the time of the Participant's death or no
beneficiary designated by the Participant survives the
Participant, the Participant's estate shall be deemed to be
the beneficiary designated to receive any amounts then
remaining payable under this Plan.
(d) In determining any question concerning a
Participant's beneficiary, the latest designation filed with
the Company shall control and intervening changes in
circumstances shall be ignored. For example, if a
Participant's spouse is designated as beneficiary but
thereafter is divorced from the Participant, such
designation shall remain valid unless and until the
Participant files a later beneficiary designation form with
the Company.
-11-
<PAGE>13
(e) Any check issued on or before the date of a
Participant's death shall remain payable to the Participant,
whether or not the check is received by the Participant
prior to death. Any check issued after the date of the
Participant's death shall be the property of the
Participant's beneficiaries determined in accordance with
this Section 5.08.
(f) A Participant's election of payment in
installments shall not be altered by reason of the
Participant's death.
5.09. All Payments to be Made by the Company. All payments
---- --------------------------------------
due any Participant or beneficiary under this Plan shall be the
sole responsibility of the Company.
VI. ADMINISTRATION
6.01. Administrative Duties of the Company.
---- ------------------------------------
(a) The Company shall have sole responsibility for the
administration of the Plan.
(b) The Company shall administer the Plan in
accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan. The
Company shall interpret the Plan; shall determine all
questions arising in the administration, interpretation, and
application of the Plan; and shall construe any ambiguity,
supply any omission, and reconcile any inconsistency in such
manner and to such extent as the Company deems proper. Any
interpretation or construction placed upon any term or
provision of the Plan by the Company, any decisions and
determinations of the Company arising under the Plan,
including without limiting the generality of the foregoing:
(i) the eligibility of any individual to become or remain a
Participant and a Participant's status as such, and Eligible
Compensation for any Year; (ii) the time, method and amounts
of payments payable under the Plan; (iii) the rights of
Participants; and any other action or determination or
decision whatsoever taken or made by the Company in good
faith shall be final, conclusive, and binding upon all
persons concerned, including, but not limited to, the
Company, all Participating Employers and all Participants
and beneficiaries.
(c) The Chief Financial Officer of the Company shall
appoint one or more Employees to carry out the Company's
duties hereunder.
-12-
<PAGE>
<PAGE>14
(d) The Company may employ accountants, counsel,
specialists, and other persons necessary to help carry out
its duties and responsibilities under the Plan. The Company
or any appointee shall be entitled to rely conclusively upon
any opinions or reports which shall be furnished to it or
him by such accountants, counsel, specialists, and other
persons.
(e) No Employee shall participate in determining his
or her own entitlement under the Plan.
6.02. Claims Procedures.
---- -----------------
(a) The Company shall make all decisions and
determinations respecting the right of any person to a
payment under the Plan.
(b) The following procedure shall be followed with
respect to claims under the Plan:
(i) Any claimant who believes he or she is
entitled to a benefit under this Plan shall submit a
claim for such benefit in writing to the Company.
(ii) Any decision by the Company denying a claim
in whole or in part shall be stated in writing by the
Company and delivered or mailed to the claimant within
ninety (90) days after receipt of the claim by the
Company unless special circumstances require an
extension of time for processing, but in any event
within one hundred eighty (180) days after such
receipt. If such an extension of time is taken, the
Company shall inform the claimant of the delay in
writing before the expiration of the initial ninety
(90) day period, including the reasons therefor and the
date by which the Company expects to render a decision.
Any decision denying a claim shall set forth the
specific reasons for the denial with specific
references to Plan provisions on which the denial is
based, a description of any additional material or
information necessary to perfect the claim and the
reasons therefor, and an explanation of the Plan's
claim review procedure as provided for in Section
6.02(b)(iii), all written in a manner calculated to be
understood by the claimant. If the Company does not
notify the claimant of denial of the claim or the need
for an extension of time within the initial ninety (90)
day period, the claim shall be deemed denied.
(iii) If a claim is denied in whole or in part,
the claimant or his or her duly authorized
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<PAGE>
<PAGE>15
representative may request a review by the Company of
the decision upon written application to the Company
within sixty (60) days after notification of the
decision. The claimant or his or her duly authorized
representative may review pertinent documents and
submit issues and comments in writing. The Company
shall make its decision on review not later than sixty
(60) days after receipt of the request for review
unless special circumstances require an extension of
time for processing, in which case its decision shall
be rendered as soon as possible, but not later than one
hundred twenty (120) days after receipt of the request
for review. If such an extension of time is taken, the
Company shall inform the claimant of the delay in
writing before the expiration of the initial sixty (60)
day period. The decision on review shall be in writing
and shall include specific reasons for the decision,
written in a manner calculated to be understood by the
claimant and specific references to the pertinent plan
provisions on which the decision is based. If the
Company does not notify the claimant of its decision on
review within the period herein provided for, the claim
shall be deemed denied on review.
(c) The Company may adopt such rules as it deems
necessary, desirable, or appropriate to carry out its duties
under this Section 6.02. All rules, decisions and determinations
of the Company under this Section 6.02 shall be uniformly and
consistently applied. Any action or determination or
decision whatsoever taken or made by the Company under this
Section 6.02 in good faith shall be final, conclusive, and binding
upon all persons concerned, including, but not limited to,
the Company, all Participating Employers and all
Participants and beneficiaries.
(d) The procedure provided for in this Section 6.02 shall be
the sole, exclusive and mandatory procedure for resolving
any dispute under this Plan.
6.03. Books and Records.
---- -----------------
(a) The Company shall keep such books, records, and
other data as it deems necessary for proper administration
of the Plan, including but not limited to records of each
Participant's Eligible Compensation, elections, deferred
amounts, Rates and Terms, interest accrued, amounts payable
to each Participant from time to time, and amounts paid to
each Participant or beneficiary from time to time.
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<PAGE>16
(b) The records of the Company shall be conclusive on
all persons unless proved incorrect to the satisfaction of
the Company.
(c) The Company shall comply with all reporting and
disclosure requirements of the law and shall maintain all
records required by law.
6.04. Notices.
---- -------
(a) Any notice from the Company to any Participant
shall be in writing and shall be given by delivery to the
Participant, or by mailing to the last known residence
address of the Participant. Any notice from a Participant
to the Company shall be in writing and shall be given by
delivery to the Pension Department of the Company at the
Company's headquarters, except as otherwise designated by
the Company. Notices shall be effective on the date of
actual delivery.
(b) Each Participant shall furnish all information,
including post office address and each change of post office
address, proofs, receipts and releases, as may be required
by the Company.
(c) Any communication, statement or notice addressed
to any individual at the last post office address filed with
the Company shall be binding for all purposes of the Plan,
and the Company shall not be obligated to search for or
ascertain the whereabouts of any such individual.
(d) Except as provided in Section III, any notice
required by the Plan may be waived by the Company or any
Participant.
VII. AMENDMENT AND TERMINATION
The Chief Financial Officer of the Company shall have
authority to amend or terminate the Plan on behalf of the Company
in his sole discretion at any time, except as follows:
(a) Amendments that provide for substantial increases
in benefits shall require approval by the Compensation
Committee of the Board of Directors of the Company.
(b) No amendment shall reduce the amount accrued for
the benefit of a Participant immediately prior to the
effective date of the amendment.
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<PAGE>17
(c) No amendment shall reduce any Rate elected by a
Participant before expiration of the Term provided therefor
when the election was made unless the amount governed by the
Rate and Term is distributed to the Participant in
connection with termination of the Plan or otherwise
pursuant to the Plan.
VIII. PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY
8.01. Adoption. A Participating Employer other than the
---- --------
Company shall adopt this Plan by written instrument executed by
its proper officers, subject to the written approval of the
Company. Adoption of the Plan by a Participating Employer shall
constitute automatic delegation of all rights and duties it might
otherwise reserve to itself under the Plan to the Company,
including full authority to amend or terminate the Plan.
8.02. Withdrawal. A Participating Employer shall
---- ----------
automatically withdraw from the Plan if and when the Company
ceases to have an equity interest of at least fifty percent (50%)
without the execution of any other instrument. A Participating
Employer may voluntarily withdraw from the Plan on not less than
thirty (30) days' written notice from its proper officers.
8.03. Succession. In the event of dissolution, merger,
---- ----------
consolidation, or spin-off involving a Participating Employer,
the entity surviving the transaction shall succeed to the rights
and duties of the affected Participating Employer without the
execution of any other instrument.
IX. MISCELLANEOUS
9.01. Company's Obligations Unsecured. It is the intention
---- -------------------------------
of the Company and all Participants that the Plan shall be
unfunded for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended from
time to time. Amounts payable to Participants under this Plan
shall be paid solely from the general assets of the Company as
they come due from time to time. No Participant and no successor
of any Participant shall have any property interest whatsoever in
any asset of the Company on account of participation in this
Plan. Participants' rights under this Plan shall be no greater
than the right of an unsecured general creditor of the Company.
Nothing in this Plan shall require the Company to invest any
amount in any asset or type of asset.
9.02. No Alienation. Except as required by law, amounts
---- -------------
payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
-16-
<PAGE>
<PAGE>18
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary; any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to payment hereunder shall be
void, and the Company shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or
torts of any Participant or other person.
9.03. No Waiver of Rights. Except as provided for in
---- -------------------
Section 6.02, no failure or delay by the Company or any Participant to
exercise any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
9.04. Severability. The invalidity of any particular
---- ------------
clause, provision or covenant herein shall not invalidate all or
any part of the remainder of this Plan, but such remainder shall
be and remain valid in all respects as fully as the law will
permit.
9.05. Legal Expenses. In any proceeding to enforce rights
---- --------------
and obligations hereunder, the unsuccessful party shall pay the
successful party an amount equal to all reasonable out-of-pocket
expenses (including reasonable legal expenses and court costs)
incurred by the successful party.
9.06. Presumption of Competence. Every person receiving or
---- -------------------------
claiming amounts payable under this Plan shall be conclusively
presumed to be mentally competent and of legal age unless and
until the Company receives proof satisfactory to the Company that
the person is incompetent or is a minor or that a guardian or
other person legally vested with the care of the person's estate
has been appointed.
9.07. Facility of Payment. If any amount is payable
---- -------------------
hereunder to a minor or other person under legal disability or
otherwise incapable of managing his or her own affairs, as
determined by the Company in its sole discretion, payment thereof
shall be made in one (or any combination) of the following ways,
as the Company shall determine in its sole discretion:
(i) Directly to said minor or other person;
(ii) To a custodian for said minor or other person
(whether designated by the Company or any other
person) under the Missouri Transfers to Minors Law,
the Missouri Personal Custodian Law or a similar law
of any other jurisdiction;
-17-
<PAGE>
<PAGE>19
(iii) To the conservator of the estate of said minor or
other person; or
(iv) To some relative or friend of such minor or other
person for the support, welfare or education of such
minor or other person.
The Company shall not be required to see to the application of
any payment so made, and payment to the person determined by the
Company shall fully discharge the Company from any further
accountability or responsibility with respect to the amount so
paid.
9.08. No Guarantee of Employment or Compensation. No
---- ------------------------------------------
provision of this Plan shall restrict any Related Employer from
discharging a Participant from employment or restrict any
Participant from resigning from employment with any Related
Employer. No provision of this Plan shall restrict any Related
Employer from increasing or decreasing the compensation of any
Employee.
9.09. Plan Provisions Binding. The provisions of the Plan
---- -----------------------
shall be binding upon the Company, all Participating Employers
and all persons entitled to benefits under the Plan and their
respective successors, heirs and legal representatives.
9.10. Rules of Interpretation. Words of gender shall
---- -----------------------
include persons and entities of any gender, the plural shall
include the singular, and the singular shall include the plural.
Captions are intended to assist in reference and shall not be
interpreted as part of the Plan.
9.11. Missouri Law Controls. Subject to the applicable
---- ---------------------
provisions of the Employee Retirement Income Security Act of 1974
which provide to the contrary, this Plan shall be administered,
construed, and enforced according to the laws of the State of
Missouri and in Courts situated in that State.
9.12. Counterparts. This Plan may be executed in two or
---- ------------
more counterparts, any one of which shall constitute an original
without reference to the others.
IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. executed
this Plan this 23rd day of November, 1993, effective as of the
1st day of January, 1994.
ANHEUSER-BUSCH COMPANIES,INC.
By s/JERRY E. RITTER
------------------------------
Jerry E. Ritter
Chief Financial Officer
WPPCGW/1025.nrl<PAGE>
<PAGE>20
TABLE OF CONTENTS
-----------------
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Eligible Compensation . . . . . . . . . . . . . . . . . . . . . . . 1
Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . 1
Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Participating Employer. . . . . . . . . . . . . . . . . . . . . . . 2
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. DEFERRAL ELECTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
3.01. Types of Election; Time of Election. . . . . . . . . . . . . 2
3.02. Special Rule for Non-deductible Amounts. . . . . . . . . . . 4
3.03. Termination of Deferrals on Termination of
Employment . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.04. Miscellaneous Limitations on Deferral. . . . . . . . . . . . 4
IV. ACCRUAL OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 5
4.01. Participant Elections. . . . . . . . . . . . . . . . . . . . 5
4.02. Accrual of Interest during Deferral Period . . . . . . . . . 5
4.03. Accrual of Interest on Installment Payments. . . . . . . . . 5
4.04. If Payment Is Delayed. . . . . . . . . . . . . . . . . . . . 6
4.05. If Payment Is Accelerated. . . . . . . . . . . . . . . . . . 6
V. PAYMENTS TO PARTICIPANTS. . . . . . . . . . . . . . . . . . . . . . 6
5.01. Time Payment Begins. . . . . . . . . . . . . . . . . . . . . 6
5.02. Form of Payment. . . . . . . . . . . . . . . . . . . . . . . 6
5.03. Set Off and Withholding. . . . . . . . . . . . . . . . . . . 7
5.04. Determination of Installment Amounts . . . . . . . . . . . . 7
5.05. Acceleration of Payment for Unforeseeable
Emergency. . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.06. Change in Control. . . . . . . . . . . . . . . . . . . . . . 9
5.07. General Right to Accelerate Payment. . . . . . . . . . . . . 10
5.08. Payments After Death . . . . . . . . . . . . . . . . . . . . 11
5.09. All Payments to be Made by the Company . . . . . . . . . . . 12
VI. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.01. Administrative Duties of the Company . . . . . . . . . . . . 12
6.02. Claims Procedures. . . . . . . . . . . . . . . . . . . . . . 13
6.03. Books and Records. . . . . . . . . . . . . . . . . . . . . . 14
6.04. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
VII. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 15
-i-
<PAGE>
<PAGE>21
VIII.PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY. . . . . . . . . . . 16
8.01. Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.02. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.03. Succession . . . . . . . . . . . . . . . . . . . . . . . . . 16
IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.01. Company's Obligations Unsecured. . . . . . . . . . . . . . . 16
9.02. No Alienation. . . . . . . . . . . . . . . . . . . . . . . . 16
9.03. No Waiver of Rights. . . . . . . . . . . . . . . . . . . . . 17
9.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . 17
9.05. Legal Expenses . . . . . . . . . . . . . . . . . . . . . . . 17
9.06. Presumption of Competence. . . . . . . . . . . . . . . . . . 17
9.07. Facility of Payment. . . . . . . . . . . . . . . . . . . . . 17
9.08. No Guarantee of Employment or Compensation . . . . . . . . . 18
9.09. Plan Provisions Binding. . . . . . . . . . . . . . . . . . . 18
9.10. Rules of Interpretation. . . . . . . . . . . . . . . . . . . 18
9.11. Missouri Law Controls. . . . . . . . . . . . . . . . . . . . 18
9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 18
-ii-
<PAGE>1
EX-10.17
ANHEUSER-BUSCH
401(k) RESTORATION PLAN
Effective January 1, 1994
<PAGE>
<PAGE>2
TABLE OF CONTENTS
-----------------
ARTICLE I
ESTABLISHMENT OF PLAN
---------------------
1.1. Action By Company . . . . . . . . . . . . . . . . . . . . 1
1.2. Purpose of the Plan . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS
-----------
2.1. Account. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Company Contributions. . . . . . . . . . . . . . . . . . . 1
2.4. Compensation.. . . . . . . . . . . . . . . . . . . . . . . 1
2.5. Effective Date.. . . . . . . . . . . . . . . . . . . . . . 1
2.6. Election Date. . . . . . . . . . . . . . . . . . . . . . . 1
2.7. Eligible Employee. . . . . . . . . . . . . . . . . . . . . 2
2.9. Investment Fund. . . . . . . . . . . . . . . . . . . . . . 2
2.10. Match Rate.. . . . . . . . . . . . . . . . . . . . . . . . 2
2.11. Participant. . . . . . . . . . . . . . . . . . . . . . . . 2
2.12. Participating Employer.. . . . . . . . . . . . . . . . . . 2
2.13. Personal Salary Deferral Contributions.. . . . . . . . . . 2
2.14. Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.15. Regular 401(k) Plan. . . . . . . . . . . . . . . . . . . . 2
2.16. Regular 401(k) Plan Matched Contributions. . . . . . . . . 2
2.17. Reporting Person.. . . . . . . . . . . . . . . . . . . . . 2
2.18. Reporting Person's HCSF Sub-Account. . . . . . . . . . . . 2
ARTICLE III
ELIGIBILITY
-----------
3.1. Eligibility on Election Dates . . . . . . . . . . . . . . . 3
3.2. Eligibility Requirements. . . . . . . . . . . . . . . . . . 3
3.3. Participation . . . . . . . . . . . . . . . . . . . . . . . 3
3.4. Suspension. . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
PARTICIPANT DEFERRAL OF COMPENSATION
------------------------------------
4.1. Election. . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2. Time For Making Election. . . . . . . . . . . . . . . . . . 4
4.3. Special Rule for Reporting Persons. . . . . . . . . . . . . 4
4.4. Cessation of Personal Salary Deferral
Contributions . . . . . . . . . . . . . . . . . . . . . . . 4
i
<PAGE>
<PAGE>3
ARTICLE V
COMPANY CONTRIBUTIONS
---------------------
ARTICLE VI
ACCOUNTS
--------
6.1. Establishment of Accounts . . . . . . . . . . . . . . . . . 5
6.2. Crediting of Personal Salary Deferral
Contributions . . . . . . . . . . . . . . . . . . . . . . . 5
6.3. Crediting of Company Contributions. . . . . . . . . . . . . 5
6.4. Crediting or Debiting of Investment Returns . . . . . . . . 5
6.5. Debiting of Payments. . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII
HYPOTHETICAL INVESTMENTS
------------------------
7.1. Election of Hypothetical Investments. . . . . . . . . . . . 6
7.2. Crediting of Investment Returns . . . . . . . . . . . . . . 6
ARTICLE VIII
VESTING
-------
8.1. Personal Salary Deferral Contributions. . . . . . . . . . . 7
8.2. Company Contributions . . . . . . . . . . . . . . . . . . . 7
ARTICLE IX
PAYMENT OF BENEFITS
-------------------
9.1. Election . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.2. Commencement of Payments . . . . . . . . . . . . . . . . . 7
9.3. Timing of Payments . . . . . . . . . . . . . . . . . . . . 8
9.4. Set Off and Withholding. . . . . . . . . . . . . . . . . . 8
9.5. Determination of Payment Amounts . . . . . . . . . . . . . 8
9.6. Unforeseeable Emergency. . . . . . . . . . . . . . . . . . 9
9.7. Change in Control. . . . . . . . . . . . . . . . . . . . . 10
9.8. General Right to Accelerate Payment. . . . . . . . . . . . 11
9.9. Payments After Death . . . . . . . . . . . . . . . . . . . 11
9.10. All Payments to be Made by the Company . . . . . . . . . . 13
9.11. Special Rule for Non-deductible Amounts. . . . . . . . . . 13
ARTICLE X
PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY
----------------------------------------------
10.1. Adoption . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.2. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . 13
10.3. Succession . . . . . . . . . . . . . . . . . . . . . . . . 13
ii
<PAGE>
<PAGE>4
ARTICLE XI
ADMINISTRATION AND CLAIMS PROCEDURES
------------------------------------
11.1. Administrative Duties of the Company . . . . . . . . . . . 14
11.2. Claims Procedures. . . . . . . . . . . . . . . . . . . . . 14
11.3. Books and Records. . . . . . . . . . . . . . . . . . . . . 16
11.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XII
AMENDMENT AND TERMINATION
-------------------------
ARTICLE XIII
MISCELLANEOUS
-------------
13.1. Company's Obligations Unsecured . . . . . . . . . . . . . 17
13.2. No Alienation . . . . . . . . . . . . . . . . . . . . . . 17
13.3. No Waiver of Rights . . . . . . . . . . . . . . . . . . . 18
13.4. Severability. . . . . . . . . . . . . . . . . . . . . . . 18
13.5. Legal Expenses. . . . . . . . . . . . . . . . . . . . . . 18
13.6. Presumption of Competence . . . . . . . . . . . . . . . . 18
13.7. Facility of Payment . . . . . . . . . . . . . . . . . . . 18
13.8. No Guarantee of Employment or Compensation. . . . . . . . 19
13.9. Plan Provisions Binding . . . . . . . . . . . . . . . . . 19
13.10. Rules of Interpretation . . . . . . . . . . . . . . . . . 19
13.11. Missouri Law Controls . . . . . . . . . . . . . . . . . . 19
13.12. Reporting Persons . . . . . . . . . . . . . . . . . . . . 19
13.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 19
iii
<PAGE>
<PAGE>5
ANHEUSER-BUSCH
401(k) RESTORATION PLAN
-----------------------
ARTICLE I
ESTABLISHMENT OF PLAN
---------------------
1.1. Action By Company. Effective as of January 1, 1994,
-----------------
Anheuser-Busch Companies, Inc., a Delaware corporation (the
"Company"), hereby establishes the Anheuser-Busch 401(k)
Restoration Plan (the "Plan").
1.2. Purpose of the Plan. The Plan is established and
-------------------
maintained by the Company for the purpose of restoring certain
benefits which are precluded from being provided under the
Regular 401(k) Plan to a select group of management and highly
compensated employees.
ARTICLE II
DEFINITIONS
-----------
Except as otherwise expressly provided in this Plan,
all capitalized terms used herein shall have the meaning ascribed
to them in the Regular 401(k) Plan.
2.1. "Account." The separate record of the interest of
-------
each Participant in this Plan which the Company will establish in
accordance with Article VI.
2.2. "Beneficiary." The individual or individuals
-----------
designated by a Participant to receive benefits under Section
9.9, or any other person deemed to be a Beneficiary under any
other provision of this Plan or by law.
2.3. "Company Contributions." The amounts credited to the
---------------------
Accounts of Participants pursuant to Article V hereof.
2.4. "Compensation." Base Pay under the Regular 401(k)
------------
Plan, except that no reduction shall be made to reflect the
limitation under Section 401(a)(17) of the Code.
2.5. "Effective Date." January 1, 1994.
--------------
2.6. "Election Date." A date determined by the Company not
-------------
later than which any election under the Plan must be made.
<PAGE>
<PAGE>6
2.7. "Eligible Employee." An Employee of any Participating
-----------------
Employer who is eligible to participate in the Plan in accordance
with Article III hereof.
2.8. "Employee." A common-law employee of any
--------
Participating Employer.
2.9. "Investment Fund." Any of the investment sub-funds
---------------
which, from time to time, comprise the Fund under the Regular
401(k) Plan. At the time of the establishment of this Plan, the
Investment Funds include the Company Stock Fund, the Equity Index
Fund, the Medium-Term Fixed Income Fund and the Short-Term Fixed
Income Fund.
2.10. "Match Rate." The applicable contribution rate for
----------
Company Matching Contributions under the Regular 401(k) Plan from
time to time.
2.11. "Participant." Any Eligible Employee who has elected
-----------
to participate in the Plan in accordance with Section 4.1 hereof
and for whom an Account is maintained.
2.12. "Participating Employer." The Company and any other
----------------------
employer which is a Participating Employer under the Regular
401(k) Plan and employs any Eligible Employees.
2.13. "Personal Salary Deferral Contributions." A
--------------------------------------
Participant's personal salary deferral contributions to this
Plan.
2.14. "Plan Year." The fiscal year adopted for this Plan.
---------
On the Effective Date, the Plan Year is the calendar year.
2.15. "Regular 401(k) Plan." The Anheuser-Busch Deferred
-------------------
Income Stock Purchase and Savings Plan, as amended from time to
time.
2.16. "Regular 401(k) Plan Matched Contributions." A
-----------------------------------------
Participant's Personal Contributions to the Regular 401(k) Plan
with respect to which Company Matching Contributions are made.
2.17. "Reporting Person." As of a given date, an Employee
----------------
who would be required to report an ordinary purchase or sale of
the common stock of the Company occurring on such date to the
Securities and Exchange Commission pursuant to Section 16(a) of
the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder.
2.18. "Reporting Person's HCSF Sub-Account." That portion
-----------------------------------
of an Account of a Reporting Person which is hypothetically
invested in the Company Stock Fund.
2
<PAGE>
<PAGE>7
ARTICLE III
ELIGIBILITY
-----------
3.1. Eligibility on Election Dates. Any person who is an
-----------------------------
Employee of a Participating Employer on the Effective Date or any
subsequent Election Date is eligible to participate in the Plan
as of such Effective Date or Election Date provided he or she
satisfies the requirements of Section 3.2 on such date.
3.2. Eligibility Requirements. In order to be eligible to
------------------------
defer any portion of his Compensation under the Plan from time to
time, an Employee must satisfy the following requirements:
(a) Be a participant in the Regular 401(k) Plan;
(b) Have Compensation exceeding the limit
established under Section 401(a)(17) of the Code, determined on a
ratable basis under the standards applied under the Regular
401(k) Plan; and
(c) Be contributing to the Regular 401(k) Plan the
maximum percentage of Base Pay which may constitute Regular
401(k) Plan Matched Contributions.
3.3. Participation. Any Eligible Employee shall become a
-------------
Participant in the Plan by electing to make Personal Salary
Deferral Contributions pursuant to Article IV hereof, and shall
remain a Participant as long as he or she shall continue to live
and have an Account.
3.4. Suspension.
----------
(a) A Participant who reduces contributions to the
Regular 401(k) Plan below the maximum percentage of Base Pay
which may constitute Regular 401(k) Plan Matched Contributions
shall be suspended from making Personal Salary Deferral
Contributions and from receiving Company Contributions under this
Plan for period of twelve (12) months after the effective date of
such withdrawal.
(b) A Participant who makes a withdrawal pursuant
to Section 9.6 or a hardship withdrawal under the Regular 401(k)
Plan shall be suspended from making Personal Salary Deferral
Contributions and receiving Company Contributions under this Plan
for a period of twelve (12) months after the effective date of
such withdrawal.
(c) A Participant who is suspended from making
Regular 401(k) Plan Matched Contributions for any other reason
shall be suspended from making Personal Salary Deferral
Contributions and receiving Company Contributions under this Plan
3
<PAGE>
<PAGE>8
for the same period as the suspension period provided for in the
Regular 401(k) Plan.
(d) Any Participant suspended pursuant to this
Section 3.4 may resume deferrals under this Plan only if the
Participant satisfies the requirements of Section 3.2 at the time
of resumption and makes an election described in Section 4.1 not
later than the Election Date for the Plan Year in which deferrals
are resumed, whether the Participant's suspension period expires
as of January 1 or on a later date during the Plan Year.
ARTICLE IV
PARTICIPANT DEFERRAL OF COMPENSATION
------------------------------------
4.1. Election. An Eligible Employee who wishes to begin or
--------
resume Personal Salary Deferral Contributions under the Plan must
execute and deliver the appropriate Company form properly
completed. Execution and delivery of such form to the Company
shall be an irrevocable direction by the Participant to his or
her Participating Employer to defer payment of an amount which is
equal to (a) the difference between the Participant's
Compensation and the applicable annual compensation limit under
Section 401(a)(17) of the Code, times (b) the maximum percentage
of Base Pay which may constitute Regular 401(k) Plan Matched
Contributions until the earlier of the date the Participant's
employment with all Participating Employers ends, the date of
suspension of the Participant's contributions pursuant to Section
3.4 or the date of cessation of the Participant's Personal Salary
Deferral Contributions pursuant to Section 4.4.
4.2. Time For Making Election. In general, the election
------------------------
described in Section 4.1 must be made not later than the Election
Date which immediately precedes the Plan Year in which the
Participant wishes to begin or resume making Personal Salary
Deferral Contributions. In the case of an Employee who becomes
an Eligible Employee after the Effective Date, the election to
begin making Personal Salary Deferral Contributions described in
Section 4.1 must be made not later than the Election Date which
coincides with such Employee's initial eligibility, and will
apply to defer amounts attributable to services performed after
such Election Date.
4.3. Special Rule for Reporting Persons. Notwithstanding
----------------------------------
anything, an election described in Section 4.1 by a Reporting
Person shall not be effective as to Compensation payable prior to
the first day of the month following the calendar month in which
the election is executed and delivered.
4.4. Cessation of Personal Salary Deferral Contributions.
---------------------------------------------------
A Participant may cease making Personal Salary Deferral
Contributions as of the first day of any Plan Year, provided that
4
<PAGE>
<PAGE>9
the Participant executes and delivers the appropriate form
promulgated by the Company not later than the Election Date which
immediately precedes the Plan Year. An election under this
Section 4.4 does not constitute a termination of participation in
the Plan.
ARTICLE V
COMPANY CONTRIBUTIONS
---------------------
Each Participant's Account will be credited with a
Company Matching Contribution which is equal to (a) the amount of
such Participant's Personal Salary Deferral Contribution, times
(b) the Match Rate, all as determined from time to time. Each
Participant's Account will be credited with a Supplemental
Contribution for each Plan Year at the same rate as the
Supplemental Contribution under the Regular 401(k) Plan for the
Regular 401(k) Plan's plan year within which the Plan Year of
this Plan ends.
ARTICLE VI
ACCOUNTS
--------
6.1. Establishment of Accounts. The Company will establish
-------------------------
an Account for the benefit of each Participant.
6.2. Crediting of Personal Salary Deferral Contributions.
---------------------------------------------------
Each Participant's Account shall be credited with his or her
Personal Salary Deferral Contributions at the same time as
accounts under the Regular 401(k) Plan are credited with Personal
Contributions.
6.3. Crediting of Company Contributions. Each
----------------------------------
Participant's Account will also be credited with Company Matching
Contributions and Supplemental Contributions in accordance with
Article V, at the same times as accounts under the Regular 401(k)
Plan are credited therewith.
6.4. Crediting or Debiting of Investment Returns. The
-------------------------------------------
Company shall credit or debit, as the case may be, each
Participant's Account to reflect the return on hypothetical
investments provided in Article VII.
6.5. Debiting of Payments. Each Participant's Account
--------------------
shall be debited by the amount of any payments of benefits
pursuant to Article IX at the time of any such payments.
5
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<PAGE>10
ARTICLE VII
HYPOTHETICAL INVESTMENTS
------------------------
7.1. Election of Hypothetical Investments. Prior to
------------------------------------
becoming a Participant, each Participant must (and at such times
as the Company may thereafter allow, each Participant may) select
the combination of Investment Funds in which he or she wishes
hypothetically to invest, subject to the following limitations:
(a) The portion of each Participant's Account which
is attributable to Company Contributions, including earnings
thereon, shall be hypothetically invested at all times in the
Company Stock Fund.
(b) At least 50% of the portion of each
Participant's Account which is attributable to Personal Salary
Deferral Contributions, including earnings thereon, shall be
hypothetically invested in the Company Stock Fund for at least
one complete Plan Year after the Plan Year of contribution.
(c) Notwithstanding (b) above, no part of the value
of a Reporting Person's Account which is attributable to Personal
Salary Deferral Contributions shall be hypothetically invested in
the Company Stock Fund at any time.
(d) A Participant's elections respecting
hypothetical investment of future deferrals and hypothetical
investment of the Participant's existing Account shall be made
separately and independently in accordance with the rules and
regulations of the Regular 401(k) Plan.
(e) If a Participant dies before distribution of
the Participant's entire Account is complete, the Participant's
Beneficiary shall have the right to make the elections reserved
to the Participant in the foregoing subsections of this Section
7.1 from the date the Employee Stock Plans Department of the
Company receives written notice of the Participant's death
through the date of final distribution; provided: (i) if a
deceased Participant has two or more Beneficiaries, the
Beneficiaries shall have the right to make such elections with
respect to the portions of the Participant's Account to which
they are respectively entitled; and (ii) if the Beneficiary is a
minor or otherwise legally incompetent, a parent or legal
guardian of the Beneficiary, as the case may be, shall exercise
such right on behalf of the Beneficiary.
7.2. Crediting of Investment Returns. The Company shall,
-------------------------------
at such times and in such manner as it in its sole discretion
determines to be appropriate, credit or debit each Participant's
Account, as the case may be, with the appropriate amount of
income, gain or loss, as if such Account had been invested in the
6
<PAGE>
<PAGE>11
combination of Investment Funds he or she has selected in
accordance with Section 7.1.
ARTICLE VIII
VESTING
-------
8.1. Personal Salary Deferral Contributions. The portion
--------------------------------------
of a Participant's Account which is attributable to the
Participant's Personal Salary Deferral Contributions, together
with all earnings thereon, shall be fully vested and non-
forfeitable at all times.
8.2. Company Contributions. The portion of a Participant's
---------------------
Account which is attributable to Company Contributions, together
with all earnings thereon, shall vest and become non-forfeitable
when the portion of such Participant's Regular 401(k) Plan
account which is attributable to Company Matching Contributions
and Supplemental Contributions vests and becomes non-forfeitable.
ARTICLE IX
PAYMENT OF BENEFITS
-------------------
9.1. Election.
--------
(a) At the time an Eligible Employee makes the
initial election to participate in the Plan which is described in
Section 4.1, he or she shall also irrevocably elect whether
amounts deferred under the Plan during the initial Plan Year and
subsequent Plan Years shall be made in a single sum, or five (5)
installments, and whether payment shall begin as of the first day
of the calendar month following termination of the Participant's
employment with all Employing Companies or as of the January 1
following the termination, all subject to acceleration as
provided for in Sections 9.6, 9.7 and 9.8.
(b) A Participant may change any prior election
made pursuant to Section 9.1(a) or any election pursuant to this
Section 9.1(b), effective as to the value of the Participant's
Account which is attributable to contributions made on and after
the first day of any succeeding Plan Year. Notice of any such
change shall be filed by the Election Date for such Plan Year on
a form prescribed by the Company.
9.2. Commencement of Payments. Subject to the remaining
------------------------
provisions of this Article IX, payments under the Plan shall
begin as of the first day of the calendar month following the
Participant's termination of employment with all Employing
7
<PAGE>
<PAGE>12
Companies or as of the January 1 following the termination, as
elected by the Participant.
9.3. Timing of Payments.
------------------
(a) If a Participant has elected payment of any
portion of the Participant's Account in a single sum pursuant to
Section 9.1, such single sum amount shall be due and payable as
of the first day of the calendar month following termination of
the Participant's employment with all Employing Companies or as
of the January 1 following the termination, as elected by the
Participant.
(b) If a Participant has elected payment of any
portion of the Participant's Account in installments pursuant to
Section 9.1, the initial installment shall be due and payable as
of the first day of the calendar month following the
Participant's termination of employment with all Employing
Companies or as of the January 1 following the termination, as
elected by the Participant, and the remaining four (4)
installments shall be due and payable as of January 1 of the next
four (4) Plan Years.
(c) Notwithstanding Section 9.3(b), if the
Participant's employment with all Employing Companies terminates
before age fifty-five (55) for any reason other than the
Participant's death or disability, the Company may determine that
payment of the Participant's entire Account balance shall be paid
in a single sum, notwithstanding any election by the Participant
to the contrary.
9.4. Set Off and Withholding.
-----------------------
(a) Any amount then due and payable by the Company
to any Participant and/or Beneficiary under this Plan may be
offset by any amount owed to any Employing Company by the
Participant and/or Beneficiary for any reason and in any capacity
whatsoever, as the Company may determine in its sole and absolute
discretion.
(b) There shall be deducted from any amount payable
under this Plan all taxes required to be withheld by any federal,
state or local government. Participants and their Beneficiaries
shall bear any and all federal, state, local and other income
taxes and other taxes imposed on amounts paid under the Plan,
whether or not withholding is required or carried out in
accordance with this provision.
9.5. Determination of Payment Amounts.
--------------------------------
(a) If payment to a Participant or Beneficiary
occurs in a single sum, the amount of such single sum shall be
equal to the Participant's vested Account balance as of the
Plan's valuation date immediately preceding the payment date.
8
<PAGE>
<PAGE>13
(b) If payment to a Participant or Beneficiary
occurs in annual installments, the amount of each installment
shall be equal to the Participant's vested Account balance as of
the Plan's valuation date immediately preceding the payment date,
divided by the number of installments then remaining to be paid.
For example, to determine the amount of the first installment,
divide the Participant's vested Account balance by five (5); to
determine the amount of the second installment, divide the
Participant's vested Account balance by four (4), and so on.
9.6. Unforeseeable Emergency.
-----------------------
(a) Notwithstanding Sections 9.1, 9.2 and 9.3
above, the Company may determine that payment of any portion of
the amount then due a Participant or Beneficiary under the Plan
shall be accelerated on application of the Participant or
Beneficiary on account of and subject to reasonable proof of
unforeseeable emergency.
(b) For purposes of this Section 9.6, an
unforeseeable emergency is a severe financial hardship to the
Participant or Beneficiary resulting from a sudden and unexpected
illness or accident of the Participant or Beneficiary or of a
dependent (as defined in section 152(a) of the Internal Revenue
Code) of the Participant or Beneficiary, loss of the
Participant's or Beneficiary's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of the Participant or
Beneficiary. The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each case,
but, in any case, payment may not be made to the extent that such
hardship is or may be relieved--
(i) Through reimbursement or compensation by
insurance or otherwise,
(ii) By liquidation of the Participant's or
Beneficiary's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship, or
(iii) By cessation of Personal Salary Deferral
Contributions under the Plan if and when possible under the
remaining provisions of the Plan, or by cessation of elective
deferrals if and when possible under any other deferred
compensation plan for which the Participant or Beneficiary is
eligible.
Examples of what are not considered to be unforeseeable
emergencies include the need to send a Participant's or
Beneficiary's child to college or the desire to purchase a home.
(c) Withdrawal of amounts because of an
unforeseeable emergency shall be permitted only to the extent
9
<PAGE>
<PAGE>14
reasonably needed to satisfy the emergency. If the Company
determines that an unforeseeable emergency requires and can be
satisfied by cessation of deferrals under this Plan and any other
deferred compensation plan without withdrawal under this Plan,
the Company shall direct cessation of such deferrals under this
Plan and any other such plan if and to the extent permitted under
the provisions thereof, and shall not direct acceleration of
payment under this Section 9.6.
(d) All determinations under this Section 9.6 shall
be made by an Administrative Committee appointed pursuant to
Section 11.1(c).
9.7. Change in Control.
-----------------
(a) If a Change in Control (as defined in Section
9.7(b)) shall occur, then, notwithstanding anything to the contrary
herein, the entire amount accrued on behalf of a Participant
under the Plan as of the Change in Control Date shall be paid in
a single sum within 30 days after the Change in Control Date.
(b) For purposes of this Plan, a "Change in
Control" shall occur if:
(i) Any Person (as defined herein) becomes the
beneficial owner directly or indirectly (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934 as amended
("Act")) of more than 50% of the Company's then outstanding
voting securities (measured on the basis of voting power);
(ii) The shareholders of the Company approve a
definitive agreement to merge or consolidate the Company with any
other corporation, other than an agreement providing for (x) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(y) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no Person acquires more than 50% of the combined voting power of
the Company's then outstanding securities;
(iii) A change occurs in the composition of the
Board of Directors of the Company during any period of twenty-
four consecutive months such that individuals who at the
beginning of such period were members of the Board of Directors
cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the
10
<PAGE>
<PAGE>15
Company's shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved;
or
(iv) The shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all the Company's assets.
A Change in Control shall be deemed to have occurred on the date
as of which any of the events described in clauses (i) through
(iv) occur (such date being referred to as "Change in Control
Date"). For purposes of this paragraph, "Person" shall have the
meaning given in Section 3(a)(9) of the Act, as modified and used
in Sections 13(d) and 14(d) thereof; however, a Person shall not
include (aa) the Company or any of its subsidiaries, (bb) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, (cc) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (dd) a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Company
stock.
(c) Following a Change in Control, the provisions
of this Section 9.7 cannot, after the Change in Control Date, be amended
in any manner without the written consent of each individual who
was a Participant immediately prior to a Change in Control.
(d) Following a Change in Control, this Plan may
continue in effect, notwithstanding that payment of benefits
shall have been made under Section 9.7(a).
(e) If, by reason of this Section 9.7, an excise or
other special tax ("Excise Tax") is imposed on any payment under
the Plan (a "Required Payment"), the amount of each Required
Payment shall be increased by an amount which, after payment of
income taxes, payroll taxes and Excise Tax on such additional
amount, will equal such Excise Tax on the Required Payment.
9.8. General Right to Accelerate Payment.
-----------------------------------
Notwithstanding Sections 9.2 and 9.3, the Company by
its proper officers in its sole discretion may direct current
payment of all amounts then credited to all Participants'
Accounts under the Plan.
9.9. Payments After Death.
--------------------
(a) Except as otherwise provided in this Section
9.9, any amount payable under this Plan as a result of or
11
<PAGE>
<PAGE>16
following the death of a Participant shall be applied only for
the benefit of the Beneficiary or Beneficiaries designated by the
Participant pursuant to this Section 9.9 or any other person
deemed to be a Beneficiary under any other provision of this Plan
or by law. Each Participant shall specifically designate, by
name, on forms provided by the Company, the Beneficiary(ies) to
whom any such amounts shall be paid. A Participant may change or
revoke a Beneficiary designation without the consent of the
Beneficiary(ies) at the time by filing a new Beneficiary
designation form with the Company. The filing of a new form
shall automatically revoke any forms previously filed with the
Company. A Beneficiary designation form not properly filed with
the Company prior to the death of the Participant shall have no
validity under the Plan.
(b) Any such designation shall be contingent on the
designated Beneficiary surviving the Participant. If the
designated Beneficiary survives the Participant but dies before
receiving the entire amount payable to the designated Beneficiary
hereunder, the amount which would otherwise have been so paid
shall be paid to the estate of the deceased Beneficiary unless a
contrary direction was made by the Participant, in which case
such direction shall control. More than one Beneficiary, and
alternative or contingent Beneficiaries may be designated, in
which case the Participant shall specify the shares, terms and
conditions upon which amounts shall be paid to such multiple or
alternative or contingent Beneficiaries, all of which must be
satisfactory to the Company.
(c) If no Beneficiary designation is on file with
the Company at the time of the Participant's death, the
beneficiary(ies) for purposes of the Regular 401(k) Plan shall be
deemed to be the Beneficiary designated to receive any amounts
then remaining payable under this Plan.
(d) If no Beneficiary designated by the Participant
under this Plan or the Regular 401(k) Plan survives the
Participant, the Participant's estate shall be deemed to be the
Beneficiary designated to receive any amounts then remaining
payable under this Plan.
(e) In determining any question concerning a
Participant's Beneficiary, the latest designation filed with the
Company shall control and intervening changes in circumstances
shall be ignored. For example, if a Participant's spouse is
designated as Beneficiary but thereafter is divorced from the
Participant, such designation shall remain valid until and unless
the Participant files a later Beneficiary designation form with
the Company.
(f) Any check issued on or before the date of a
Participant's death shall remain payable to the Participant
whether or not the check is received by the Participant prior to
12
<PAGE>
<PAGE>17
death. Any check issued after the date of the Participant's
death shall be the property of the Participant's Beneficiaries
determined in accordance with this Section 9.9.
(g) A Participant's election of payment in
installments shall not be altered by reason of the Participant's
death.
9.10. All Payments to be Made by the Company. All payments
--------------------------------------
due any Participant or Beneficiary under this Plan shall be the
sole responsibility of the Company.
9.11. Special Rule for Non-deductible Amounts. Any amount
---------------------------------------
otherwise payable under the Plan in a Plan Year for which the
Company determines that the amount would not be deductible by any
Participating Employer under section 162(m) of the Internal
Revenue Code shall not be paid until such Plan Year as the
Company determines that the amount has ceased to be non-
deductible by any Participating Employer under section 162(m) of
the Internal Revenue Code. In the case of any inconsistency
between this Section 9.11 and any other provision of the Plan,
this Section 9.11 shall govern, except in the case of Section
9.7.
ARTICLE X
PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY
----------------------------------------------
10.1. Adoption. A Participating Employer other than the
--------
Company shall adopt this Plan by written instrument executed by
its proper officers, subject to the written approval of the
Company by its proper officers or their delegates. Adoption of
the Plan by a Participating Employer shall constitute automatic
delegation of all rights and duties it might otherwise reserve to
itself under the Plan to the Company, including full authority to
amend or terminate the Plan.
10.2. Withdrawal. A Participating Employer shall
----------
automatically withdraw from the Plan if and when it ceases to be
a Participating Employer under the Regular 401(k) Plan, without
the execution of any other instrument. A Participating Employer
may voluntarily withdraw from the Plan on not less than thirty
(30) days' written notice from its proper officers.
10.3. Succession. In the event of dissolution, merger,
----------
consolidation, or spin-off involving a Participating Employer,
the entity surviving the transaction shall succeed to the rights
and duties of the affected Participating Employer without the
execution of any other instrument.
13
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<PAGE>18
ARTICLE XI
ADMINISTRATION AND CLAIMS PROCEDURES
------------------------------------
11.1. Administrative Duties of the Company.
------------------------------------
(a) The Company shall have sole responsibility for
the administration of the Plan.
(b) The Company shall administer the Plan in
accordance with its terms and shall have all powers necessary to
carry out the provisions of the Plan. The Company shall
interpret the Plan; shall determine all questions arising in the
administration, interpretation, and application of the Plan; and
shall construe any ambiguity, supply any omission, and reconcile
any inconsistency in such manner and to such extent as the
Company deems proper. Any interpretation or construction placed
upon any term or provision of the Plan by the Company, any
decisions and determinations of the Company arising under the
Plan, including without limiting the generality of the foregoing:
(i) the eligibility of any individual to become or remain a
Participant, a Participant's status as such and the amount of a
Participant's Compensation for any Plan Year, (ii) the time,
method and amounts of payments payable under the Plan; (iii) the
rights of Participants; and (iv) any other action or
determination or decision whatsoever taken or made by the Company
in good faith, shall be final, conclusive, and binding upon all
persons concerned, including, but not limited to, the Company,
all Participating Employers and all Participants and
Beneficiaries.
(c) The Chief Financial Officer of the Company
shall appoint one or more Employees to carry out the Company's
duties hereunder.
(d) The Company may employ accountants, counsel,
specialists, and other persons necessary to help carry out its
duties and responsibilities under the Plan. The Company or any
appointee shall be entitled to rely conclusively upon any
opinions or reports which shall be furnished to it or him by such
accountants, counsel, specialists, and other persons.
(e) No Employee shall participate in determining
his or her own entitlement under the Plan.
11.2. Claims Procedures.
-----------------
(a) The Company shall make all decisions and
determinations respecting the right of any person to a payment
under the Plan.
(b) The following procedure shall be followed with
respect to claims under the Plan:
14
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<PAGE>19
(i) Any claimant who believes he or she is
entitled to a payment under this Plan shall submit a claim for
such payment in writing to the Company.
(ii) Any decision by the Company denying a claim
in whole or in part shall be stated in writing by the Company and
delivered or mailed to the claimant within ninety (90) days after
receipt of the claim by the Company unless special circumstances
require an extension of time for processing, but in any event
within one hundred eighty (180) days after such receipt. If such
an extension of time is taken, the Company shall inform the
claimant of the delay in writing before the expiration of the
initial ninety (90) day period, including the reasons therefor
and the date by which the Company expects to render a decision.
Any decision denying a claim shall set forth the specific reasons
for the denial with specific references to Plan provisions on
which the denial is based, a description of any additional
material or information necessary to perfect the claim and the
reasons therefor, and an explanation of the Plan's claim review
procedure as provided for in Section 11.2(b)(iii), all written in
a manner calculated to be understood by the claimant. If the
Company does not notify the claimant of denial of the claim or
the need for an extension of time within the initial ninety (90)
day period, the claim shall be deemed denied.
(iii) If a claim is denied in whole or in part,
the claimant or his or her duly authorized representative may
request a review by the Company of the decision upon written
application to the Company within sixty (60) days after
notification of the decision. The claimant or his or her duly
authorized representative may review pertinent documents and
submit issues and comments in writing. The Company shall make
its decision on review not later than sixty (60) days after
receipt of the request for review unless special circumstances
require an extension of time for processing, in which case its
decision shall be rendered as soon as possible, but not later
than one hundred twenty (120) days after receipt of the request
for review. If such an extension of time is taken, the Company
shall inform the claimant of the delay in writing before the
expiration of the initial sixty (60) day period. The decision on
review shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by
the claimant and specific references to the pertinent plan
provisions on which the decision is based. If the Company does
not notify the claimant of its decision on review within the
period herein provided for, the claim shall be deemed denied on
review.
(c) The Company may adopt such rules as it deems
necessary, desirable, or appropriate to carry out its duties
under this Section 11.2. All rules, decisions and determinations
of the Company under this Section 11.2 shall be uniformly and
consistently applied. Any action or determination or decision
15
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<PAGE>20
whatsoever taken or made by the Company under this Section 11.2
in good faith shall be final, conclusive and binding upon all
persons concerned, including, but not limited to, the Company,
all Participating Employers, and all Participants and
Beneficiaries.
(d) The procedure provided for in this Section 11.2
shall be the sole, exclusive and mandatory procedure for
resolving any dispute under this Plan.
11.3. Books and Records.
-----------------
(a) The Company shall keep such books, records, and
other data as it deems necessary for proper administration of the
Plan, including but not limited to records of each Participant's
Personal Salary Deferral Contributions, hypothetical Investment
Fund and payment elections, Account balance and payment record.
(b) The records of the Company shall be binding on
all persons unless proved incorrect to the satisfaction of the
Company.
(c) The Company shall comply with all reporting and
disclosure requirements of the law and shall maintain all records
required by law.
11.4. Notices.
-------
(a) Any notice from the Company to any Participant
shall be in writing and shall be given by delivery to the
Participant, or by mailing to the last known residence address of
the Participant. Any notice from a Participant to the Company
shall be in writing and shall be given by delivery to the
Employee Stock Plans Department of the Company at the Company's
headquarters, except as otherwise designated by the Company.
Notices shall be effective on the date of actual delivery.
(b) Each Participant shall furnish all information,
including post office address and each change of post office
address, proofs, receipts and releases, as may be required by the
Company.
(c) Any communication, statement or notice
addressed to any individual at the last post office address filed
with the Company shall be binding for all purposes of the Plan,
and the Company shall not be obligated to search for or ascertain
the whereabouts of any such individual.
(d) Except as provided for in Article IV, any
notice required by the Plan may be waived by the Company or any
Participant.
16
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<PAGE>21
(e) Notwithstanding any other provision of this
Section 11.4, in the event and to the extent permitted under the
Regular 401(k) Plan, notices may be made by electronic means.
ARTICLE XII
AMENDMENT AND TERMINATION
-------------------------
The Chief Financial Officer of the Company shall
have authority to amend or terminate the Plan on behalf of the
Company in his or her sole discretion at any time, except as
follows:
(a) Any amendments that affect the Contribution
Rate shall require approval by the Compensation Committee of the
Board of Directors of the Company; and
(b) No amendment shall retroactively reduce any
Participant's Account under the Plan, except as provided for in
Section 13.12.
All Participants shall be bound by any amendment to the Plan
without the execution of any other instrument.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1. Company's Obligations Unsecured. It is the intention
-------------------------------
of the Company and all Participants that the Plan shall be
unfunded for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974. Amounts payable
to Participants under this Plan shall be paid solely from the
general assets of the Company as they come due from time to time.
No Participant or Beneficiary shall have any property interest
whatsoever in any asset of the Company on account of
participation in this Plan. Participants' rights under this Plan
shall be no greater than the right of an unsecured general
creditor of the Company. Nothing in this Plan shall require the
Company to invest any amount in any asset or type of asset.
13.2. No Alienation. Except as required by law, amounts
-------------
payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary; any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to payment hereunder shall be
void, and the Company shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or
torts of any Participant or other person.
17
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<PAGE>22
13.3. No Waiver of Rights. Except as provided for in
-------------------
Section 11.2, no failure or delay by the Company or any
Participant to exercise any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege.
13.4. Severability. The invalidity of any particular
------------
clause, provision or covenant herein shall not invalidate all or
any part of the remainder of this Plan, but such remainder shall
be and remain valid in all respects as fully as the law will
permit.
13.5. Legal Expenses. In any proceeding to enforce rights
--------------
and obligations hereunder, the unsuccessful party shall pay the
successful party an amount equal to all reasonable out-of-pocket
expenses (including reasonable legal expenses and court costs)
incurred by the successful party.
13.6. Presumption of Competence. Every person receiving or
-------------------------
claiming amounts payable under this Plan shall be conclusively
presumed to be mentally competent and of legal age unless and
until the Company receives proof satisfactory to the Company that
the person is incompetent or is a minor or that a guardian or
other person legally vested with the care of the person's estate
has been appointed.
13.7. Facility of Payment. If any amount is payable
-------------------
hereunder to a minor or other person under legal disability or
otherwise incapable of managing his or her own affairs, as
determined by the Company in its sole discretion, payment thereof
shall be made in one (or any combination) of the following ways,
as the Company shall determine in its sole discretion:
(a) directly to said minor or other person;
(b) to a custodian for said minor or other person
(whether designated by the Company or any other person) under the
Missouri Transfers to Minors Law, the Missouri Personal Custodian
Law or a similar law of any jurisdiction;
(c) to the conservator of the estate of said minor
or other person; or
(d) to some relative or friend of such minor or
other person for the support, welfare or education of such minor
or other person.
The Company shall not be required to see to the application of
any payment so made, and payment to the person determined by the
Company shall fully discharge the Company from any further
18
<PAGE>
<PAGE>23
accountability or responsibility with respect to the amount so
paid.
13.8. No Guarantee of Employment or Compensation. No
------------------------------------------
provision of this Plan shall restrict any Employing Company from
discharging a Participant from employment or restrict any
Participant from resigning from employment with any Participating
Employer. No provision of this Plan shall restrict any Employing
Company from increasing or decreasing the compensation of any
Employee.
13.9. Plan Provisions Binding. The provisions of the Plan
-----------------------
shall be binding upon the Company, all Participating Employers
and all persons entitled to benefits under the Plan and their
respective successors, heirs and legal representatives.
13.10. Rules of Interpretation. Words of gender shall
-----------------------
include persons and entities of any gender, the plural shall
include the singular, and the singular shall include the plural.
Captions are intended to assist in reference and shall not be
interpreted as part of the Plan.
13.11. Missouri Law Controls. Subject to the applicable
---------------------
provisions of the Employee Retirement Income Security Act of 1974
which provide to the contrary, this Plan shall be administered,
construed, and enforced according to the laws of the State of
Missouri and in Courts situated in that State.
13.12. Reporting Persons. It is intended that the
-----------------
interests of Reporting Persons in the Plan qualify for exclusion
from the definition of "derivative securities" contained in Rule
16a-1(c) of the Securities and Exchange Commission; the Plan
shall be interpreted in a manner consistent with that intent.
Moreover, the Chief Financial Officer of the Company may amend
the Plan, retroactively if deemed prudent, as such Officer deems
appropriate to ensure the continuation of such qualification.
13.13. Counterparts. This Plan may be executed in two or
------------
more counterparts, any one of which shall constitute an original
without reference to the others.
IN WITNESS WHEREOF, the Company has executed this
Plan this 23rd day of November, 1993, effective as of the 1st day
of January, 1994.
ANHEUSER-BUSCH COMPANIES, INC.
BY: s/JERRY E. RITTER
------------------------------
Jerry E. Ritter
Chief Financial Officer
wppcgw\401krest.sto
19
<PAGE>1
EX-10.18
INDEMNIFICATION AGREEMENT
-------------------------
AGREEMENT, effective as of --------------, 19----,
between Anheuser-Busch Companies, Inc., a Delaware
corporation (the "Company"), and --------------- (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain
and attract as directors [and executive officers] the most
capable persons available;
WHEREAS, Indemnitee is a [director/executive
officer] of the Company;
WHEREAS, both the Company and Indemnitee recognize
the increased risk of litigation and other claims being
asserted against directors of public companies in today's
environment;
WHEREAS, the Restated Certificate of Incorporation
and the By-laws of the Company require the Company to
indemnify and advance expenses to its directors to the full
extent permitted by law and the Indemnitee has been serving
and continues to serve as a director [or executive officer]
of the Company in part in reliance on such Restated
Certificate of Incorporation and By-laws;
<PAGE>
<PAGE>2
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in Order
to enhance Indemnitee's continued service to the Company in
an effective manner and Indemnitee's reliance on the
aforesaid Restated Certificate of Incorporation and
By-laws, and in part to provide Indemnitee with specific
contractual assurance that the protection promised by such
Restated Certificate of Incorporation and By-laws will be
available to Indemnitee (regardless of, among other things,
any amendment to or revocation of such Restated Certificate
of Incorporation and By-laws or any change in the
composition of the Company's Board of Directors or
acquisition transaction relating to the Company), and in
order to induce Indemnitee to continue to provide services
to the Companyias a director [or executive officer]
thereof, the Company wishes to provide in this Agreement
for the indemnification of and the advancing of expenses to
Indemnitee to the full extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and,
to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies;
2
<PAGE>
<PAGE>3
NOW, THEREFORE, in consideration of the premises
and of Indemnitee continuing to serve the Company directly
or, at its request, with another enterprise, and intending
to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Definitions:
-------------------
(a) Change in Control: shall be deemed to have
-----------------
occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary
holding securities under an employee benefit
plan of the Company or a corporation owned
directly or indirectly by the stockholders of
the Company in substantially the same
proportions as their ownership of stock of
the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities
of the Company representing 20% or more of
the total voting power represented by the
Company's then outstanding Voting Securities,
or (ii) during any period of two consecutive
years, individuals who at the beginning of
3
<PAGE>
<PAGE>4
such period constitute the Board of Directors
of the Company and any new director whose
election by the Board of Directors or
nomination for election by the Company's
stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then
still in office who either were directors at
the beginning of the period or whose election
or nomination for election was previously so
approved, cease for any reason to constitute
a majority thereof, or (iii) the stockholders
of the Company approve a merger or
consolidation of the Company with any other
corporation, other than a merger or
consolidation which would result in the
Voting Securities of the Company outstanding
immediately prior thereto continuing to
represent (either by remaining outstanding or
by being converted into Voting Securities of
the surviving entity) at least 80% of the
total voting power represented by the Voting
Securities of the Company or such surviving
entity outstanding immediately after such
4
<PAGE>
<PAGE>5
merger or consolidation, or the stockholders
of the Company approve a plan of complete
liquidation of the Company or an agreement
for the sale or disposition by the Company
(in one transaction or a series of
transactions) of all or substantially all the
Company's assets.
(b) Claim: any threatened, pending or completed
-----
action, suit or proceeding, or any inquiry,
hearing or investigation, whether conducted
by the Company or any other party, that
Indemnitee in good faith believes might lead
to the institution of any such action, suit
or proceeding, whether civil, criminal,
administrative, investigative or other.
(c) Expenses: include attorneys' fees and all
--------
other costs, expenses and obligations paid or
incurred in connection with investigating,
defending, being a witness in or
participating in (including on appeal), or
preparing to defend, be a witness in or
participate in any Claim relating to any
Indemnifiable Event.
5
<PAGE>
<PAGE>6
(d) Indemnifiable Event: any event or
-------------------
occurrence related to the fact that
Indemnitee is or was a director,
officer, employee, agent or
fiduciary of the Company, or is or
was serving at the request of the
Company as a director, officer,
employee, trustee, agent or
fiduciary of another corporation,
partnership, joint venture, employee
benefit plan, trust or other
enterprise, or by reason of anything
done or not done by Indemnitee in
any such capacity.
(e) Potential Change in Control:
---------------------------
shall be deemed to have occurred if
(i) the Company enters into an
agreement or arrangement, the
consummation of which would result
in the occurrence of a Change in
Control; (ii) any person (including
the Company) publicly announces an
intention to take or to consider
6
<PAGE>
<PAGE>7
taking actions which if consummated
would constitute a Change in
Control; (iii) any person, other
than a trustee or other fiduciary
holding securities under an employee
benefit plan of the Company acting
in such capacity or a corporation
owned, directly or indirectly, by
the stockholders of the Company in
substantially the same proportions
as their ownership of stock of the
Company, who is or becomes the
beneficial owner, directly or
indirectly, of securities of the
Company representing 10% or more of
the combined voting power of the
Company's then outstanding Voting
Securities, increases his beneficial
ownership of such securities by 5%
or more over the percentage so owned
by such person on the date hereof;
or (iv) the Board adopts a
resolution to the effect that, for
7
<PAGE>
<PAGE>8
purposes of this Agreement, a
Potential Change in Control has
occurred.
(f) Reviewing Party: any appropriate
---------------
person or body consisting of a
member or members of the Company's
Board of Directors or any other
person or body appointed by the
Board (including the special,
independent counsel referred to in
Section 3) who is not a party to the
particular Claim for which
Indemnitee is seeking
indemnification.
(g) Voting Securities: any securities
-----------------
of the Company which vote generally
in the election of directors.
2. Basic Indemnification Arrangement. (a)
---------------------------------
In the event Indemnitee was, is or becomes a party
to or witness or other participant in, or is
threatened to be made a party to or witness or
other participant in, a Claim by reason of (or
arising in part out of) an Indemnifiable Event,
8
<PAGE>
<PAGE>9
the Company shall indemnify Indemnitee to the
fullest extent permitted by law, as soon as
practicable but in any event no later than thirty
days after written demand is presented to the
Company, against any and all Expenses, judgments,
fines, penalties and amounts paid in settlement
(including all interest, assessments and other
Charges paid or payable in connection with or in
respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such
Claim and any federal, state, local or foreign
taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under
this Agreement (including the creation of the
Trust). Notwithstanding anything in this
Agreement to the contrary and except as provided
in Section 5, prior to a Change in Control
Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in
connection with any Claim initiated by Indemnitee
against the Company or any director or officer of
the Company unless the Company has joined in or
consented to the initiation of such Claim. If so
9
<PAGE>
<PAGE>10
requested by Indemnitee, the Company shall advance
(within two business days of such request) any and
all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing,
(i) the obligations of the Company under Section
2(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a
written opinion, in any case in which the special,
independent counsel referred to in Section 3
hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law,
and (ii) the obligation of the Company to make an
Expense Advance pursuant to Section 2(a) shall be
subject to the condition that, if, when and to the
extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so
indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for
all such amounts theretofore paid; provided,
however, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction
to secure a determination that Indemnitee should
10
<PAGE>
<PAGE>11
be indemnified under applicable law, any
determination made by the Reviewing Party that
Indemnitee would not be permitted to be
indemnified under applicable law shall not be
binding and Indemnitee shall not be required to
reimburse the Company for any Expense Advance
until a final judicial determination is made with
respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company
for Expense Advances shall be unsecured and no
interest shall be charged thereon. If there has
not been a Change in Control the Reviewing Party
shall be selected by the Board of Directors, and
if there has been such a Change in Control (other
than a Change in Control which has been approved
by a majority of the Company's Board of Directors
who were directors immediately prior to such
Change in Control), the Reviewing Party shall be
the special, independent counsel referred to in
Section 3 hereof. If there has been no
determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee
11
<PAGE>
<PAGE>12
substantively would not be permitted to be
indemnified in whole or in part under applicable
law, Indemnitee shall have the right to commence
litigation in any court in the States of Missouri
or Delaware having subject matter jurisdiction
thereof and in which venue is proper seeking an
initial determination by the court or challenging
any such determination by the Reviewing Party or
any aspect thereof, and the Company hereby
consents to service of process and to appear in
any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
3. Change in Control. The Company agrees
-----------------
that if there is a Change in Control of the
Company (other than a Change in Control which has
been approved by a majority of the Company's Board
of Directors who were directors immediately prior
to such Change in Control) then with respect to
all matters thereafter arising concerning the
rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other
agreement or under applicable law or the Company's
12
<PAGE>
<PAGE>13
Restated Certificate of Incorporation or By-laws
now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal
advice only from special, independent counsel
selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably
withheld), and who has not otherwise performed
services for the Company within the last [10]
years (other than in connection with such matters)
or Indemnitee. Such independent counsel shall not
include any person who, under the applicable
standards of professional conduct then prevailing,
would have a conflict of interest in representing
either the Company or Indemnitee in an action to
determine Indemnitee's rights under this
Agreement. Such counsel, among other things,
shall render its written opinion to the Company
and Indemnitee as to whether and to what extent
the Indemnitee would be permitted to be
indemnified under applicable law. The Company
agrees to pay the reasonable fees of the special,
independent counsel referred to above and to
indemnify fully such counsel against any and all
13
<PAGE>
<PAGE>14
expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating
to this Agreement or the engagement of special,
independent counsel pursuant hereto.
4. Establishment of Trust. In the event of a
----------------------
Potential Change in Control, the Company shall,
upon written request by Indemnitee, create a Trust
for the benefit of the Indemnitee and from time to
time upon written request of Indemnitee shall fund
such Trust in an amount sufficient to satisfy any
and all Expenses reasonably anticipated at the
time of each such request to be incurred in
connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable
Event, and any and all judgments, fines, penalties
and settlement amounts of any and all Claims
relating to an Indemnifiable Event from time to
time actually paid or claimed, reasonably
anticipated or proposed to be paid. The amount or
amounts to be deposited in the Trust pursuant to
the foregoing funding obligation shall be
determined by the Reviewing Party, in any case in
which the special, independent counsel referred to
14
<PAGE>
<PAGE>15
above is involved. The terms of the Trust shall
provide that upon a Change in Control (i) the
Trust shall not be revoked or the principal
thereof invaded, without the written consent of
the Indemnitee, (ii) the Trustee shall advance,
within two business days of a request by the
Indemnitee, any and all Expenses to the Indemnitee
(and the Indemnitee hereby agrees to reimburse the
Trust under the circumstances under which the
Indemnitee would be required to reimburse the
Company under Section 2(b) of this Agreement),
(iii) the Trust shall continue to be funded by the
Company in accordance with the funding obligation
set forth above, (iv) the Trustee shall promptly
pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification
pursuant to this Agreement or otherwise, and (v)
all unexpended funds in such Trust shall revert to
the Company upon a final determination by the
Reviewing Party or a court of competent
jurisdiction, as the case may be, that the
Indemnitee has been fully indemnified under the
terms of this Agreement. The Trustee shall be
15
<PAGE>
<PAGE>16
chosen by the Indemnitee. Nothing in this Section
4 shall relieve the Company of any of its
obligations under this Agreement. All income
earned on the assets held in the Trust shall be
reported as income by the Company for federal,
state, local and foreign tax purposes.
5. Indemnification for Additional Expenses.
---------------------------------------
The Company shall indemnify Indemnitee against any
and all expenses (including attorneys' fees) and,
if requested by Indemnitee, shall (within two
business days of such request) advance such
expenses to Indemnitee, which are incurred by
Indemnitee in connection with any claim asserted
against or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by
the Company under this Agreement or any other
agreement or under applicable law or the Company's
Restated Certificate of Incorporation or By-laws
now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance
policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be
16
<PAGE>
<PAGE>17
entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled
----------------------
under any provision of this Agreement to indemnification by
the Company for some or a portion of the Expenses,
judgments, fines, penalties and amounts paid in settlement
of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any or all Claims
relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against
all Expenses incurred in connection therewith. In
connection with any determination by the Reviewing Party or
otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
7. No Presumption. For purposes of this Agreement, the
--------------
termination of any claim, action, suit or proceeding, by
judgment, order, settlement (whether with or without
17
<PAGE>
<PAGE>18
court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted
by applicable law.
8. Non-exclusivity, Etc. The rights of the Indemnitee
--------------------
hereunder shall be in addition to any other rights
Indemnitee may have under the Company's Restated
Certificate of Incorporation or By-laws or the Delaware
General Corporation Law or otherwise. To the extent that a
change in the Delaware General Corporation Law (whether by
statute or judicial decision) permits greater
indemnification by agreement than would be afforded
currently under the Company's Restated Certificate of
Incorporation and By-laws and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such
change.
9. Liability Insurance. To the extent the Company
-------------------
maintains an insurance policy or policies providing
directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of
18
<PAGE>
<PAGE>19
the coverage available for any Company director or officer.
10. Period of Limitations. No legal action shall be
---------------------
brought and no cause of action shall be asserted by or on
behalf of the Company or any affiliate of the Company
against Indemnitee, Indemnitee's spouse, heirs, executors
or personal or legal representatives after the expiration
of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company or
its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action
within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.
11. Amendments, Etc. No supplement, modification or
---------------
amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this
-----------
Agreement, the Company shall be subrogated to the
19
<PAGE>
<PAGE>20
extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights,
including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not
--------------------------
be liable under this Agreement to make any payment in
connection with any claim made against Indemnitee to the
extent Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the
amounts otherwise indemnifiable hereunder.
14. Binding Effect, Etc. This Agreement shall be
-------------------
binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors,
assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the
Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a
substantial part, of the business and/or assets of the
Company, by written agreement in form and substance sat-
20
<PAGE>
<PAGE>21
isfactory to the Indemnitee, expressly to assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no
such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee
continues to serve as a director [or executive officer] of
the Company or of any other enterprise at the Company's
request.
15. Severability. The provisions of this Agreement
------------
shall be severable in the event that any of the provisions
hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable,
and the remaining provisions shall remain enforceable to the
fullest extent permitted by law. Furthermore, to the
fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this
Agreement containing any provision held to be invalid, void
or otherwise unenforceable, that is not itself invalid, void
or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal
or unenforceable.
16. Governing Law. This Agreement shall be governed by
-------------
and construed and enforced in accordance with
21
<PAGE>
<PAGE>22
the laws of the State of Delaware applicable to contracts
made and to be performed in such State without giving effect
to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement as of the ----- day
of ----------, 19--.
ANHEUSER-BUSCH COMPANIES, INC.
By: --------------------------
Name:
Title:
---------------------------
(Indemnitee)
22
<PAGE>1
EX-10.19
EXECUTION COPY
- - - -----------------------------------------------------------------
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
- - - ----------------------------------------------------------------
<PAGE>
<PAGE>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
i
<PAGE>
<PAGE>3
IV. REPRESENTATIONS AND WARRANTIES OF A-B, A-BI AND
THE INVESTOR
4.1 Corporate Power and Authority; Effect
of Agreement . . . . . . . . . . . . . . . . 30
4.2 Consents . . . . . . . . . . . . . . . . . . 31
4.3 Availability of Funds. . . . . . . . . . . . 31
4.4 Management of G-Modelo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 31
V. COVENANTS OF THE PARTIES
5.1 Access to Information. . . . . . . . . . . . 32
5.2 Further Assurances . . . . . . . . . . . . . 33
5.3 Filings; Tax Returns . . . . . . . . . . . . 34
5.4 Internal Reorganization. . . . . . . . . . . 35
5.5 Election of A-B Director . . . . . . . . . . 36
5.6 Environmental and Safety Laws. . . . . . . . 36
5.7 USA Export Agreement . . . . . . . . . . . . 37
5.8 Consummation of Public Offerings;
Registration of Shares . . . . . . . . . . . 37
5.9 Dividend Policies. . . . . . . . . . . . . . 38
5.10 Equity Participations. . . . . . . . . . . . 41
5.11 Operation of G-Modelo. . . . . . . . . . . . 41
5.12 Government Officials . . . . . . . . . . . . 41
5.13 Sale of Series C Shares to Employees . . . . 42
5.14 Real Estate Transfers. . . . . . . . . . . . 42
5.15 Technical Committees . . . . . . . . . . . . 42
5.16 Failure by the Investor to Acquire
all Diblo Option Shares. . . . . . . . . . . 43
VI. TRANSFER, SALE AND PURCHASE RIGHTS
6.1 General. . . . . . . . . . . . . . . . . . . 44
6.2 Offer to Sell; Right of First Refusal. . . . 45
6.3 The Investor's Option to Purchase
Shares of G-Modelo Capital Stock . . . . . . 49
6.4 The Investor's Option to Purchase
Diblo Common Shares. . . . . . . . . . . . . 52
6.5 Consequences of Failure to Convert
Series P-C Shares. . . . . . . . . . . . . . 54
6.6 Restriction on Dispositions to
Competitors. . . . . . . . . . . . . . . . . 59
6.7 Restrictions on Acquiring Series C
Shares . . . . . . . . . . . . . . . . . . . 59
6.8 Extension of Time Periods. . . . . . . . . . 59
ii
<PAGE>
<PAGE>4
VII. BOARDS OF DIRECTORS; VOTING
7.1 Boards of Directors. . . . . . . . . . . . . 60
7.2 Corporate Actions. . . . . . . . . . . . . . 62
VIII. CONDITIONS TO THE INVESTOR'S OBLIGATIONS
8.1 Representations, Warranties of the
G-Modelo Signatories . . . . . . . . . . . . 68
8.2 No Prohibition . . . . . . . . . . . . . . . 68
8.3 No Action. . . . . . . . . . . . . . . . . . 69
8.4 HSR Act. . . . . . . . . . . . . . . . . . . 69
8.5 Certificates . . . . . . . . . . . . . . . . 69
8.6 Opinion. . . . . . . . . . . . . . . . . . . 69
IX. CONDITIONS TO THE G-MODELO SIGNATORIES' AND THE
BANAMEX TRUST'S OBLIGATIONS
9.1 Representations and Warranties of A-B,
A-BI and the Investor. . . . . . . . . . . . 69
9.2 No Prohibition . . . . . . . . . . . . . . . 70
9.3 No Action. . . . . . . . . . . . . . . . . . 70
9.4 HSR Act. . . . . . . . . . . . . . . . . . . 70
9.5 Certificates . . . . . . . . . . . . . . . . 70
9.6 Opinion. . . . . . . . . . . . . . . . . . . 70
X. INDEMNIFICATION
10.1 The Controlling Shareholders', G-Modelo
and Diblo Indemnification. . . . . . . . . . 71
10.2 The Investor's Indemnification . . . . . . . 71
10.3 Conditions of Indemnification. . . . . . . . 72
10.4 Remedies Cumulative. . . . . . . . . . . . . 73
XI. TERMINATION PRIOR TO CLOSING
11.1 Termination. . . . . . . . . . . . . . . . . 73
11.2 Procedure and Effect of Termination. . . . . 74
XII. DISPUTE RESOLUTION
12.1 Arbitration. . . . . . . . . . . . . . . . . 75
12.2 Business Disagreements . . . . . . . . . . . 76
XIII. MISCELLANEOUS
13.1 Survival of Representations, Warranties
and Covenants. . . . . . . . . . . . . . . . 78
13.2 Entire Agreement . . . . . . . . . . . . . . 78
iii
<PAGE>
<PAGE>5
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
iv
<PAGE>
<PAGE>6
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-
<PAGE>
<PAGE>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
<PAGE>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
<PAGE>
<PAGE>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
<PAGE>
<PAGE>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
<PAGE>
<PAGE>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
<PAGE>
<PAGE>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
7
<PAGE>
<PAGE>13
Initial Diblo Shares (which shall be "ex" the previously
declared dividend that is referred to in clause (iv) of
paragraph (b) of Section 2.04).
2.2. The Closing. The Closing of the transac-
-----------
tions contemplated by this Article II shall take place at
the offices of G-Modelo, Campos Eliseos 400, 19th Floor,
Colonia Lomas de Chapultepec, 11000 Mexico, D.F., com-
mencing at 11:00 a.m. (Mexico time) on the date hereof
provided that all of the conditions to the parties'
obligations set forth in Articles VIII and IX have been
satisfied or waived or such other place, time and date as
the Controlling Shareholders and the Investor may mutual-
ly agree upon. All matters at Closing shall be consid-
ered to take place simultaneously and no delivery of any
document shall be deemed complete until all transactions
and deliveries of documents are completed.
2.3. Purchase Price. The aggregate purchase
--------------
price to be paid by the Investor for the Series P-C
Shares (the "Series P-C Purchase Price") shall be 207.225
million United States dollars and the aggregate purchase
price to be paid by the Investor for the Initial Diblo
Shares (the "Diblo Purchase Price") shall be 270 million
United States dollars. Payment of the Series P-C Pur-
chase Price and the Diblo Purchase Price shall be made at
the Closing by the Investor in immediately available
United States funds.
2.4. Deliveries at the Closing.
-------------------------
(a) Deliveries by the Investor. At the
--------------------------
Closing, the Investor or A-B shall deliver or cause to be
delivered the following:
(i) the Series P-C Purchase
Price to G-Modelo and the Diblo Purchase Price
to the Banamex Trust;
(ii) copies of a duly executed
amendment to the Distribution Agreement dated
as of the Closing Date between A-B and Interna
cionales (the "Internacionales Distribution
Agreement"), providing, among other things,
that, subject to the terms and conditions ther-
eof, for so long as the Investor owns ten per-
cent or more of the total outstanding shares of
8
<PAGE>14
G-Modelo capital stock, Internacionales shall
continue to be the exclusive distributor of A-B
beers in Mexico;
(iii) the opinions referred to in
Section 9.6; and
(iv) any other documents, in-
struments and writings required to be delivered
by the Investor at or prior to the Closing
pursuant to the terms of this Agreement.
(b) Deliveries by the G-Modelo Signato-
----------------------------------
ries, the Banamex Trust and the Option Trust. At the
--------------------------------------------
Closing, the Controlling Shareholders, the Banamex Trust
and the Option Trust shall deliver or cause to be deliv-
ered the following:
(i) stock certificates repre-
senting the Series P-C Shares registered in the
name of the Investor and the Initial Diblo
Shares, duly endorsed in the name of the Inves-
tor;
(ii) a certificate of the appro-
priate officer of Diblo certifying (A) the
completion of the transfer to USA Export of the
exclusive rights of Diblo for the export of
G-Modelo beers to the United States upon the
terms set forth in the agreement between USA
Export and the applicable G-Modelo Corporations
(the "USA Export Agreement"),(B) the Certif-
icate of Incorporation and By-laws of USA Ex-
port and (C) the USA Export Agreement as in
effect on the Closing Date duly executed by the
parties thereto;
(iii) a certificate of an appro-
priate officer of G-Modelo certifying (x) the
exact amount of the dividend declared out of
the consolidated after-tax net earnings of G-
Modelo calculated in accordance with Mexican
GAAP, which dividend will be 484,440,235.90
Mexican Pesos which is the Mexican Peso equiva-
lent of 155.4 million United States dollars
based upon an agreed Free Exchange Rate of
3.1170 Mexican Pesos per United States dollar
9
<PAGE>15
for this purpose, (y) the date of declaration
of such dividend and (z) the date of payment of
such dividend (which shall be payable to G-Mod-
elo's shareholders of record on the date of
such declaration);
(iv) a certificate of an appro-
priate officer of Diblo certifying (x) the
exact amount of the dividend declared out of
the consolidated after-tax net earnings of
Diblo calculated in accordance with Mexican
GAAP, which dividend will be 645,920,325 Mexi-
can Pesos based upon an agreed Free Exchange
Rate of 3.1170 Mexican Pesos per United States
dollar for this purpose, (y) the date of dec-
laration of such dividend, and (z) the date of
payment of such dividend (which shall be pay-
able to Diblo's shareholders of record on the
date of such declaration);
(v) a copy of the Amended G-Mo-
delo By-laws as in effect on the Closing Date
certified by the Secretary of G-Modelo and the
Amended Diblo By-laws as in effect on the Clos-
ing Date certified by the Secretary of Diblo;
(vi) Powers of Attorney granting
one or more of the Controlling Shareholders the
power and authority to act on behalf of those
Controlling Shareholders who have executed this
Agreement by power of attorney, which Control-
ling Shareholders together with the Controlling
Shareholders who have directly executed this
Agreement own or control at least 99 percent of
the capital stock of G-Modelo;
(vii) the opinion referred to in
Section 8.6;
(viii) copies of the duly executed
Control Trust Agreement, the Banamex Trust
Agreement, the Option Trust Agreement and the
Real Estate Trust Agreement, in each case as in
effect on the Closing Date;
(ix) Designation as Trustee
Delegate authorizing the representative of
10
<PAGE>
<PAGE>16
Banco Nacional de Mexico, S.A. on behalf of each of
the Banamex Trust and the Option Trust to execute
the Banamex Trust Agreement and the Option Trust
Agreement, respectively, and this Agreement and of
the Control Trust to execute the Control Trust
Agreement; and
(x) any other documents, in-
struments and writings required to be delivered
by the G-Modelo Signatories, the Banamex Trust
or the Option Trust at or prior to the Closing
pursuant to the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE G-MODELO SIGNATORIES
------------------------------
Each of the G-Modelo Signatories, jointly and
severally, represents and warrants to A-B, A-BI and the
Investor as follows:
3.1. Capital Stock of G-Modelo.
-------------------------
(a) Other than as set forth on Exhibit A,
there are no authorized, issued or outstanding securities
of G-Modelo. The Series A Shares and the Series C Shares
are owned of record as set forth on Exhibit A, free and
clear of all Encumbrances, except as set forth in this
Agreement. All of the Series A Shares and the Series C
Shares have been duly and validly authorized and issued,
and all of such shares, other than those Series C Shares
held in G-Modelo's treasury for issuance to the public in
accordance with Section 5.8 or to executive employees of
the G-Modelo Corporations in accordance with Section
5.13, are fully paid and nonassessable, and, upon payment
for the treasury shares in connection with such issuanc-
es, such treasury shares will be outstanding, fully paid
and nonassessable. The Series B Shares have been duly
and validly authorized for issuance upon conversion of
shares of G-Modelo capital stock pursuant to the Amended
G-Modelo By-laws, are free of pre-emptive rights and none
of such shares have been issued. The Series P-C Shares
have been duly and validly authorized and, upon payment
therefor as provided in this Agreement, will be validly
issued and outstanding, fully paid and nonassessable.
11
<PAGE>
<PAGE>17
Except as provided in this Agreement, the Control Trust
Agreement and the Option Trust Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of G-Modelo, including any right of
conversion or exchange under any security or other in-
strument. Each of the persons listed on Exhibit A has
good and marketable title to the shares listed next to
such person's name on Exhibit A, and the Investor will
receive good and marketable title to the Series P-C
Shares, free and clear of all Encumbrances, except as set
forth in this Agreement.
(b) Upon the conversion, if any, by the
Investor of the Series P-C Shares into Series B Shares
pursuant to the terms of the Series P-C Shares, the
Investor will receive good and marketable title to the
Series B Shares free and clear of all Encumbrances,
except as set forth in this Agreement.
(c) Upon the purchase of the Option
Shares at the Option Closing (as such term is defined in
Section 6.3) pursuant to Section 6.3, the Investor or its
authorized designee, if any, will receive good and mar-
ketable title to the Option Shares free and clear of all
Encumbrances, except as set forth in this Agreement.
(d) Upon the purchase of Series A Shares
at a Purchase Right Closing (as such term is defined in
Section 6.2) pursuant to Section 6.2, the Investor or its
authorized designee, if any, will receive good and mar-
ketable title to such Series A Shares free and clear of
all Encumbrances, except as set forth in this Agreement.
(e) Except as provided in this Agreement,
the Control Trust Agreement and the Amended G-Modelo By-
laws, the Control Trust is not a party to any subscrip-
tion, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement with respect to
the sale, delivery or transfer of the Series A Shares
held by the Control Trust, including any right of conver-
sion or exchange under any security or other instrument.
Except as provided in this Agreement, the Option Trust
Agreement and the Amended G-Modelo By-laws, the Option
Trust is not a party to any subscription, option, war-
rant, call, right, contract, agreement, commitment,
12
<PAGE>
<PAGE>18
understanding or arrangement with respect to the sale,
delivery or transfer of the Series A Shares held by the
Option Trust, including any right of conversion or ex-
change under any security or other instrument. Each of
the Control Trust and the Option Trust has good and mar-
ketable title to the Series A Shares held in trust by it,
free and clear of all Encumbrances, except as set forth
in this Agreement.
3.2. Capital Stock of Diblo and the G-Modelo
---------------------------------------
Corporations.
------------
(a) The authorized capital stock of Diblo
is variable with a minimum fixed capital of 1,428,804,61-
4.20 Mexican Pesos and a variable capital, which as of
the Closing Date, equals 1,122,188,515.70 Mexican Pesos.
The total capital is divided into (i) 226,268,273 shares
of Diblo common stock, all of which shares are issued and
outstanding, 169,701,206 of which shares are designated
as Class I Diblo Series A Shares which represent the
minimum fixed capital and 56,567,067 of which shares are
designated as Class II Diblo Series B Shares and (ii)
17,030,940 Diblo P-C Shares, all of which shares are
issued and outstanding and are designated as Class II
shares and which together with the Class II Diblo Series
B Shares represent the variable capital. The Diblo Series
A Shares and the Diblo Series B Shares (collectively, the
"Diblo Common Shares") and the Diblo P-C shares are owned
of record as set forth on Schedule 3.2(a). All Diblo
Common Shares have been duly and validly authorized and
issued, are fully paid and nonassessable, and are owned
of record as set forth on Schedule 3.2(a) free and clear
of all Encumbrances, except as set forth in this Agree-
ment. All Diblo P-C Shares have been duly and validly
authorized and issued, and upon payment therefor immedi-
ately after the Closing will be fully paid and nonassess-
able, and are owned by G-Modelo free and clear of Encum-
brances. Other than the Diblo Common Shares and the
Diblo P-C Shares, there are no authorized, issued or out-
standing securities of Diblo. Except as provided in this
Agreement and the Banamex Trust Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of Diblo, including any right of con-
version or exchange under any security or other instru-
ment. Each of G-Modelo and the Banamex Trust has good
13
<PAGE>
<PAGE>19
and marketable title to the Diblo Common Shares and, in
the case of G-Modelo, the Diblo P-C Shares owned by it,
and at the Closing the Investor will receive good and
marketable title to the Initial Diblo Shares, free and
clear of all Encumbrances, except as set forth in this
Agreement.
(b) Upon the purchase of the Diblo Option
Shares at the Diblo Option Closing (as such terms are
defined in Section 6.4) pursuant to Section 6.4, the
Investor or its authorized designee, if any, will receive
good and marketable title to the Diblo Option Shares free
and clear of all Encumbrances, except as set forth in
this Agreement.
(c) For each of the G-Modelo Corpora-
tions, Schedule 3.2(c) identifies (i) the names of the
directors or sole administrator, as the case may be, (ii)
the authorized capital for such corporation, divided
between minimum fixed capital and variable capital, (iii)
the number of such shares which are issued and outstand-
ing, together with the number of treasury shares, if any,
and (iv) the names of all record holders of such issued
and outstanding shares (indicating the number of shares
owned). Each of the G-Modelo Corporations has good and
marketable title to the shares of capital stock of the G-
Modelo Corporations owned by it, free and clear of all
Encumbrances. All of the shares of capital stock of the
G-Modelo Corporations are duly and validly authorized and
issued, fully paid and nonassessable. Except as provided
in this Agreement, there is no subscription, option, war-
rant, call, right, contract, agreement, commitment,
understanding or arrangement with respect to the issu-
ance, sale, delivery or transfer of any of the shares of
the capital stock of the G-Modelo Corporations, including
any right of conversion or exchange under any security or
other instrument. As promptly as practicable, the Con-
trolling Shareholders agree to identify the relationship,
if any, of the shareholdrs, the directors or the sole
administrator of the G-Modelo Corporations identified on
Schedule 3.2(c) to Srs. Antonino Fernandez R., Pablo
Aramburuzabala, Nemesio Diez R., Juan Sanchez-Navarro y
P. or Valentin Diez M. and to provide such information to
A-B.
(d) Except as provided in this Agreement
and the Banamex Trust Agreement, the Banamex Trust is not
14
<PAGE>
<PAGE>20
a party to any subscription, option, warrant, call,
right, contract, agreement, commitment, understanding or
arrangement with respect to the sale, delivery or trans-
fer of the Diblo Series B Shares held by the Banamex
Trust, including any right of conversion or exchange
under any security or other instrument. The Banamex
Trust has good and marketable title to the Diblo Series B
Shares held in trust by it, free and clear of all Encum-
brances, except as set forth in this Agreement.
3.3. USA Export. All of the shares of capital
----------
stock of USA Export are duly and validly authorized and
issued, fully paid and nonassessable and owned of record
and beneficially by certain of the Controlling Sharehold-
ers. Except as provided in this Agreement, there is no
subscription, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with
respect to the issuance, sale, delivery or transfer of
the capital stock of USA Export, including any right of
conversion or exchange under any security or other in-
strument. All of the exclusive rights of Diblo for the
export of G-Modelo beers to the United States have been
transferred to USA Export. USA Export had all requisite
power and authority (corporate or otherwise) to execute,
deliver and perform the USA Export Agreement and to
consummate the transactions contemplated thereby. The
execution, delivery and performance of the USA Export
Agreement by USA Export and the consummation by USA
Export of its obligations thereunder have been duly
authorized by all necessary corporate action and no other
corporate proceedings on the part of the Board of Direc-
tors or shareholders of USA Export is necessary to autho-
rize the USA Export Agreement or to consummate the trans-
action contemplated thereby. The USA Export Agreement
has been duly and validly executed and delivered by the
G-Modelo Corporations which are parties thereto and USA
Export and constitutes the valid and binding obligation
of each of them, enforceable against each of them in
accordance with its terms. None of A-B, A-BI, the Inves-
tor or any of their respective affiliates has any owner-
ship interest in USA Export or ability to influence or
control any of the policies or decisions of the Board of
Directors or management of USA Export.
15
<PAGE>
<PAGE>21
3.4. Power and Authority; Effect of Agreement.
----------------------------------------
(a) Each of the G-Modelo Signatories has
all requisite power and authority (corporate or other-
wise) to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The
execution, delivery and performance by the corporate
G-Modelo Signatories of their obligations under this
Agreement and the consummation by them of the transac-
tions contemplated hereby have been duly authorized by
the Board of Directors and shareholders, as applicable,
of each corporate G-Modelo Signatory, and no other corpo-
rate action or proceeding on the part of such corporation
or its shareholders is necessary to authorize this Agree-
ment or the consummation of any of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by the G-Modelo Signato-
ries and constitutes the valid and binding obligation of
each of the G-Modelo Signatories, enforceable against
each of them in accordance with its terms.
(b) One or more of the Controlling Share-
holders has full legal power and authority to act on
behalf of those Controlling Shareholders who have exe-
cuted this Agreement by power of attorney, which Control-
ling Shareholders together with the Controlling Share-
holders who have directly executed this Agreement own or
control at least 99 percent of the capital stock of G-
Modelo.
(c) As of the date hereof, a majority of
the members of the technical committees of the Control
Trust, the Banamex Trust and the Option Trust are Con-
trolling Shareholders or will otherwise be bound by the
terms of this Agreement.
(d) The execution, delivery and perfor-
mance by the G-Modelo Signatories of this Agreement and
the consummation by the G-Modelo Signatories of the
transactions contemplated hereby does not and will not,
with or without the giving of notice or the lapse of
time, or both, (i) violate any law, rule or regulation to
which any G-Modelo Signatory or any of its respective
assets is subject, (ii) violate any order, writ, injunc-
tion, judgment or decree applicable to any G-Modelo
Signatory or any of its respective assets or properties,
or (iii) conflict with, or result in a breach of or
16
<PAGE>
<PAGE>22
default under, or give rise to any right of termination,
cancellation or acceleration under (A) any term or condi-
tion of the Certificate of Incorporation, the By-Laws, or
other similar charter documents, of any corporate G-Mode-
lo Signatory, or (B) any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or
material lease, license, agreement or other material
instrument to which any G-Modelo Signatory is a party or
by which any of them or any of their respective assets
may be bound; except with respect to clauses (i), (ii)
and (iii)(B) above, for violations, conflicts, breaches
or defaults which in the aggregate would not materially
hinder or impair any G-Modelo Signatory's ability to
consummate the transactions contemplated hereby.
3.5. Investments. The corporations, partner-
-----------
ships, joint ventures or other entities in which G-Modelo
or any of the G-Modelo Corporations has, or pursuant to
any agreement will have, individually or in the aggre-
gate, directly or indirectly, the right to acquire by any
means, an equity interest or investment exceeding ten
percent of the equity capital thereof (other than the
G-Modelo Corporations) (the "G-Modelo Investments"), in
the aggregate, are not material to the business, assets,
operations, prospects or financial condition of G-Modelo
and the G-Modelo Corporations, taken as a whole.
3.6. Organization; Assets.
--------------------
(a) Each of G-Modelo, the G-Modelo Corpo-
rations and USA Export is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and each has all
requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as
now being conducted. G-Modelo, the G-Modelo Corporations
and USA Export are each duly qualified or licensed and in
good standing to do business in each jurisdiction in
which the property owned, leased or operated by such
corporation or the nature of the business conducted by
such corporation makes such qualification necessary,
except where the failure to be so qualified or licensed
and in good standing would not have a material adverse
effect on the business, assets, operations, prospects or
financial condition of G-Modelo, such G-Modelo Corpora-
tion or USA Export, as the case may be. The Controlling
Shareholders have heretofore delivered to the Investor
17
<PAGE>
<PAGE>23
complete and correct copies of the Certificate of Incor-
poration and Amended By-laws (or other similar charter
documents), as currently in effect, of G-Modelo and
Diblo. The Controlling Shareholders have heretofore made
available to the Investor complete and correct copies of
(i) the stock registry book and (ii) the Certificate of
Incorporation and By-laws (or other similar charter
documents), as currently in effect, of each G-Modelo
Corporation (other than Seeger Industrial, Eurocermex,
Iberocermex, Procermex, Inc., a Texas corporation ("Proc-
ermex"), Desarrollo Inmobiliario Siglo XXI, S.A. de C.V.
and Arena Silica de Mexico, S.A. de C.V.). Each of the
Amended G-Modelo By-laws and the Amended Diblo By-laws
has been duly and validly authorized, is in full force
and effect and is enforceable in accordance with its
terms.
(b) The assets currently owned by or
leased to G-Modelo and the G-Modelo Corporations, direct-
ly or indirectly, include all of the assets and proper-
ties, whether tangible or intangible, real, personal or
mixed, used in connection with, or that relate to or are
necessary for G-Modelo and the G-Modelo Corporations to
conduct their business and operations in all material re-
spects as presently conducted. The assets reflected on
the G-Modelo Balance Sheet or acquired by G-Modelo or a
G-Modelo Corporation after the date of the G-Modelo
Balance Sheet are in all material respects in good work-
ing condition for the conduct of the business and opera-
tions of G-Modelo and the G-Modelo Corporations, ordinary
wear and tear excepted.
(c) As of the Closing Date, (i) the only
assets of G-Modelo are 169,701,202 Diblo Series A Shares,
17,030,940 Diblo PC Shares, cash and marketable securi-
ties; (ii) G-Modelo has no liabilities other than liabil-
ities incurred in connection with the transactions con-
templated by this Agreement; and (iii) G-Modelo conducts
no business or operations except in connection with the
transactions contemplated by this Agreement and except
for investing activities with respect to the cash and
marketable securities owned by it.
3.7. Financial Information. The Controlling
---------------------
Shareholders have previously furnished to the Investor:
(a) audited consolidated balance sheets and the related
audited consolidated statements of income, changes in
18
<PAGE>
<PAGE>24
stockholders equity and changes in the financial position
(including the related notes) of G-Modelo and subsidiar-
ies for the fiscal years ended December 31, 1992 and
December 31, 1991 and of the G-Modelo Corporations for
each of the four fiscal years ended December 31, 1991,
December 31, 1990, December 31, 1989 and December 31,
1988 accompanied by the auditor reports thereon (collec-
tively, the "Audited Consolidated Financial Statements"),
and (b) the unaudited consolidated balance sheet and the
related unaudited consolidated statements of income of
G-Modelo and subsidiaries for the two months ended Febru-
ary 28, 1993 (collectively, the "Unaudited Consolidated
Financial Statements" and together with the Audited
Consolidated Financial Statements, the "Consolidated
Financial Statements"). The audited consolidated balance
sheet of G-Modelo and subsidiaries for the fiscal year
ended December 31, 1992 is hereinafter referred to as the
"G-Modelo Balance Sheet." The Consolidated Financial
Statements (i) were prepared from the (A) books and
records of G-Modelo and the G-Modelo Corporations in the
case of the Audited Consolidated Financial Statements for
the fiscal year ended December 31, 1992 and the Unaudited
Consolidated Financial Statements and (B) from the books
and records of the G-Modelo Corporations in the case of
the Audited Consolidated Financial Statements for other
four fiscal years, which books and records accurately
reflect in all material respects the accounts and trans-
actions recorded therein, (ii) present fairly the finan-
cial position, results of operations, changes in stock-
holders equity and changes in financial position of
G-Modelo and its subsidiaries as of and for the periods
in which they relate, and (iii) have been prepared in
accordance with Mexican GAAP consistently applied throug-
hout the periods covered, except as otherwise noted
therein and except that the Unaudited Consolidated Finan-
cial Statements are subject to any normal and recurring
adjustments which may arise from the audit of the fiscal
year ended December 31, 1993. The consolidated books and
records of G-Modelo and its subsidiaries reflect that as
of December 31, 1992, G-Modelo and the G-Modelo Corpora-
tions had cufine (Cuenta De Utilidad Fiscal Neta) in an
aggregate amount equal to 2,216,147,495 Mexican Pesos.
3.8. Undisclosed Liabilities; Absence of
-----------------------------------
Certain Changes. Neither G-Modelo nor any G-Modelo
---------------
Corporation has any liabilities or obligations of any
nature, secured or unsecured (absolute, accrued, contin-
19
<PAGE>
<PAGE>25
gent or otherwise and whether due or to become due),
except liabilities and obligations which are fully re-
flected, reserved against or disclosed in the G-Modelo
Balance Sheet or the notes to the Audited Consolidated
G-Modelo Financial Statements and except for liabilities
and obligations incurred in the ordinary course of busi-
ness and consistent with past practice since December 31,
1992. Except as contemplated by this Agreement, since
December 31, 1992 there has not been any material adverse
change in the business, assets, operations, prospects or
financial condition of G-Modelo and the G-Modelo Corpora-
tions, taken as a whole.
3.9. Title and Related Matters. Except with
-------------------------
respect to the Patent and Trademark Rights (as defined in
Section 3.10 and as to which the representations in
Section 3.10 shall apply) and Real Property (as defined
in Section 3.20 and as to which the representations in
Section 3.20 apply): the G-Modelo Corporations have good
and marketable title, free and clear of all Encumbrances,
to (a) all properties and assets (personal, tangible,
intangible and mixed) reflected in the G-Modelo Balance
Sheet or acquired after the date thereof by such corpora-
tions, and (b) all other material properties and assets
owned by G-Modelo and the G-Modelo Corporations, except
in each case for (i) any of such properties or assets
sold or otherwise disposed of in the ordinary course of
business, (ii) liens for current taxes not yet due or
which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been
established and disclosed in writing to the Investor, and
(iii) Encumbrances which are not material to the value of
the properties or assets encumbered and which do not
impair in any material respect the current use or opera-
tion of such properties and assets.
3.10. Patents, Trademarks, Etc. Schedule 3.10
-------------------------
sets forth a list of all patents, common law and regis-
tered trademarks and service marks, applications for
trademark and service mark registrations, and copyright
registrations owned by G-Modelo or any of the G-Modelo
Corporations (the "Patent and Trademark Rights"). Except
as set forth on Schedule 3.10, (a) no other company is
licensed or authorized by G-Modelo or any of the G-Modelo
Corporations to use any of the Patent and Trademark
Rights; (b) neither G-Modelo nor any G-Modelo Corporation
uses any of the Patent and Trademark Rights by consent of
20
<PAGE>
<PAGE>26
or license from any other rightful owner thereof, and the
same are free and clear of Encumbrances, and G-Modelo or
a G-Modelo Corporation has the right to exclude others
from making, using, or selling the invention of such
patents and has the exclusive right to use such common
law and registered marks and copyrighted works on the
goods or services for which they are currently used, or
on the goods and services specified in the respective
trademark registrations subject to any conditions or
limitations therein; (c) the conduct of the business of
the G-Modelo Corporations as now being conducted in
Mexico, Canada and the United States does not conflict
with any patents, trademarks, service marks, names, trade
names or copyrights of others in any way which has an
adverse effect on the business, assets, operations,
prospects or financial condition of G-Modelo and the G-
Modelo Corporations, taken as a whole; (d) G-Modelo and
the G-Modelo Corporations have no knowledge that the
conduct of the business of the G-Modelo Corporations as
now being conducted in any country other than Mexico,
Canada or the United States conflicts with any patents,
trademarks, service marks, names, trade names or copy-
rights of others in any way which has a material adverse
effect on the business, assets, operations, prospects or
financial condition of G-Modelo and G-Modelo Corpora-
tions, taken as a whole; (e) the G-Modelo Corporations
solely own good and valid title to the Patent and Trade-
mark Rights in Mexico, Canada and the United States, and
to the Controlling Shareholders' best knowledge after due
inquiry, there is no fact which raises any issue as to
the validity of the Patent and Trademark Rights in Mexi-
co, Canada and the United States; (f) the G-Modelo Corpo-
rations solely own good and valid title to the Patent and
Trademark Rights used in the conduct of the business of
the G-Modelo Corporations as now being conducted in any
country other than Mexico, Canada or the United States,
and except as set forth on Schedule 3.10, to the Control-
ling Shareholders' best knowledge after due inquiry,
there is no fact which raises any issue as to the validi-
ty of the Patent and Trademark Rights; (g) except as set
forth on Schedule 3.10, there is no pending litigation in
a court or proceedings in any administrative agency, nor
has G-Modelo or any G-Modelo Corporation received any
notice or other communication, in which any of the Patent
and Trademark Rights are being challenged or contested;
(h) except as set forth on Schedule 3.10, neither G-
Modelo nor any G-Modelo Corporation received any pro-
21
<PAGE>
<PAGE>27
tests, claims, notices, or other communications relating
to infringement of the rights of others arising from the
present use of the Patent and Trademark Rights, and to
the Controlling Shareholders' best knowledge after due
inquiry, the subject matter of the Patent and Trademark
Rights do not thereby infringe; and (i) none of the Con-
trolling Shareholders, G-Modelo or any G-Modelo Corpo-
ration has contracted to provide indemnification for
infringement of the intellectual property rights of
others, or to grant any license of the Patent and Trade-
mark Rights to any other party or receive a license to
use any patent, trademark or copyright from a third
party, except as set forth in Schedule 3.10, or to under-
take or covenant not to sue any other party with respect
to the Patent and Trademark Rights.
3.11. Litigation. Except as set forth in
----------
Schedule 3.11, there are no (a) actions, suits, proceed-
ings or investigations, pending or, to the Controlling
Shareholders' best knowledge after due inquiry, threat-
ened, against G-Modelo or any G-Modelo Corporation or (b)
orders, injunctions or decrees of any court or governmen-
tal agency against or affecting G-Modelo or any G-Modelo
Corporation, which in either (a) or (b) above would have
a material adverse effect on the business, assets, opera-
tions, prospects or financial condition of G-Modelo and
the G-Modelo Corporations, taken as a whole. There are
no actions, suits, proceedings or investigations, pending
or, to the Controlling Shareholders' best knowledge after
due inquiry, threatened, which would give any third party
the right to enjoin or rescind or cause a material alter-
ation in the transactions contemplated hereby.
3.12. Compliance with Laws. G-Modelo and each
--------------------
G-Modelo Corporation is in compliance in all material
respects with all laws, rules, regulations and orders
applicable to their respective businesses, and G-Modelo
and each G-Modelo Corporation has lawfully obtained all
necessary permits, licenses and governmental authoriza-
tions required for the ownership, use or occupancy of
their properties and assets and the carrying on of their
business as currently conducted, except for all such
failures to have any such permit, license or governmental
authorizations which would not, in the aggregate, have a
material adverse effect on the business, assets, opera-
tions, prospects or financial condition of G-Modelo and
the G-Modelo Corporations, taken as a whole.
22
<PAGE>
<PAGE>28
3.13. Tax Matters.
-----------
(a) All Tax Returns (as hereinafter
defined) required to be filed by G-Modelo or the G-Modelo
Corporations (collectively, the "Taxpayers") have been
filed on a timely basis and are in all material respects
true, complete and correct;
(b) All Taxes (as hereinafter defined)
that are due and payable or claimed or asserted to be due
and payable by the Taxpayers by any tax authority for all
periods up to and including the Closing Date have been
paid or provided for, except for Taxes which are the
subject of customary challenges by the Ministry of Trea-
sury and the aggregate amount of which claimed by the
Ministry to be due does not exceed 3,500,000 Mexican
Pesos in any year;
(c) There are no liens for Taxes upon the
assets of any of the Taxpayers;
(d) The Taxpayers have complied in all
material respects with all applicable laws, rules and
regulations relating to the payment and withholding of
Taxes pursuant to all applicable tax provisions concern-
ing tax withholding or similar provisions and have,
within the time and in the manner prescribed by law, paid
over to the proper governmental authorities all amounts
required to be so withheld and paid over under all appli-
cable laws;
(e) (i) Except for the tax years 1988
through 1992, the statute of limitations for the assess-
ment of all Taxes under the Mexican income tax and the
United States federal income tax laws have expired for
all applicable returns of the Taxpayers or an audit of
those returns has been completed by the appropriate
taxing authorities for all periods ending on or before
the Closing Date, (ii) no deficiency for any Taxes has
been proposed, asserted or assessed which has not been
finally resolved, (iii) neither the Controlling Share-
holders nor the Taxpayers know of any facts that are
likely to result in any assertion or assessment of a Tax
with respect to any past taxable period, and (iv) no
taxing authority has successfully asserted any issue
concerning the liability of the Taxpayers for Taxes that
by application of similar principles could result in any
23
<PAGE>
<PAGE>29
assertion or assessment of a Tax for another taxable
period;
(f) No Tax audits or other administrative
proceedings or court proceedings are now pending with
regard to any Taxes or Tax Returns of the Taxpayers;
(g) None of the transactions contemplated
by or completed with respect to this Agreement has or
will cause the Taxpayers to incur any additional Tax
liability as a result thereof;
(h) The Taxpayers have not incurred any
Tax liabilities for the period beginning January 1, 1993
and ending on the Closing Date other than Tax liabilities
incurred in the ordinary course of their business; and
(i) For purposes of this Agreement, (i)
"Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income
tax, property tax, value added tax, all other net income,
sales, use, ad valorem, beer excise, transfer, license,
withholding, payroll, employment, social security, INFON-
AVIT, SAR, estimated, property or other taxes, customs
duties, fees, assessments or charges of any kind whatso-
ever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any
taxing authority of any jurisdiction upon any of the
Taxpayers, and (ii) "Tax Returns" shall mean all returns,
declarations, reports, information returns and state-
ments required to be filed by any of the Taxpayers in
connection with Taxes.
3.14. Shareholder Agreements. Except for the
----------------------
Control Trust Agreement, the Option Trust Agreement and
the Banamex Trust Agreement, there are no contracts,
agreements or understandings, whether written or oral
(including any and all amendments thereto), among or
between the shareholders of G-Modelo or any G-Modelo
Corporation or any Related Person thereof or between a
shareholder of G-Modelo or any G-Modelo Corporation or
any Related Person thereof and G-Modelo or any G-Modelo
Corporation with respect to the shares of the capital
stock of G-Modelo or any G-Modelo Corporation or the
business or operations of G-Modelo or any G-Modelo Corpo-
ration.
24
<PAGE>
<PAGE>30
3.15. Consents. No consent, approval or
--------
authorization of, or exemption by, or filing with, any
governmental or regulatory authority (other than as may
be required under the HSR Act or the Law on Economic
Competition ("LEC")) is required in connection with the
execution, delivery and performance by the G-Modelo
Signatories of the transactions contemplated by this
Agreement.
3.16. Environmental Matters. (a) The opera-
---------------------
tions of G-Modelo and the G-Modelo Corporations comply in
all material respects with all Federal, state and local
environmental and health and safety statutes and regula-
tions; (b) neither G-Modelo nor any G-Modelo Corporation
nor, to the Controlling Shareholders' best knowledge
after due inquiry, any prior owner or tenant of the Real
Property has made, caused or contributed to any release
of any hazardous or toxic waste, substance or constitu-
ent, into the environment; (c) none of the operations of
G-Modelo or any G-Modelo Corporation is subject to any
judicial or administrative proceeding alleging the viola-
tion of any Federal, state or local environmental or
health or safety statute or regulation; (d) none of the
operations of G-Modelo or any G-Modelo Corporation is
subject to any compliance agreement or settlement agree-
ment resulting from an alleged violation of any Federal,
state or local environmental or health or safety statute
regulation; (e) none of the operations of G-Modelo or any
G-Modelo Corporation is the subject of any Federal, state
or local investigation or threatened investigation re-
garding a violation or alleged violation of any Federal,
state or local environmental or health or safety statute
or regulation; (f) none of the operations of G-Modelo or
any G-Modelo Corporation is required to file a notice or
report pursuant to any Federal, state or local environ-
mental or health or safety statute or regulation of any
past or present spill or release of hazardous or toxic
substance or constituent into the environment; (g) none
of the businesses of G-Modelo or any G-Modelo Corporation
involves the generation, transportation, treatment, stor-
age or disposal of hazardous or toxic waste; (h) G-Modelo
and the G-Modelo Corporations have no knowledge of any
hazardous wastes or toxic substances in, on, over or
under the Real Property; and (i) G-Modelo and the G-
Modelo Corporations possess all material environmental
permits and authorizations required by any Federal, state
25
<PAGE>
<PAGE>31
or local environmental or health and safety statute or
regulation to conduct their operations.
3.17. Absence of Certain Changes or Events.
------------------------------------
Except as set forth in Schedule 3.17, since December 31,
1992 there has not been (i) any material adverse change
in the business, assets, operations, prospects or finan-
cial condition of G-Modelo and the G-Modelo Corporations,
taken as a whole; (ii) any significant damage, destruc-
tion or loss affecting G-Modelo or any of the G-Modelo
Corporations, which is not substantially covered by
insurance; (iii) any material increase in the compensa-
tion payable or to become payable by G-Modelo or any
G-Modelo Corporation to its officers or key employees;
(iv) any material increase in any bonus, insurance,
pension or other employee benefit plan, payment or ar-
rangement made to, for or with any such officers or key
employees; or (v) any entry into any agreement, commit-
ment or transaction (including, without limitation, any
borrowing, capital expenditure or capital financing) by
G-Modelo or any G-Modelo Corporation, except agreements,
commitments or transactions in the ordinary course of
business and consistent with past practice; or (vi) any
change by G-Modelo or any G-Modelo Corporation in ac-
counting methods, principles or practices except as
required by Mexican GAAP.
3.18. Material Contracts. Except for the
------------------
information which will be provided on the Schedule to be
delivered to the Investor pursuant to Section 7.2(a)(v),
Schedule 3.18 contains a list of each material contract,
license, lease, agreement or understanding (including,
without limitation, with governments or governmental
agencies), whether written or oral (including any and all
amendments thereto), to which G-Modelo or any G-Modelo
Corporation is a party or by which any of their respec-
tive properties or assets may be bound (a "Material
Contract"); and where such Material Contract is with a
party which is not a G-Modelo Corporation and is oral or
is evidenced only by form purchase orders, Schedule 3.18
identifies the commodity purchased or sold, the supplier
or purchaser thereof, the annual quantity purchased or
sold and a recent representative price therefor; pro-
----
vided, however, in the case of Material Contracts which
----- -------
are subject to confidentiality agreements between the
parties, Schedule 3.18 sets forth only the parties there-
to and the subject matter thereof; and provided, further,
-------- -------
26
<PAGE>32
such contracts are on an arm's-length basis and the price
terms thereof are at or below market. For purposes of
this Section 3.18, a Material Contract shall include,
without limitation, (a) any agreement, contract, commit-
ment, understanding or arrangement (a "Material Agree-
ment") requiring total payments of more than 1 million
Mexican Pesos (except with respect to oral agreements
which shall be deemed to be Material Agreements only if
they require total payments of 3 million or more Mexican
Pesos) and having a term exceeding six months and which
may not be cancelled upon 90 or fewer days' notice with-
out any liability, penalty or premium (other than a
nominal cancellation fee or charge); (b) one or more
purchase orders for a single product or service which
require aggregate payments in any twelve month period of
3 million or more Mexican Pesos; (c) any Material Agree-
ment which might reasonably be expected to have a materi-
al adverse effect on the business, assets, operations,
prospects or financial condition of G-Modelo and the
G-Modelo Corporations, taken as a whole; (d) any covenant
not to compete; (e) any Material Agreement (other than
the Material Agreements listed on Schedule 3.14) (1)
requiring total payments of more than 100,000 United
States dollars in any twelve month period and (2) which
is between or among G-Modelo or a G-Modelo Corporation
and any Controlling Shareholder who owns 1 percent or
more of the capital stock of G-Modelo or any entity in
which such Controlling Shareholder owns 1 percent or more
of the capital stock and (3) which involves the business
or operations of G-Modelo or any G-Modelo Corporation or
requires the payment of money or the provision of servic-
es to or by G-Modelo or any G-Modelo Corporation; or (f)
any other Material Agreement which is material to the
business, assets, operations, prospects or financial
condition of G-Modelo or any G-Modelo Corporation.
Except as disclosed in Schedule 3.18, none of the Con-
trolling Shareholders, G-Modelo or any G-Modelo Corpora-
tion or any other party to a Material Contract is in
default in any material respect thereunder. The infor-
mation required by the first sentence of this Section
3.18 with respect to oral contracts and purchase orders
to be set forth on Schedule 3.18, may be delivered to the
Investor within a reasonable time (not to exceed ninety
days) following the Closing.
3.19. Employee Benefits; Employment Contracts.
---------------------------------------
Schedule 3.19 contains a list of all material plans, pro-
27
<PAGE>
<PAGE>33
grams, policies, contracts, agreements or understandings,
whether written or oral (including any and all amendments
thereto), to which G-Modelo or any G-Modelo Corporation
is a party which relate to all employment, bonus, profit-
-sharing, deferred compensation, pension, employee bene-
fit, welfare and retirement plans, stock purchase and
stock option plans, consulting arrangements in excess of
1 million Mexican Pesos per year and all labor union and
collective bargaining agreements.
3.20. Real Property. As used herein, the term
-------------
"Real Property" shall mean all of the following:
(1) all material land and easements
owned, used or occupied by G-Modelo or any of the G-Mode-
lo Corporations and all material buildings, structures
and other improvements thereof or thereon; and
(2) all rights and appurtenances in and
to the Real Property described in subparagraph (1) above;
and
(3) all material real estate leasehold
interests owned by G-Modelo or any G-Modelo Corporation
as a tenant, excluding leases from G-Modelo or any G-
Modelo Corporation, and all other real property interests
owned by any of the G-Modelo Corporations.
(a) G-Modelo or a G-Modelo Corporation
has good and marketable title to the Real Property di-
rectly or indirectly through trusts, free and clear of
all easements, restrictions, covenants, conditions or
Encumbrances of any character whatsoever except (i)
conditions or restrictions which do not with respect to
the parcel of Real Property so encumbered have a material
adverse effect on the actual or intended use of such
property, (ii) public or private roadway rights-of-way or
utility easements which do not underlie any buildings,
(iii) real property leases to a G-Modelo Corporation, and
(iv) taxes and assessments which are a lien but which are
not yet due and payable or which are being contested in
good faith by appropriate proceedings and for which
appropriate reserves have been established and disclosed
in writing to the Investor.
28
<PAGE>
<PAGE>34
(b) The Real Property conforms in all
material respects to any and all applicable state and
local laws, zoning and building ordinances and health and
safety ordinances, and no zoning, building or similar law
or ordinance or regulation is being violated by the
operation or use of the Real Property in any manner
having a material adverse effect on the marketability or
the actual or intended use or operation of the Real
Property. Neither G-Modelo nor any G-Modelo Corporation
has received any notice of any material violation of any
law, ordinance or regulation in connection with the
operation or use of such Real Property.
(c) None of the Real Property is subject
to the Federal Law of the Agrarian Reform.
(d) With respect to any Real Property
located (i) within one hundred kilometers of the border
of Mexico and any of the United States, Belize or Guate-
mala or (ii) within fifty kilometers of any of Mexico's
coastlines (the "Restricted Zone"), either (A) all of the
outstanding shares of capital stock of the G-Modelo
Corporations which own Real Property located within the
Restricted Zone have been duly transferred into the Real
Estate Trust or as promptly as practicable following the
Closing will be duly transferred into a trust to be
established under a trust agreement for the benefit of
such G-Modelo Corporations pursuant to Section 5.14, or
(B) the by-laws of the G-Modelo Corporations which own
Real Property in the Restricted Zone permit the indirect
ownership by foreigners of capital stock of such G-Modelo
Corporations.
3.21. Tied House Prohibitions. There is no
-----------------------
Mexican statute, rule or regulation applicable to G-
Modelo or any G-Modelo Corporation which prohibits G-
Modelo or any G-Modelo Corporation or its shareholders
from selling alcoholic beverages, on either a retail or
wholesale basis.
3.22. Insurance. G-Modelo and each G-Modelo
---------
Corporation have policies of liability, fire, automobile,
property and other forms of insurance, all of which are
valid and enforceable and in full force and effect, are
underwritten by unaffiliated financially sound and repu-
table insurers, are sufficient for all applicable re-
quirements of law and provide insurance, including,
29
<PAGE>
<PAGE>35
without limitation, liability and products liability
insurance, in such amounts and against such risks as is
customary for companies engaged in similar businesses to
G-Modelo and the G-Modelo Corporations in Mexico to pro-
tect the properties, assets, businesses and operations of
G-Modelo and each of the G-Modelo Corporations. All such
policies will remain in full force and effect through
their respective dates and will not in any way be affect-
ed by or terminate or lapse by reason of, any of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF A-B, A-BI
AND THE INVESTOR
-------------------------------------------
A-B, A-BI and the Investor, jointly and sever-
ally, represent and warrant to each of the G-Modelo
Signatories, the Option Trust and the Banamex Trust as
follows:
4.1. Corporate Power and Authority; Effect of
----------------------------------------
Agreement. Each of A-B, A-BI and the Investor is a
---------
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each
of A-B, A-BI and the Investor has all requisite corporate
power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by each
of A-B, A-BI and the Investor of its obligations under
this Agreement and the consummation by each of A-B, A-BI
and the Investor of the transactions contemplated hereby
have been duly authorized by the Board of Directors of
each of A-B, A-BI and the Investor, and no other corpo-
rate action or proceeding on the part of each of A-B,
A-BI and the Investor or their stockholders is necessary
to authorize this Agreement or the consummation of any of
the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by each of
A-B, A-BI and the Investor and constitutes the valid and
binding obligation of each of A-B, A-BI and the Investor,
enforceable against each of them in accordance with its
terms. The execution, delivery and performance by the
each of A-B, A-BI and Investor of this Agreement and the
consummation by each of A-B, A-BI and the Investor of the
transactions contemplated hereby does not and will not,
30
<PAGE>36
with or without the giving of notice or the lapse of
time, or both, (a) violate any law, rule or regulation to
which any of them or any of their respective assets is
subject, (b) violate any order, writ, injunction, judg-
ment or decree applicable to any of them or any of their
respective assets or properties, or (c) conflict with, or
result in a breach of or default under, or give rise to
any right of termination, cancellation or acceleration
under (i) any term or condition of the Certificate of
Incorporation or By-Laws of any of them, or (ii) any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture or material lease, license, agreement
or other material instrument to which any of them or any
of their respective subsidiaries is a party or by which
any of their respective assets may be bound; except, with
respect to clauses (a), (b) and (c)(ii) above, for viola-
tions, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair their
ability to consummate the transactions contemplated
hereby.
4.2. Consents. No consent, approval or autho-
--------
rization of, or exemption by, or filing with, any govern-
mental or regulatory authority (other than as may be
required under the HSR Act or the LEC) is required in
connection with the execution, delivery and performance
by A-B, A-BI or the Investor of the transactions contem-
plated by this Agreement.
4.3. Availability of Funds. The Investor has
---------------------
available or will have available on the Closing Date
sufficient funds to enable it to consummate the transac-
tions contemplated by Article II of this Agreement.
4.4. Management of G-Modelo and the G-Modelo
---------------------------------------
Corporations. Each of A-B, A-BI and the Investor ac-
------------
knowledge that it is its intention and desire, as well as
the intention and desire of the Controlling Shareholders,
that G-Modelo and the G-Modelo Corporations shall contin-
ue to be managed by the Controlling Shareholders, with
the participation of A-B, A-BI and the Investor as minor-
ity shareholders, as provided for in this Agreement and
in the Amended G-Modelo By-laws and the Amended Diblo By-
laws; and that this has been an essential and basic
condition for the Controlling Shareholders to enter into
this Agreement and to create and enter into the asso-
ciation or joint venture herein set forth.
31<PAGE>
<PAGE>37
ARTICLE V
COVENANTS OF THE PARTIES
------------------------
5.1. Access to Information.
---------------------
(a) A-B and its authorized representa-
tives shall be permitted to review the business activi-
ties of G-Modelo and the G-Modelo Corporations as they
deem reasonably necessary sufficiently in advance of
future investments in G-Modelo and Diblo contemplated by
this Agreement. For such purposes and subject to prior
consultation with a representative of the Controlling
Shareholders, (a) A-B and its authorized representatives
shall have access during normal business hours to books,
records and properties of G-Modelo and the G-Modelo
Corporations and to those employees and financial, legal
and other representatives of G-Modelo and the G-Modelo
Corporations having knowledge of financial, operating and
legal data and other information with respect to the
business and properties of G-Modelo and the G-Modelo
Corporations as A-B may reasonably request to enable A-B
and its authorized representatives to conduct a finan-
cial, environmental and legal review of G-Modelo and the
G-Modelo Corporations for purposes of determining whether
to make further investments in G-Modelo and Diblo; pro-
----
vided, however, that such review shall be subject to
----- -------
prior consultation with and scheduling by representatives
of the Controlling Shareholders to ensure that the review
will be conducted in such a manner as not to disrupt the
operations of G-Modelo and the G-Modelo Corporations.
(b) From and after the Closing, A-B, A-
BI, the Investor and their authorized representatives
(the "A-B Group"), on the one hand, and the Controlling
Shareholders and their authorized representatives (the
"Controlling Shareholders Group"), on the other hand,
agree to treat all information concerning G-Modelo and
the G-Modelo Corporations (the "Confidential Informa-
tion") as strictly confidential; provided, however, that
-------- -------
disclosure of such information may be made by either the
A-B Group or the Controlling Shareholders Group (i) with
the prior written consent of the non-disclosing group or
(ii) if, in the opinion of counsel for the party desiring
to make such disclosure, such disclosure is required by
law, including, without limitation, in connection with
32
<PAGE>38
the public offerings contemplated by Section 5.8. The
term "Confidential Information" shall not be deemed to
include information which (i) is already in the posses-
sion of the A-B Group and which was not disclosed to the
A-B Group by the Controlling Shareholders Group or G-
Modelo, provided that such information is not known to
the A-B Group to be subject to another confidentiality
agreement with, or other obligation of secrecy to, G-
Modelo or a G-Modelo Corporation, (ii) is or becomes
generally available to the public other than as a result
of a disclosure by the A-B Group or the Controlling
Shareholders Group in violation of this Section 5.1(b),
or (iii) becomes available to either the A-B Group or the
Controlling Shareholders Group on a non-confidential
basis from a source other than G-Modelo or a G-Modelo
Corporation or their respective directors, officers,
employees, agents, representatives or advisors, provided
that such source is not known by the A-B Group or the
Controlling Shareholders Group, respectively, to be bound
by a confidentiality agreement with, or other obligation
of secrecy to, G-Modelo or a G-Modelo Corporation.
5.2. Further Assurances. Subject to the terms
------------------
and conditions of this Agreement, A-B, G-Modelo, Diblo
and the Controlling Shareholders, in their capacity as
shareholders, directors or officers of G-Modelo and Diblo
and as members of the technical committees of the Control
Trust, the Banamex Trust and the Option Trust (a) will
take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advis-
able under applicable laws and regulations to consummate
and make effective the transactions contemplated by this
Agreement, including without limitation, the transac-
tions, rights and obligations under the Amended G-Modelo
By-laws, Amended Diblo By-laws, the Control Trust Agree-
ment, the Option Trust Agreement and the Banamex Trust
Agreement (collectively, the "Ancillary Documents") and
to ensure that A-B's, A-BI's and the Investor's rights
under this Agreement and the Ancillary Documents continue
unimpeded and (b) will take, or cause to be taken, no
action inconsistent with the terms of this Agreement and
the Ancillary Documents or inconsistent with A-B's, A-
BI's or the Investor's rights hereunder or thereunder.
In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purpos-
es of this Agreement or the Ancillary Documents, (a) A-B
will cause its proper officers and directors to take all
33
<PAGE>
<PAGE>39
such necessary action, and (b) the Controlling Sharehold-
ers will take or cause the proper officers and directors
of G-Modelo or any of the G-Modelo Corporations and the
Trustees under the Trust Control, the Banamex Trust and
the Option Trust to take all such necessary actions.
5.3. Filings; Tax Returns.
--------------------
(a) If upon the exercise by the Investor
of any of the rights provided in Article VI hereof or
Clause Eighth and Annex 3 of the Control Trust Agreement
to acquire shares of G-Modelo capital stock, 49 percent
or more of the total outstanding full voting capital
stock of G-Modelo would be held of record by a "Foreign
Investor" (as defined in the LRMI), G-Modelo shall give
written notice to the Investor (the "Foreign Investor No-
tice") within two business days following notice of the
Investor's intention to acquire shares, accompanied by a
certificate signed by the Secretary of the G-Modelo Board
of Directors certifying such ownership and indicating the
number of shares which would be owned by Foreign Inves-
tors upon the exercise by the Investor of the right to
acquire shares. Upon receipt of the Foreign Investor
Notice, the Investor may appoint a designated purchaser
to acquire such shares. In the event, the Investor
determines not to appoint such designated purchaser or
following the appointment of such designated purchaser,
the Investor and the Controlling Shareholders agree
promptly to file or cause to be filed with the Mexican
Foreign Investment Commission in accordance with the LRMI
all requisite documents and notifications necessary or
appropriate in order to obtain the requisite permits for
G-Modelo to become a "Foreign Corporation" within the
meaning of the LRMI. The parties hereto will coordinate
and cooperate with one another in exchanging such infor-
mation and provide such reasonable assistance as may be
requested in connection with obtaining the required
permits as promptly as possible.
(b) A-B and G-Modelo agree that they will
provide each other with such assistance as may reasonably
be requested by either of them in connection with the
preparation of any return of Taxes, any audit or other
examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for
Taxes and will provide the other with any records or
information relevant to such return, audit or examina-
34
<PAGE>
<PAGE>40
tion, proceedings or determination as are in their pos-
session or subject to their control. Such assistance
shall include making employees available on a mutually
convenient basis to provide additional information and an
explanation of any material provided hereunder and shall
include providing copies of any relevant returns of Taxes
and any relevant Tax receipts.
5.4. Internal Reorganization. As promptly as
-----------------------
practicable following the Closing Date but in no event
later than December 31, 1993, the Controlling Sharehold-
ers shall cause G-Modelo and the G-Modelo Corporations to
effect and carry out a corporate reorganization in accor-
dance with the following provisions:
(a) all of the issued and outstanding
capital stock of Tapas Y Tapones de Zacatecas, S.A de
C.V. ("Tapas"), Promotora de Servicios de Zacatecas, S.A.
de C.V. ("Promotora"), and Envases de Zacatecas, S.A. de
C.V. ("Envases") then owned by Tenedora Cano, S.A. de
C.V. shall be transferred to Diblo;
(b) El Cubito Fabrica de Hielo, S.A. de
C.V. ("Hielo") shall be merged with and into Cerveceria
del Pacifico, S.A. de C.V. ("Pacifico"), and as a result
of such merger, the separate corporate existence of Hielo
shall cease and Pacifico shall continue as the surviving
corporation of the merger;
(c) G-Modelo will obtain, if necessary, a
ruling from the Mexican tax authorities that the transac-
tions described in (a) above are tax-free for Mexican
income and transfer tax purposes;
(d) each of Tecnica Inamex, S.A. de C.V.
and Instalaciones Inamex, S.A. de C.V. (collectively, the
"Inamex Subsidiaries") shall be merged with and into
Inamex de Cervezas y Maltas, S.A. de C.V. ("Inamex"), and
as a result of such mergers, the separate corporate
existence of the Inamex Subsidiaries shall cease and
Inamex shall continue as the surviving corporation of the
mergers;
(e) Constructora Inamex, S.A. de C.V.
shall be liquidated;
35
<PAGE>
<PAGE>41
(f) each of Perifreria, S.A. de C.V.,
Conorte, S.A. de C.V., Invoccidente, S.A.de C.V., Negopa-
cifico, S.A. de C.V., Consureste, S.A. de C.V., Invocari-
be, S.A. de C.V., Pro-altiplano, S.A. de C.V., Transnore-
ste, S.A. de C.V. or Control Consolidado, S.A. de C.V.
(collectively, the "Distribution Companies") shall be
reorganized from a Sociedad Anonima de Capital Variable
into a Sociedad en Comandita Simple and, in connection
with such reorganizations, the Investor shall be issued
one interest in each of such Comanditas. A-B shall have
the right to approve the governing documents of each of
such Comandita, which approval shall not be unreasonably
withheld, and such governing documents shall provide that
no transfer of a partner's interest in the Comandita and
no amendment to the Comandita governing documents shall
be permitted without the unanimous consent of each of the
partners;
(g) following the reorganizations de-
scribed in (f) above, all of the Distribution Companies
shall be merged into two Distribution Companies, which
the Controlling Shareholders presently contemplate will
be Control Consolidado and Patentes (as hereinafter
defined), and the Investor will receive one interest in
each of such Distribution Companies; and
(h) G-Modelo and the Controlling Share-
holders agree that they will provide A-B with such assis-
tance and information as may reasonably be requested by
A-B in connection with any filings made by A-B with the
United States Internal Revenue Service.
5.5. Election of A-B Director. The Control-
------------------------
ling Shareholders shall be entitled to designate a G-Mod-
elo director for election to the A-B Board of Directors.
Following such designation, A-B will use its best efforts
to nominate and cause such designee to be elected to the
A-B Board of Directors at the Annual Meeting of Share-
holders of A-B next succeeding such designation and to
continue to nominate and cause such a designee to be
elected for so long as the Investor owns ten percent or
more of the total outstanding shares of G-Modelo capital
stock.
5.6. Environmental and Safety Laws. From and
-----------------------------
after the date hereof, G-Modelo and the G-Modelo Corpora-
tions shall conduct their businesses so as to comply in
36
<PAGE>
<PAGE>42
all material respects with all Federal, state and local
environmental and health and safety laws and regulations
in all jurisdictions in which they are or may at any time
be doing business. If G-Modelo or any G-Modelo Corpora-
tion shall (a) receive notice that it is the subject of
any investigation or threatened investigation by any
Federal, state or local government agency regarding the
violation or alleged violation of any Federal, state or
local environmental or health and safety statute or
regulation; or (b) receive notice that any judicial or
administrative complaint, proceeding or order has been
filed or is about to be filed against G-Modelo or a G-
Modelo Corporation alleging violations of any Federal,
state or local environmental or health and safety statute
or regulation, then G-Modelo or the G-Modelo Corporation
shall promptly provide A-B with such notice, and in no
event later than within fifteen (15) days from receipt
thereby by G-Modelo or the G-Modelo Corporation.
5.7. USA Export Agreement. The Controlling
--------------------
Shareholders agree that the USA Export Agreement shall
not be amended without the prior written consent of A-B,
which shall not be unreasonably withheld.
5.8. Consummation of Public Offerings; Regis-
----------------------------------------
tration of Shares.
-----------------
(a) The Controlling Shareholders agree to
use their best efforts to sell on a widely distributed
basis an aggregate of 27,436,722 Series C Shares and to
cause G-Modelo to sell an aggregate of 10,161,748 Series
C Shares prior to May 31, 1995, of which at least an
aggregate of 26,420,548 Series C Shares (such shares
representing thirteen percent of the authorized capital
stock of G-Modelo) shall be sold in one or more public
offerings (the "Offerings") and the remainder of which
shall be sold on a widely distributed basis through open-
market transactions or otherwise. Prior to filing an
application with the Comision Nacional de Valores with
respect to any of the Offerings, the Controlling Share-
holders and G-Modelo agree to provide the Investor with a
copy of such application and all offering materials
prepared in connection therewith sufficiently in advance
of the proposed filing date to enable the Investor to
review and comment on such application.
37
<PAGE>43
(b) The Controlling Shareholders and
G-Modelo agree to use their best efforts to cause the
Series C Shares, and at the request of A-B, the Series B
Shares to be placed on the Bolsa Mexicana de Valores,
S.A. de C.V. (the "Bolsa"). The Controlling Shareholders
and G-Modelo shall have the right to cause the Series A
Shares to be placed on the Bolsa.
5.9. Dividend Policies.
-----------------
(a) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and as members of the technical
committees of the Control Trust and the Option Trust
agree to take all actions necessary to cause G-Modelo to
adopt and to follow, and all such parties agree to adopt
and to follow, in accordance with Mexican law, the fol-
lowing annual dividend policy on the Series A Shares,
Series B Shares, Series C Shares and Series P-C Shares.
(i) For the period commencing
on the Closing Date and ending at such time as
clause (ii) of this paragraph (a) becomes ap-
plicable, the per share amount of the annual
dividend payable on the outstanding Series A
Shares, Series B Shares and Series C Shares
will be an amount equal to (A) the greater of
(1) 15 percent of G-Modelo's consolidated af-
ter-tax net earnings calculated in accordance
with Mexican GAAP for the most recently com-
pleted calendar year, and (2) 45,109,950 Mexi-
can Pesos divided by (B) the aggregate number
of Series A Shares, Series B Shares and Series
C Shares outstanding on the record date fixed
by the shareholders of G-Modelo for the payment
of such dividend.
(ii) If the Investor purchases
all of the Option Shares pursuant to the Op-
tion, then for the period commencing January 1,
1998, the per share amount of the annual divi-
dend payable on the outstanding Series A
Shares, Series B Shares and Series C Shares
will be an amount equal to (A) the greater of
(1) Consolidated G-Modelo Free Cash Flow (as
hereinafter defined) for the most recently
completed calendar year, and (2) 45,109,950
38
<PAGE>
<PAGE>44
Mexican Pesos, divided by (B) the aggregate
number of Series A Shares, Series B Shares and
Series C Shares outstanding on the record date
fixed by the shareholders of G-Modelo for the
payment of such dividend. For purposes hereof,
"Consolidated G-Modelo Free Cash Flow" shall
equal all of the consolidated after-tax net
earnings of G-Modelo and its subsidiaries cal-
culated in accordance with Mexican GAAP avail-
able to holders of Series A Shares, Series B
Shares and Series C Shares, (A) plus deprecia-
tion and amortization, (B) plus any decrease in
non-cash net working capital, (C) plus other
expenses which do not require a cash outlay,
(D) minus other income which does not provide
cash, (E) minus capital expenditures and other
asset acquisitions, (F) minus any increase in
non-cash net working capital, and (G) minus any
principal repayments of indebtedness, all of
which shall be determined as shown in the exam-
ple contained in Exhibit B hereto.
(iii) For the period commencing
on the Closing Date and ending on the date the
Series P-C Shares are exchanged for Series B
Shares, the per share amount of the annual
dividend payable on the outstanding PC Shares
will be calculated in accordance with the terms
of such Series P-C Shares set forth in the
Amended G-Modelo By-laws.
(b) The Controlling Shareholders in their
capacity as shareholders, directors or officers of Diblo
and as members of the technical committee of the Banamex
Trust agree to take all actions necessary to cause Diblo
to adopt and to follow, and all such parties agree to
adopt and to follow, in accordance with Mexican law, the
following annual dividend policy on the Diblo capital
stock. Commencing on the Closing Date, there shall be
declared (i) an annual dividend on the outstanding Diblo
P-C Shares in an amount sufficient for G-Modelo to de-
clare and pay the annual dividend provided for in para-
graph (a)(iii) above; provided, however, upon the ex-
-------- -------
change by the Investor of the Series P-C Shares into
Series B Shares, the Diblo P-C Shares will be exchanged
by G-Modelo effective as of the date of such exchange by
the Investor on a share-for-share basis for Diblo Series
39
<PAGE>
<PAGE>45
A Shares and the annual dividend policy set forth in this
clause (i) shall terminate, and (ii) an annual dividend
on the outstanding Diblo Common Shares which shall be
payable to all holders of Diblo Common Shares in an
amount sufficient for G-Modelo to declare and pay the
annual dividend provided for in paragraphs (a)(i) and
(a)(ii) above.
(c) The Controlling Shareholders in their
capacity as shareholders, directors or officers of Diblo
and as members of the technical committee of the Banamex
Trust agree to take all actions necessary to cause the G-
Modelo Corporations to declare annual dividends in an
amount which, in the aggregate, are sufficient to enable
G-Modelo and Diblo to declare and pay the dividends
provided for in paragraphs (a) and (b) above, respective-
ly.
(d) Subject to the applicable require-
ments of Mexican law, the Amended G-Modelo By-laws and
the Amended Diblo By-Laws, each of G-Modelo in the case
of paragraph (a) above, and Diblo in the case of para-
graph (b) above, will declare the annual common dividend
following shareholder approval at a shareholders meeting
to be held on or prior to April 30, of each year. Sub-
ject to the applicable requirements of Mexican law (in-
cluding applicable regulations of the Bolsa for any
shares listed thereon), the Amended G-Modelo By-laws and
the Amended Diblo By-laws, the common dividend shall be
payable to shareholders of record on the date of the
shareholders meeting and shall be paid on or prior to the
fifth day following the declaration date.
(e) Notwithstanding the provisions of
this Section 5.9, A-B and the Controlling Shareholders
agree to consider prior to the declaration of annual
dividends on the Series A Shares, the Series B Shares and
the Series C Shares the effect such dividends will have
on the business, operations and best interests of G-
Modelo and the G-Modelo Corporations, including, if
applicable, taking into account the purchase by G-Modelo
of the Banamex Put Shares (as defined in Section 5.16)
pursuant to Section 5.16.
40
<PAGE>
<PAGE>46
5.10. Equity Participations.
---------------------
(a) At all times after the date of this
Agreement, (i) Diblo shall own at least 99.9854 percent
of Patentes y Marcas para Promocion de Exportaciones,
S.A. de C.V., a Mexican corporation, or its successor
("Patentes"), (ii) Patentes shall own no less than 80
percent of the outstanding capital stock of Procermex and
(iii) Procermex shall own not less than 80 percent and 80
percent, respectively, of the outstanding capital stock
of Eurocermex and Iberocermex.
(b) At all times after the date of this
Agreement, Diblo shall own no less than 41.051 percent,
7.1641 percent and 26.30 percent, respectively, of the
outstanding capital stock of Direccion de Fabricas, S.A.
de C.V. ("Difa"), Gondi, S.A. de C.V. ("Gondi"), and
Extractos y Maltas, S.A. de C.V. ("Extractos"), each of
which is a Mexican corporation.
5.11. Operation of G-Modelo. Except as other-
---------------------
wise provided for in this Agreement, the Controlling
Shareholders and G-Modelo agree that following the Clos-
ing Date and for so long as the Investor owns at least 10
percent of the shares of capital stock of G-Modelo and at
least 10 percent of the shares of capital stock of Diblo,
(i) the only assets of G-Modelo will be 169,701,202 Diblo
Series A Shares, 17,030,940 Diblo P-C Shares, cash, mar-
ketable securities and the proceeds received by G-Modelo
from the Offerings pursuant to Section 5.8 and the sale
of Series C Shares to G-Modelo's executive employees
pursuant to Section 5.13; (ii) G-Modelo will incur no
liabilities other than liabilities expressly permitted
and incurred in connection with the transactions contem-
plated by this Agreement; and (iii) G-Modelo will conduct
no business or operations except in connection with the
transactions contemplated by this Agreement and except
for investing activities with respect to the cash and
marketable securities owned by it.
5.12. Government Officials. From and after
--------------------
the date hereof, G-Modelo and the G-Modelo Corporations
have the continued intention to cause their officers and
employees to conduct their businesses so as to comply in
all material respects with all Federal, state and local
Mexican laws, including those concerning payments of
money or other things of value to government officials
41
<PAGE>47
and to refrain from making or authorizing an offer or
payment of money or other thing of value, directly or
indirectly, (a) to or for the benefit of a government
official in order to obtain the wrongful performance or
omission of any acts related to the duties of such gov-
ernment official, or (b) to a political party or candi-
date when such contributions are not made in the form and
within the limits permitted by Mexican law so as to
wrongfully influence any official act or decision or to
wrongfully induce such party or candidate to wrongfully
use its or his influence with the government to affect or
influence any act or decision of government.
5.13. Sale of Series C Shares to Employees.
------------------------------------
G-Modelo shall have the right to offer for subscription
up to 3,048,525 Series C Shares from its treasury to
certain executive employees of the G-Modelo Corporations
(other than the Controlling Shareholders), or to a trust
for their benefit, pursuant to the terms of an employee
stock purchase plan to be adopted following the Closing.
G-Modelo agrees to consult with A-B in connection with
the creation and implementation of such plan to ensure
that the plan will not result in compensation expense
under U.S. GAAP.
5.14. Real Estate Transfers. As soon as prac-
---------------------
ticable following the Closing, the Controlling Sharehold-
ers agree to take all action necessary to cause G-Modelo,
and G-Modelo agrees, to transfer all of the outstanding
shares of capital stock of Distribuidora Pacifico y
Modelo de Tepic, S.A. de C.V. and Distribuidora Pacifico
y Modelo de La Paz, S.A. de C.V. to a trust to be estab-
lished under a trust agreement for the benefit of one or
both of Control Consolidado or Patentes.
5.15. Technical Committees. Following the
--------------------
Closing Date, the Controlling Shareholders will take all
actions necessary to ensure that a majority of the mem-
bers of the technical committees of the Control Trust,
the Option Trust and the Banamex Trust are Controlling
Shareholders.
42<PAGE>
<PAGE>48
5.16. Failure by the Investor to Acquire all
--------------------------------------
Diblo Option Shares. In the event that the Investor does
-------------------
not acquire all of the Diblo Option Shares (as such term
is defined in Section 6.4) pursuant to Section 6.4, the
Controlling Shareholders shall have the right, at their
sole election, at any time during the three year period
following the expiration of the Investor's right to
acquire such Diblo Option Shares pursuant to the Diblo
Option (as such term is defined in Section 6.4) either
(a) to require that G-Modelo purchase all of the Diblo
Common Shares then held by the Banamex Trust (the "Banam-
ex Put Shares"), such right being exercisable at any time
or from time to time, in whole or in part, or (b) to
merge Diblo and G-Modelo with the result that each out-
standing Diblo Common Share held by the Banamex Trust or
the Investor shall be converted into a number of shares
of full voting common stock of G-Modelo reflecting the
fair market value thereof (with Series A Shares being
issued to the Controlling Shareholders and Series B
Shares being issued to the Investor); provided, however,
-------- -------
(i) that no such merger shall be effected unless A-B has
agreed that the merger would not have any significant ad-
verse financial, accounting or tax consequences for A-B,
and (ii) if such merger is effected, the shares issued to
the Controlling Shareholders would not be Restricted
Shares (as hereinafter defined) subject to Article VI of
this Agreement. If the merger of Diblo and G-Modelo is
prohibited by the immediately preceding clause, the
parties shall work together to achieve a mutually accept-
able transaction structure which would achieve the Con-
trolling Shareholders' objectives. In the event that the
Controlling Shareholders elect to require G-Modelo to
purchase the Banamex Put Shares pursuant to clause (a)
above, the Controlling Shareholders shall deliver a
written notice (the "Banamex Put Notice") to G-Modelo and
the Investor in accordance with Section 13.10 indicating
(1) the number of Banamex Put Shares, (2) the Banamex Put
Price Per Share (as hereinafter defined), and (3) the
date and time fixed for the consummation of such sale.
The purchase price per share for the Banamex Put Shares
(the "Banamex Put Price Per Share") shall be calculated
in the same manner and subject to the same limitations
and restrictions as the Diblo Option Price Per Share
provided for in Section 6.4(a)(including the limitations
and restrictions set forth in the two provisory clauses
in the third sentence of Section 6.3(a)) except that (i)
43
<PAGE>
<PAGE>49
all references in Section 6.3(a) to the Option Exercise
Notice shall mean the Banamex Put Notice, and (ii) the
Adjusted G-Modelo Per Share Earnings shall be calculated
during the most recently completed four quarters prior to
the date of the Banamex Put Notice.
ARTICLE VI
TRANSFER, SALE AND PURCHASE RIGHTS
----------------------------------
6.1. General. Subject to the rights and
-------
obligations of the Controlling Shareholders with respect
to their Trust Rights in the Entrusted Shares (as such
terms are defined in the Control Trust Agreement) pursu-
ant to the Control Trust Agreement, none of the Control-
ling Shareholders, the Trustee on behalf of the Control
Trust, the Trustee on behalf of the Option Trust, the
Trustee on behalf of the Banamex Trust or the Investor
shall sell, convey, assign, transfer, deliver, mortgage,
pledge, encumber or otherwise dispose (a "Disposition" or
when used as a verb, "Dispose") of any Series A Shares
(except for an aggregate of 27,436,722 Series C Shares to
be sold by the Controlling Shareholders on a widely
distributed basis in accordance with Section 5.8), Series
B Shares, Series P-C Shares or Diblo Common Shares (col-
lectively, the "Restricted Shares") held by such party
except as provided in this Agreement, the Control Trust
Agreement, the Option Trust Agreement and the Banamex
Trust Agreement; provided, however, that until such time
-------- -------
as the Series C Shares are sold to the public in accor-
dance with Section 5.8, they shall be deemed to be Re-
stricted Shares for purposes of this Agreement. Any at-
tempted Disposition in violation hereof shall be null and
void. Notwithstanding the foregoing, any party may make
a Disposition of Restricted Shares, whether voluntarily
or involuntarily, directly or indirectly, pursuant to (a)
any transfer of legal title to the Restricted Shares
resulting from the resignation, removal or change of a
trustee holding Restricted Shares for the benefit of
another, (b) any distribution of Restricted Shares from
an estate or trust to any beneficiary thereof, (c) any
transfer of Restricted Shares to such party's spouse,
child, grandchild, brother, uncle, aunt, nephew, adopted
child, great-grandchild or parent, (d) any transfer of
Restricted Shares to a trust for the benefit of any
person described in clause (c), a Controlling Sharehold-
44
<PAGE>50
er, charitable institution or other trust created to
pursue philanthropic purposes for the benefit of third
parties not affiliated with a beer company (other than G-
Modelo or A-B), or (e) any transfer of Restricted Shares
to a partnership or corporation controlling, controlled
by or under the common control with one or more of the G-
Modelo Signatories, and only if, in each case under
clauses (a) through (e) above, (i) the recipient of such
Restricted Shares agrees in writing to be bound by the
terms and conditions of this Agreement in which event,
for purposes of this Agreement, such recipient shall be
deemed to be a (1) "Controlling Shareholder" if the
disposing party was a Controlling Shareholder, the Trust-
ee of the Control Trust, the Trustee of the Option Trust
or the Trustee of the Banamex Trust if the Disposition
was effected by a substitution of Trustee of such Trust
or (2) the Investor if the disposing party was the Inves-
tor, and (ii) in the case of any Disposition by a party
other than the Investor, the Investor receives reasonable
notice of such Disposition, a copy of the recipient's
written agreement required by clause (i) above, and
copies of any related instruments effecting a substitu-
tion of the trustee pursuant to clause (a) above, creat-
ing a trust pursuant to clause (d) above or evidencing
control of the corporation or partnership to which a
Disposition was made pursuant to clause (e) above, and
(iii) in the case of any Disposition by the Investor, the
Controlling Shareholders receive reasonable advance
notice of such Disposition, a copy of the recipient's
written agreement required by clause (i) above, and
copies of any related instruments creating a trust pursu-
ant to clause (d) above, effecting a substitution of the
trustee pursuant to clause (a) above or evidencing A-B's
control of the corporation or partnership to which a
Disposition was made pursuant to clause (e) above.
6.2. Offer to Sell; Right of First Refusal.
-------------------------------------
(a) In the event that the Investor de-
sires to make a Disposition at any time of any of Re-
stricted Shares (other than the Series P-C Shares) then
owned by it (other than a Disposition permitted by Sec-
tion 6.1), the Investor shall first submit a written
offer (the "Offering Notice") of such shares to each of
the Controlling Shareholders (each of such parties, an
"Offeree") in accordance with Section 13.10 specifying
45
<PAGE>
<PAGE>51
the number of Restricted Shares being offered for sale
(the "Offered Shares").
(b) Within five business days after
receipt of an Offering Notice, each Offeree shall give a
written notice (a "Response Notice") to the Investor
informing the Investor as to whether it desires to nego-
tiate the purchase of the Offered Shares, which Response
Notice shall specify the number of Offered Shares each
such Offeree desires to purchase. Upon receipt of
affirmative Response Notice(s) for all of the Offered
Shares, the Investor and Offeree(s) shall promptly nego-
tiate in good faith the terms governing such purchase.
In the event the Offeree(s) delivering Response Notices
do not intend, in the aggregate, to negotiate the pur-
chase of all of the Offered Shares, the Investor shall
determine whether to negotiate the sale of the aggregate
number of Offered Shares proposed to be purchased in such
Response Notices. If (i) the Investor determines to sell
such lesser number of Offered Shares, then the Investor
and the Offeree(s) delivering affirmative Response Notic-
es shall promptly negotiate in good faith the terms
governing such purchase, or (ii) the Investor determines
to attempt to sell all Offered Shares, then the Investor
shall give a written notice (a "Second Offering Notice")
within five business days after receipt of the Response
Notices to each Offeree who delivered an affirmative
Response Notice (a "Purchasing Offeree") setting forth
the names of, and number of Offered Shares to be pur-
chased by, each Purchasing Offeree and the number of
Offered Shares remaining offered for purchase. Within
five business days after receipt of a Second Offering
Notice, the Purchasing Offerees shall determine whether
they will negotiate the purchase of all Offered Shares
and give the Investor written notice of such determina-
tion (a "Second Response Notice"). If the Purchasing
Offerees, in the aggregate, determine to negotiate the
purchase of all Offered Shares, the Investor and the Pur-
chasing Offerees shall promptly negotiate in good faith
the terms governing such purchase.
(c) In the event that (i) the parties
cannot in good faith reach agreement upon the terms of
said purchase of Offered Shares within thirty days fol-
lowing the date of the Response Notice or the Second
Response Notice, as the case may be, or (ii) the Investor
makes the determination provided in paragraph (b)(ii) and
46
<PAGE>
<PAGE>52
the Purchasing Offerees, in the aggregate, decline to
negotiate the purchase of all of the Offered Shares, then
the Investor shall have the right to negotiate the sale
of the Offered Shares to a third party (a "Third Party
Purchaser") for cash.
(d) If the Investor receives a bona fide
cash offer from a Third Party Purchaser (a "Third Party
Offer") to purchase all of such Offered Shares which the
Investor wishes to accept, the Investor shall cause the
Third Party Offer to be reduced to writing and shall
submit a written notice of such Third Party Offer (a
"Third Party Offer Notice") to each of the Purchasing
Offerees specifying (i) the names of all Purchasing
Offerees receiving the Third Party Offer Notice, (ii) the
number of Offered Shares, (iii) the proposed cash pur-
chase price (the "Third Party Offer Price"), (iv) the
name and address of the Third Party Purchaser, and (v)
all other material terms of the proposed Disposition,
including the proposed method of cash payment. The Third
Party Offer Notice shall set forth the Investor's irrevo-
cable offer to sell the Offered Shares to the Purchasing
Offerees at the price and upon the terms stated in the
Third Party Offer Notice.
(e) Within ten business days after re-
ceipt of a Third Party Offer Notice, the Purchasing
Offerees receiving a Third Party Offer Notice shall give
written notice (a "Third Party Offer Response Notice") to
the Investor as to whether they elect to purchase all,
but not less than all, of the Offered Shares upon the
terms and conditions set forth in the Third Party Offer
Notice. Any affirmative Third Party Offer Response
Notice shall specify a date and time for the closing of
the purchase (the "Purchase Right Closing"), which date
shall not be less than ten nor more than forty days after
the date of such affirmative Third Party Response Notice.
The Purchase Right Closing shall take place at such
location as the parties may mutually agree upon, and the
purchase price per share to be paid by a Purchasing
Offeree for the purchase of Offered Shares pursuant to
this Section 6.2(e) shall be equal to the Third Party
Offer Price per share and shall be paid in the manner
proposed in the Third Party Offer Notice.
(f) If the Offered Shares are not pur-
chased by the Purchasing Offerees, the Investor may make
47
<PAGE>
<PAGE>53
a Disposition of the Offered Shares to the Third Party
Purchaser named in the Third Party Offer Notice but only
in strict compliance with the terms stated therein or on
terms more favorable to the Investor, and thereafter the
Offered Shares in the hands of the Third Party Purchaser
shall not be subject to the provisions of this Agreement.
If the Investor shall fail to complete such Disposition
to the Third Party Purchaser within ninety days following
the receipt of the Third Party Offer Response Notice, the
Investor shall be required to submit another Offering
Notice pursuant to Section 6.2(a) in order to Dispose of
any of its Restricted Shares.
(g) In the event that the Purchasing
Offerees indicate their willingness to purchase, when
aggregated, a number of Restricted Shares greater than
the number of the Offered Shares, the Offered Shares
shall be allocated among the Purchasing Offerees in
proportion to their respective percentage ownerships of
G-Modelo capital stock.
(h) Any failure by the Controlling Share-
holders to deliver a Response Notice, a Second Response
Notice or a Third Party Offer Response Notice within the
required time period shall be deemed an irrevocable
election not to purchase the Offered Shares.
(i) Subject to the rights of first refus-
al among the Controlling Shareholders set forth in the
Control Trust Agreement, the Investor shall have rights
identical to those set forth in paragraphs (a) through
(h) above with respect to all of the Restricted Shares
owned by the Controlling Shareholders or the Control
Trust, which rights shall be provided for in the Control
Trust Agreement, but shall, for purposes of this Agree-
ment, be deemed to be set forth herein as if fully set
forth in haec verba. Notwithstanding the foregoing and
-- ---- -----
as provided in the Control Trust Agreement, in the event
the Investor does not exercise the Option on or before
December 31, 1997 in full and purchase 51,052,626 Series
B Shares pursuant to Section 6.3, the Investor's rights
of first refusal shall terminate and be of no further
force and effect as of December 31, 1997 (or such later
date as provided in the Control Trust Agreement).
48
<PAGE>
<PAGE>54
6.3. The Investor's Option to Purchase Shares
----------------------------------------
of G-Modelo Capital Stock.
-------------------------
(a) The Controlling Shareholders and the
Trustee on behalf of the Option Trust hereby grant to the
Investor an irrevocable option (the "Option") to purchase
51,052,626 Series B Shares, which shall be Class II
shares representing the variable capital of G-Modelo (it
being agreed that such number of shares of G-Modelo capi-
tal stock, which when added to the 20,323,498 Series P-C
Shares or Series B Shares then owned by the Investor,
will cause the Investor to own at least 35.12 percent of
the outstanding G-Modelo capital stock after exercise of
the Option) (the "Option Shares"), which Option Shares
will be obtained by converting the 51,052,626 Series A
Shares held in trust pursuant to the Option Trust Agree-
ment into a like number of Series B Shares. The exercise
price per share payable by the Investor for the Option
Shares shall be equal to the "Average Closing Price Per
Share of G-Modelo Capital Stock." The Average Closing
Price Per Share of G-Modelo Capital Stock shall be equal
to the average closing price per share of the Series C
Shares on the Bolsa for the 30 trading-days preceding the
date of the Option Exercise Notice (as hereinafter de-
fined); provided, however, that in the event such Average
-------- -------
Closing Price Per Share of G-Modelo Capital Stock (i) is
less than 15 times the Adjusted G-Modelo Per Share Earn-
ings (as hereinafter defined), the Average Closing Price
Per Share of G-Modelo Capital Stock shall be deemed to be
an amount equal to 15 times the Adjusted G-Modelo Per
Share Earnings, and (ii) is more than 19 times the Ad-
justed G-Modelo Per Share Earnings, the Average Closing
Price Per Share of G-Modelo Capital Stock shall be deemed
to be an amount equal to 19 times the Adjusted G-Modelo
Per Share Earnings; and provided, further, that (1) if,
-------- -------
in addition to the Series C Shares trading on the Bolsa
on the date the Average Closing Price Per Share of G-
Modelo Capital Stock is determined, the Series A Shares
and/or Series B Shares are also traded on the Bolsa on
such date, the Average Closing Price Per Share of G-
Modelo Capital Stock shall be equal to the quotient
(rounded to the fourth decimal) determined by (x) multi-
plying the average closing price per share of each Series
of G-Modelo so traded on the Bolsa for such 30 trading-
day period by the number of outstanding shares of such
Series, and (y) adding all such multiplication products
49
<PAGE>55
to determine the sum thereof, and (z) dividing such sum
by the aggregate number of outstanding shares of all
Series of capital stock of G-Modelo so traded; (2) if
shares of any Series of capital stock of G-Modelo were
not traded on the Bolsa for a period of 30 trading-days
preceding the date of the Option Exercise Notice, the
Average Closing Price Per Share of G-Modelo Capital Stock
shall be based on the average closing price per share of
such Series of G-Modelo capital stock on the Bolsa for
such number of days that such Series of G-Modelo stock
traded on the Bolsa prior to such date, subject to the
limitations provided in the immediately preceding provi-
so; and (3) if 26,420,548 Series C Shares (such shares
representing thirteen percent of the total authorized
capital stock of G-Modelo) have not theretofore been sold
to the public as contemplated by Section 5.8 and placed
on the Bolsa, the Average Closing Price Per Share of G-
Modelo Capital Stock shall be conclusively deemed to have
been established as provided in clause (i) of the immedi-
ately preceding proviso. For purposes hereof, the "Ad-
justed G-Modelo Per Share Earnings" shall mean (x) the
consolidated after-tax net earnings of G-Modelo calculat-
ed in accordance with Mexican GAAP for the most recently
completed four quarters prior to the date of the Option
Exercise Notice, as reported to the Bolsa, if shares of
G-Modelo capital stock have been listed on the Bolsa, or
as prepared by G-Modelo, if shares have not been listed,
excluding any non-recurring extraordinary items, divided
by (y) the aggregate number of outstanding shares of
G-Modelo capital stock; and provided, further, that for
-------- -------
purposes of this Agreement, such Adjusted G-Modelo Per
Share Earnings shall be independently certified by each
of C&L and PW.
(b) The Option may be exercised by the
Investor, in whole or in part, at any time or from time
to time commencing on July 1, 1995 and ending on December
31, 1997 by delivery of written notice of such exercise
(an "Option Exercise Notice") to the Controlling Share-
holders and the Option Trust in accordance with Section
13.10. The Option Exercise Notice shall indicate (i) the
date (an "Option Closing Date") and time fixed for the
Option Closing (which date shall not be less than ten nor
more than forty days following the date of the Option
Exercise Notice), (ii) the number of Option Shares to be
purchased, and (iii) the Average Closing Price Per Share
of G-Modelo Capital Stock. The closing of the purchase
50
<PAGE>
<PAGE>56
of the Option Shares (an "Option Closing") shall take
place at such location as the parties may mutually agree
upon.
(c) At any Option Closing hereunder (i)
the Investor shall pay in immediately available funds an
aggregate purchase price for the Option Shares to be
purchased (the "Aggregate Option Price") equal to the
product of (A) the Average Closing Price Per Share of G-
Modelo Capital Stock and (B) the number of Option Shares
being purchased at such Option Closing converted into
United States dollars at the Free Exchange Rate, and (ii)
the Trustee on behalf of the Option Trust shall deliver
to the Investor a certificate or certificates represent-
ing the number of Option Shares so purchased, duly en-
dorsed in the name of the Investor.
(d) In the event that any purchase of
Option Shares by the Investor pursuant to this Section
6.3 would require the approval of or any filing with any
Mexican or United States governmental agency, including,
without limitation, the Mexican Foreign Investment Com-
mission pursuant to the LRMI, the LEC or the United
States Federal Trade Commission or the Antitrust Division
of the United States Department of Justice pursuant to
the HSR Act, and such approval has not been obtained or
all waiting periods have not expired or been terminated
prior to the Option Closing Date, (x) if the approval of
the Mexican Foreign Investment Commission pursuant to the
LRMI is the sole remaining approval and all other appli-
cable waiting periods have expired or been terminated,
the Investor shall have the right to appoint a designated
purchaser to consummate such purchase pursuant to Section
5.3(a), or (y) the Option Closing Date shall automati-
cally be extended to the date which is no more than three
business days after the approval of all such governmental
agencies has been granted and all waiting periods have
expired or been terminated; provided, however, the Option
-------- -------
Closing Date may not be extended beyond August 10, 1998.
In the event that the Option Closing is extended pursuant
to clause (y) of the immediately preceding sentence, the
Aggregate Option Price shall be reduced by the aggregate
amount of dividends on the Option Shares to be purchased
at the Option Closing, if any, declared following the
Option Closing Date set forth in the Option Exercise
Notice and paid to holders of record on a date which is
prior to the date the Option Closing, as so extended
51
<PAGE>
<PAGE>57
occurs; provided, however, the Investor shall be required
-------- -------
to pay interest on such Aggregate Option Price at the
Prime Rate, for the period beginning on the Option Clos-
ing Date set forth in the Option Exercise Notice to but
not including the date the Option Closing, as so extend-
ed, occurs.
6.4. The Investor's Option to Purchase Diblo
---------------------------------------
Common Shares.
-------------
(a) The Controlling Shareholders and the
Trustee on behalf of the Banamex Trust hereby grant to
the Investor an irrevocable option (the "Diblo Option")
to purchase 32,237,145 Diblo Series B Shares, which shall
be Class II shares representing the variable capital of
Diblo (it being agreed that such number of shares of
Diblo capital stock, which when added to the 24,329,922
Diblo Series B Shares then owned by the Investor, will
cause the Investor to own at least 23.25 percent of the
outstanding Diblo capital stock after exercise of the
Diblo Option) (the "Diblo Option Shares"), which Diblo
Option Shares are held in the Banamex Trust. The exer-
cise price per share payable by the Investor for the
Diblo Option Shares (the "Diblo Option Price Per Share")
shall be calculated by (i) adding the Total G-Modelo
Common Equity Capitalization (as hereinafter defined) to
the product obtained by multiplying the Average Closing
Price Per Share of G-Modelo Capital Stock by the total
number of Series P-C Shares then outstanding (the "Total
G-Modelo Equity Capitalization"), (ii) dividing the Total
G-Modelo Equity Capitalization by G-Modelo's aggregate
percentage ownership of the outstanding Diblo capital
stock on the day preceding the date of the Diblo Option
Exercise Notice (as hereinafter defined)(the "Total Diblo
Equity Capitalization"), and (iii) dividing the Total
Diblo Equity Capitalization by the aggregate number of
Diblo Common Shares and Diblo P-C Shares outstanding at
the close of business on the day preceding the date of
the Diblo Option Exercise Notice (the "Diblo Per Share
Market Price"). For purposes hereof, "Total G-Modelo
Common Equity Capitalization" shall mean the product
obtained by multiplying (x) the Average Closing Price Per
Share of G-Modelo Capital Stock by (y) the aggregate
number of Series A Shares, Series B Shares and Series C
Shares outstanding at the close of business on the day
preceding the date of the Diblo Option Exercise Notice.
The determination of the Diblo Option Price Per Share
52
<PAGE>58
shall be subject to the limitations and restrictions set
forth in, and shall be calculated in accordance with, the
two provisory clauses in the third sentence of Section
6.3(a) above; provided, however, the Adjusted G-Modelo
-------- -------
Per Share Earnings shall be calculated during the most
recently completed four quarters prior to the date of the
Diblo Option Exercise Notice and all references to Option
Exercise Notice in Section 6.3(a) shall mean the Diblo
Option Exercise Notice.
(b) The Diblo Option may be exercised by
the Investor, in whole or in part, at any time or from
time to time commencing on July 1, 1995 and ending on
December 31, 1997 by delivery of written notice of such
exercise (the "Diblo Option Exercise Notice") to the
Controlling Shareholders and the Banamex Trust in accor-
dance with Section 13.10. The Diblo Option Exercise
Notice shall indicate (i) the date (the "Diblo Option
Closing Date") and time fixed for the Diblo Option Clos-
ing (which date shall not be less than ten nor more than
forty days following the date of the Diblo Option Exer-
cise Notice), (ii) the number of Diblo Option Shares to
be purchased, and (iii) the Diblo Option Price Per Share.
The closing of the purchase of the Diblo Option Shares
(the "Diblo Option Closing") shall take place at such
location as the parties may mutually agree upon.
(c) At any Diblo Option Closing hereunder
(i) the Investor shall pay in immediately available funds
an aggregate purchase price for the Diblo Option Shares
to be purchased (the "Aggregate Diblo Option Price")
equal to the product of (A) the Diblo Option Price Per
Share and (B) the number of Diblo Option Shares being
purchased at such Diblo Option Closing converted into
United States dollars at the Free Exchange Rate, and (ii)
the Trustee on behalf of the Banamex Trust shall deliver
to the Investor a certificate or certificates represent-
ing the number of Diblo Option Shares so purchased, duly
endorsed in the name of the Investor.
(d) In the event that any purchase of
Diblo Option Shares by the Investor pursuant to this
Section 6.4 would require the approval of or any filing
with any Mexican or United States governmental agency,
including, without limitation, the Mexican Foreign In-
vestment Commission pursuant to the LRMI, the LEC or the
United States Federal Trade Commission or the Antitrust
53
<PAGE>
<PAGE>59
Division of the United States Department of Justice
pursuant to the HSR Act, and such approval has not been
obtained or all waiting periods have not expired or been
terminated prior to the Diblo Option Closing Date, (x) if
the approval of the Mexican Foreign Investment Commission
pursuant to the LRMI is the sole remaining approval and
all other applicable waiting periods have expired or been
terminated, the Investor shall have the right to appoint
a designated purchaser to consummate such purchase pursu-
ant to Section 5.3(a) or (y) the Diblo Option Closing
Date shall automatically be extended to the date which is
no more than three business days after the approval of
all such governmental agencies has been granted and all
waiting periods have expired or been terminated; provid-
-------
ed, however, the Diblo Option Closing Date may not be
-- -------
extended beyond August 10, 1998. In the event that the
Diblo Option Closing is extended pursuant to clause (y)
of the immediately preceding sentence, the Aggregate
Diblo Option Price shall be reduced by the aggregate
amount of dividends on the Diblo Option Shares to be
purchased at the Diblo Option Closing, if any, declared
following the Diblo Option Closing Date set forth in the
Diblo Option Exercise Notice and paid to holders of
record on a date which is prior to the date the Diblo
Option Closing, as so extended, occurs; provided, howev-
-------- ------
er, the Investor shall be required to pay interest on
--
such Aggregate Diblo Option Price at the Prime Rate, for
the period beginning on the Diblo Option Closing Date set
forth in the Diblo Option Exercise Notice to but not
including the date the Diblo Option Closing, as so ex-
tended, occurs.
6.5. Consequences of Failure to Convert Series
-----------------------------------------
P-C Shares. In the event that the Investor does not
----------
convert the Series P-C Shares into a like number of
Series B Shares on or prior to December 31, 1996, in
accordance with the terms of the Series P-C Shares, then
the following provisions shall be mandatorily and irrevo-
cably applicable and binding on all parties to this
Agreement.
(a) The Series P-C Shares shall be re-
deemed by G-Modelo on December 31, 1996, in accordance
with the terms of the Series P-C Shares and the Amended
G-Modelo By-laws.
54
<PAGE>60
(b) The rights granted to the Investor to
purchase Option Shares and Diblo Option Shares pursuant
to Sections 6.3 and 6.4, respectively, the restrictions
on transfer and the right of first refusal granted to the
Investor pursuant to Sections 6.1 and 6.2(i) hereof and
Clause Eighth and Annex 3 of the Control Trust Agreement,
respectively, and the restrictions on transfer and the
right of first refusal granted to the Controlling Share-
holders pursuant to Section 6.1 and 6.2, respectively,
shall expire and be of no further force and effect.
(c) The Investor shall have the right
(the "Put Right"), in its sole discretion, to require
that:
(i) the Controlling Sharehold-
ers purchase all, but not less than all, of the
Shares of G-Modelo Stock (the "G-Modelo Put
Shares") and the Diblo Common Shares (the "Dib-
lo Put Shares," and together with the "G-Modelo
Put Shares," the "Put Shares") then owned,
directly or indirectly, by the Investor and its
authorized designees, if any; and
(ii) the Controlling Sharehold-
ers or G-Modelo or any combination thereof pur-
chase all, but not less than all, of the Diblo
Put Shares then owned, directly or indirectly,
by the Investor and its authorized designees,
if any.
The Investor shall exercise the Put Right by delivering a
written notice (the "Put Notice") to the Controlling
Shareholders and G-Modelo in accordance with Section
13.10 indicating (1) the number of Put Shares, (2) the G-
Modelo Put Price Per Share (as hereinafter defined) and
the Diblo Put Price Per Share (as hereinafter defined),
and (3) the date and time fixed for the consummation of
such sale (the "Put Closing"), which date shall not be
less than ten nor more than forty days following the date
of the Put Notice. The purchase price per share for the
G-Modelo Put Shares (the "G-Modelo Put Price Per Share")
shall be calculated in the same manner and subject to the
same limitations as the Average Closing Price Per Share
of G-Modelo Capital Stock provided for in Section 6.3(a)
except that (x) all references in Section 6.3(a) to
Option Exercise Notice shall mean Put Notice, and (y) the
55
<PAGE>
<PAGE>61
Adjusted G-Modelo Per Share Earnings shall be calculated
during the most recently completed four quarters prior to
the date of the Put Notice. The purchase price per share
for the Diblo Put Shares (the "Diblo Put Price Per
Share") shall be calculated in the same manner and sub-
ject to the same limitations as the Diblo Option Price
Per Share provided for in Section 6.4(a) except that (i)
all references in Section 6.3(a) to Option Exercise
Notice shall mean Put Notice, and (ii) the Adjusted G-
Modelo Per Share Earnings shall be calculated during the
most recently completed four quarters prior to the date
of the Put Notice. At the Put Closing, (x) the Control-
ling Shareholders or G-Modelo or any such combination
thereof shall pay an aggregate purchase price for the Put
Shares equal to the sum of (A) the product obtained by
multiplying the G-Modelo Put Price Per Share by the
number of G-Modelo Put Shares, and (B) the product ob-
tained by multiplying the Diblo Put Price Per Share by
the number of Diblo Put Shares, in United States dollars
in immediately available funds, calculated in accordance
with the Free Exchange Rate, and (y) the Investor shall
deliver to the purchasers certificates representing the
Put Shares, duly endorsed in the name of the purchaser.
(d) In addition to, and not in lieu of,
the Put Rights, the Investor shall have the right (the
"Withdrawal Right"), in its sole discretion, to require
that G-Modelo (in the case of G-Modelo capital stock) and
Diblo (in the case of Diblo capital stock) purchase all,
but not less than all, of the G-Modelo Put Shares and the
Diblo Put Shares, respectively, then owned, directly or
indirectly, by the Investor and its authorized designees,
if any, and G-Modelo and Diblo shall be obligated to
purchase all of such shares. The Investor shall exercise
the Withdrawal Right by delivering a written notice (the
"Withdrawal Notice") to the Controlling Shareholders, G-
Modelo and Diblo in accordance with Section 13.10 indi-
cating the number of G-Modelo Put Shares and Diblo Put
Shares to be withdrawn. G-Modelo, Diblo and the Control-
ling Shareholders, in their capacity as shareholders,
directors or officers of G-Modelo and Diblo and as mem-
bers of the technical committees of the Control Trust,
the Option Trust and the Banamex Trust, will take all
actions, and do all things necessary to ensure that the
withdrawal is completed (the "Withdrawal Closing") as
soon as permitted by Mexican law, the Amended G-Modelo
By-laws and the Amended Diblo By-laws. For purposes of
56
<PAGE>
<PAGE>62
this Section 6.5(d), the withdrawal price per share for
the G-Modelo Put Shares pursuant to the Withdrawal Right
(the "G-Modelo Withdrawal Price Per Share") shall be the
amount per share of G-Modelo capital stock paid by G-
Modelo to the Investor in connection with the exercise of
the Withdrawal Right pursuant to the Amended G-Modelo By-
laws. For purposes of this Section 6.5(d), the with-
drawal price per share for the Diblo Put Shares pursuant
to the Withdrawal Right (the "Diblo Withdrawal Price Per
Share") shall be the amount per share of Diblo capital
stock paid by Diblo to the Investor in connection with
the exercise of the Withdrawal Right pursuant to the
Amended Diblo By-laws. At the Withdrawal Closing, (x) G-
Modelo shall pay an aggregate withdrawal price (the
"Aggregate G-Modelo Withdrawal Price") for the G-Modelo
Put Shares equal to the product obtained by multiplying
the G-Modelo Withdrawal Price Per Share by the number of
G-Modelo Put Shares, and Diblo shall pay an aggregate
withdrawal price (the "Aggregate Diblo withdrawal Price"
and, together with the Aggregate G-Modelo Withdrawal
Price, the "Aggregate Withdrawal Price") for the Diblo
Put Shares equal to the product obtained by multiplying
the Diblo Put Price Per Share by the number of Diblo Put
Shares, in Mexican Pesos in immediately available funds,
and (y) the Investor shall deliver to G-Modelo and Diblo,
as the case may be, the certificates representing the Put
Shares, duly endorsed in the names of the companies. In
connection with the Investor's exercise of the Withdrawal
Right pursuant to this Section 6.5(d), the Controlling
Shareholders agree to indemnify, jointly and severally,
the Investor for the full amount, if any, of the G-Modelo
Withdrawal Price Shortfall (as hereinafter defined) and
the Diblo Withdrawal Price Shortfall (as hereinafter de-
fined). For purposes of this Section 6.5(d), (1) the "G-
Modelo Withdrawal Price Shortfall" shall be an amount
equal to the sum of (A) the difference between the G-
Modelo Put Price Per Share calculated in accordance with
Section 6.5(c) and the G-Modelo Withdrawal Price Per
Share plus (B) an amount equal to the interest on the
Aggregate G-Modelo Withdrawal Price and the G-Modelo
Withdrawal Price Shortfall at the Prime Rate, for the
period beginning on the earliest date on which the Put
Closing could have occurred had the Controlling Share-
holders purchased the G-Modelo Put Shares pursuant to the
Put Right and continuing to but not including the date of
the Withdrawal Closing, and (2) the "Diblo Withdrawal
Price Shortfall" shall be an amount equal to the sum of
57
<PAGE>
<PAGE>63
(C) the difference between the Diblo Put Price Per Share
calculated in accordance with Section 6.5(c) and the
Diblo Withdrawal Price Per Share plus (D) an amount equal
to the interest on the Aggregate Diblo Withdrawal Price
and the Diblo Withdrawal Price Shortfall at the Prime
Rate for the period beginning on the earliest date on
which the Put Closing could have occurred had the Con-
trolling Shareholders purchased the Diblo Put Shares
pursuant to the Put Right and continuing to but not in-
cluding the date of the Withdrawal Closing. The Control-
ling Shareholders agree to pay the G-Modelo Withdrawal
Price Shortfall and the Diblo Withdrawal Price Shortfall
to the Investor in United States dollars in immediately
available funds calculated in accordance with the Free
Exchange Rate within three business days after the With-
drawal Closing.
(e) The Controlling Shareholders shall
have the right (the "Call Right") to require that the
Investor sell all, but not less than all, of the Put
Shares, and the Investor shall be obligated to so sell
all of the Put Shares. The Controlling Shareholders
shall exercise the Call Right by delivering a written
notice (the "Call Notice") to the Investor in accordance
with Section 13.10 indicating the total number of Put
Shares, (ii) the Aggregate Call Purchase Price (as here-
inafter defined), and (iii) the date and time fixed for
the consummation of such sale (the "Call Closing"), which
date shall not be less than ten nor more than forty days
following the date of the Call Notice. The purchase
price per share for the Put Shares shall be calculated in
the same manner and subject to the same limitations as
provided for in Section 6.5(c) except that (i) all refer-
ences in Section 6.3(a) to Option Exercise Notice shall
mean Call Notice, and (ii) the Adjusted G-Modelo Per
Share Earnings shall be calculated during the most re-
cently completed four quarters prior to the date of the
Call Notice (the "Call Price Per Share"). At the Call
Closing, the purchasers shall pay an aggregate purchase
price for the Put Shares equal to the Call Price Per
Share multiplied by the number of Put Shares, in United
States dollars in immediately available funds, calculated
in accordance with the Free Exchange Rate, and (ii) the
Investor shall deliver to the purchasers certificates
representing the Put Shares, duly endorsed in the name of
the purchasers.
58
<PAGE>
<PAGE>64
(f) Following consummation of the trans-
actions contemplated by paragraphs (a) and (c) or (d) or
(e) and the performance in full by all parties of all of
their obligations thereunder, this Agreement shall termi-
nate (other than Sections 5.1(b), 13.8, 13.9, 13.10,
13.11, 13.12 and Article XII).
6.6. Restriction on Dispositions to Competi-
---------------------------------------
tors. Notwithstanding anything to the contrary contained
----
in this Agreement, none of the G-Modelo Signatories, the
Banamex Trust, the Option Trust or the Investor shall,
and the Controlling Shareholders as members of the tech-
nical committee of the Control Trust shall cause the
Control Trust not to, sell or offer to sell and the G-
Modelo Signatories shall cause the other Controlling
Shareholders not to sell or offer to sell any shares of
capital stock of G-Modelo (other than Series C Shares to
be sold on a widely distributed basis in accordance with
Section 5.8) or any G-Modelo Corporation to any Person or
its controlling shareholders engaged, directly or indi-
rectly, in the production, distribution or sale of beer
in or to the United States or Mexico other than the
Investor or its designees in accordance with the terms of
this Agreement.
6.7. Restrictions on Acquiring Series C
----------------------------------
Shares. Until the earlier of (x) such time as the Inves-
------
tor has exercised the Option in full or (y) the expira-
tion of the Option, the Controlling Shareholders and A-B
each agree that they will not, directly or indirectly
through affiliates, nominees or otherwise, acquire record
or beneficial ownership of any Series A Shares, Series B
Shares or Series C Shares pursuant to open-market pur-
chases.
6.8. Extension of Time Periods. In the event
-------------------------
that any purchase of shares of G-Modelo capital stock or
Diblo capital stock by A-B, A-BI or the Investor, on the
one hand, or the Controlling Shareholders or G-Modelo, on
the other hand, pursuant to Sections 6.2, 6.3, 6.4, 6.5
and 12.2 hereof and Clause Eighth and Annex 3 of the
Control Trust Agreement is subject to any legal impedi-
ment or would require the approval of or any filing with
any Mexican or United States governmental agency, includ-
ing, without limitation, the Mexican Foreign investment
Commission pursuant to the LRMI, the LEC or the United
States Federal Trade Commission or the Antitrust Division
59
<PAGE>65
of the United States Department of Justice pursuant to
the HSR Act, and such legal impediment is not removed or
approval has not been obtained or all waiting periods
have not expired or been terminated prior to the date set
for the consummation of the acquisition of such shares,
the parties hereto agree that the termination of all
exercise periods during which such acquisition may take
place shall be tolled for a period not to exceed six
months from the expiration date of such period and as a
result of such tolling the closing date for any such
acquisition shall automatically be extended to a date
which is no more than three business days after the
approval of all such governmental agencies has been
granted and all waiting periods have expired or been
terminated; provided, however, such closing date may not
-------- -------
be extended to a date which is six months beyond the day
following the last day that such closing could otherwise
have taken place.
ARTICLE VII
BOARDS OF DIRECTORS; VOTING
---------------------------
7.1. Boards of Directors. Pursuant to the
-------------------
Amended G-Modelo By-laws:
(a) Effective as of the Closing Date (i)
the number of members of the G-Modelo Board of Directors
shall be fixed at fourteen (each of whom may have an
alternate), three of whom shall be nominated by the
Investor (the "Investor Nominees") and eleven of whom
shall be nominated by the Controlling Shareholders (the
"Controlling Shareholder Nominees") and (ii) the Investor
Nominees and the Controlling Shareholder Nominees shall
be elected to the G-Modelo Board of Directors, in accor-
dance with Mexican law and the Amended G-Modelo By-laws.
A-B and the Controlling Shareholders agree to consider
the advisability of inviting up to four independent
individuals to become members of the fourteen person G-
Modelo Board of Directors (the "Independent Nominees") up
to three of whom would be nominated by the Controlling
Shareholders in consultation with A-B and one of whom
would be nominated by A-B in consultation with the Con-
trolling Shareholders.
60
<PAGE>
<PAGE>66
(b) Effective as of the time the Investor
and its authorized designees, if any, own, in the aggre-
gate, at least 35.12 percent of G-Modelo's outstanding
capital stock (i) the number of members of the G-Modelo
Board of Directors shall be increased to twenty-one (each
of whom may have an alternate), the number of Investor
Nominees shall be increased to ten and the number of
Controlling Shareholder Nominees shall remain at eleven,
(ii) A-B and the Controlling Shareholders will consider
maintaining the appointment of the Independent Nominees,
and (iii) the additional Investor Nominees selected to
fill such newly created directorships shall be elected to
the G-Modelo Board of Directors in accordance with Mexi-
can law and the Amended G-Modelo By-laws.
(c) All such G-Modelo directors nominated
and elected pursuant to paragraphs (a) and (b) above
shall serve on the G-Modelo Board of Directors until
their respective successors are duly elected and quali-
fied in accordance with this Agreement and the provisions
of the Amended G-Modelo By-laws. In addition, at each
annual meeting of G-Modelo shareholders following the
Closing, the Investor Nominees and the Controlling Share-
holder Nominees shall be elected to the G-Modelo Board of
Directors.
(d) Notwithstanding anything contained in
this Agreement to the contrary, in the event that the
Investor or its authorized designees, if any, acquire, in
the aggregate, a number of Series A Shares that represent
ten percent or more of G-Modelo's total outstanding
capital stock, the Controlling Shareholders shall cause,
in accordance with Section 7.1(g), one of the Controlling
Shareholder Nominees to be removed from the G-Modelo
Board of Directors and the Investor shall be entitled to
fill such vacancy. Thereafter, at each annual meeting of
G-Modelo shareholders, the Investor shall be entitled to
nominate one of the Controlling Shareholder Nominees.
(e) For so long as the Controlling Share-
holders are entitled to nominate more members of the G-
Modelo Board of Directors than A-B, the Controlling
Shareholders shall have the right to nominate a Control-
ling Shareholder Nominee to act as Chairman of the G-Mod-
elo Board of Directors, which nomination shall be ap-
proved by a simple majority vote of the G-Modelo Board of
Directors.
61
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<PAGE>67
(f) Except as provided in Section 7.1(d),
any vacancy on the G-Modelo Board of Directors occurring
by reason of death, resignation, removal or other termi-
nation of a director elected pursuant to Section 7.1(a)
or 7.1(b) shall be filled by a new director nominated by
the same party who was entitled to nominate the previous
incumbent whose death, resignation, removal or other
termination created such vacancy.
(g) The party who nominated any director
elected pursuant to Section 7.1(a) or 7.1(b), and only
such party, shall have the right to remove such director
by giving written notice to the Comisario of G-Modelo to
call a meeting of G-Modelo shareholders for such purpose.
(h) Pursuant to the Amended G-Modelo By-
laws and the Amended Diblo By-laws, the Investor shall
have rights identical to those set forth in paragraphs
(a) through (g) above with respect to Diblo and the Diblo
Board of Directors.
7.2. Corporate Actions.
-----------------
(a) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and Diblo and as members of the
technical committees of the Control Trust, the Banamex
Trust and the Option Trust, agree to use their best ef-
forts and to take all actions necessary to ensure that
during the period the Investor and its authorized design-
ees, if any, own, in the aggregate, at least 20,323,498
shares of the outstanding capital stock of G-Modelo and
at least 24,329,922 outstanding Diblo Common Shares, the
Investor shall be entitled to the following rights and
protections as a minority shareholder of G-Modelo and
Diblo:
(i) The Investor shall have the
right to elect three Investor Nominees to the
fourteen member G-Modelo Board of Directors and
at least two Investor Nominees to G-Modelo's
seven member Executive Committee (and their re-
spective alternates).
(ii) The Investor shall have the
right to name a statutory auditor (Comisario)
of G-Modelo.
62
<PAGE>
<PAGE>68
(iii) The Investor shall have the
right to approve any change to the dividend
policies of G-Modelo and Diblo set forth in
Section 5.9 or to approve any dividend or dis-
tribution not in compliance with Section 5.9.
(iv) There shall be a majority
vote by series of the holders of Series A
Shares and Series B Shares and a majority vote
of the holders of the Series P-C Shares, at an
Extraordinary Meeting of Shareholders of G-Mod-
elo to approve (A) amendments to the Amended
G-Modelo By-laws or Amended Diblo By-laws which
would be contrary to or inconsistent with the
Investor's rights contained in this Agreement,
(B) acquisitions, divestitures, spin-offs,
mergers or consolidations which will modify
G-Modelo's earnings or asset base by more than
ten percent, or involve companies owned in part
by the Controlling Shareholders outside the
G-Modelo corporate structure, or (C) except for
divestitures of a controlling interest in a G-
Modelo Corporation otherwise permitted in (B)
above, the sale of any shares of capital stock
of any of the G-Modelo Corporations (except as
is otherwise required in the by-laws of the
Comanditas pursuant to Section 5.4 of this
Agreement).
(v) A-B shall have the right to
approve all pricing and other policies for
transactions between G-Modelo or any G-Modelo
Corporation, on the one hand, and Procermex,
Difa, Gondi, Tramo Cia. de Transportes, S.A. de
C.V., a Mexican corporation ("Tramo"), Eurocer-
mex, Iberocermex, Tapas, Promotora, Envases or
any other Subsidiary in which a Controlling
Shareholder has any ownership interest other
than through G-Modelo, on the other hand, to
assure that such transactions are carried out
on an arm's-length basis; provided, however,
-------- -------
that such approval shall not be withheld if the
resulting pricing for each such transaction is
at or below Market Price (as defined); and pro-
----
vided, further, that such approval will be re-
----- -------
quired with respect to pricing or other poli-
cies for transactions with Procermex only when
63
<PAGE>69
they imply changes to the pricing or policies
for transactions with Procermex existing as of
March 24, 1993 (which policies are generally
described in Exhibit C hereto). For purposes
hereof, "Market Price" shall mean for any prod-
uct or service, the lowest price available to
the purchaser in Mexico from any North American
source (including, without limitation, Subsid-
iaries of the Investor), whether on a spot or
long-term basis, which pricing will be verified
from time to time by check bids. Furthermore,
in furtherance of the parties' desire to obtain
the best available prices, G-Modelo and each G-
Modelo Corporation agree to consult on a semi-
annual basis with the Investor regarding all
purchases of major goods and services acquired
by them, regardless of source. Within a rea-
sonable period of time following the Closing,
G-Modelo will provide to the Investor a sched-
ule setting forth for each of the companies
referred to in the first sentence of this
clause (v), the commodity sold to or purchased
by any other G-Modelo Corporation, the annual
quantity thereof purchased or sold and a recent
representative unit price therefor.
(vi) The following planning and
control processes shall be presented to and
approved by a majority vote of the G-Modelo
Board of Directors, provided such vote includes
the approval of at least two Investor Nominees
(a "Qualified Vote") and thereafter implemented
by the G-Modelo management: (A) annual budgets
for capital and income statement line items, in
reasonable detail, which shall be presented to
the G-Modelo Board of Directors in the fourth
quarter of each fiscal year and thereafter
shall be revised quarterly by a Qualified Vote
of the G-Modelo Board of Directors to reflect
changes in the Mexican economy and other market
circumstances; (B) the five-year plan for busi-
ness strategy, income statement, balance sheet
and cash flow statement, which shall be pre-
sented to the G-Modelo Board of Directors annu-
ally; and (C) monthly and year-to-date operat-
ing, financial and sales results versus budget,
with updated estimates for the remainder of the
64
<PAGE>
<PAGE>70
current fiscal year which shall be presented at
each monthly or bi-monthly G-Modelo Board of
Directors (or Executive Committee) meeting.
(vii) To promote the sharing of
functional skills between G-Modelo and A-B, the
Investor Nominees and the Controlling Share-
holder Nominees shall mutually agree on the
selection of executive and management personnel
candidates to rotate between G-Modelo and A-B
in the Finance, Marketing, Corporate Planning,
Brewing and Operations areas commencing as soon
as reasonably practicable after the Closing;
provided, however, that no participant in such
-------- -------
program shall hold an executive office or posi-
tion with any host company nor shall such par-
ticipant have any authority to act in the name
or on behalf of, or otherwise to bind, the host
company; provided, further, that each party
-------- -------
shall continue to pay the compensation of each
of such party's participants in the program, as
well as all costs and expenses relating to such
participation, and the host company shall have
no obligations in respect of any such payments.
(viii) The Investor shall have the
right to approve (A) any issuances of G-Modelo
capital stock (other than on a pro rata basis
to all G-Modelo shareholders without the pay-
ment of any consideration therefor) or (B) any
amortization of shares of G-Modelo capital
stock.
(ix) Whenever any of the matters
described in (iii) through (vii) above are to
be approved by a G-Modelo Corporation, such
matter must first be approved by a Qualified
Vote of the G-Modelo Board of Directors; pro-
----
vided, however, with respect to the matters set
----- -------
forth in (iii) above, there shall be no Quali-
fied Vote of the G-Modelo Board of Directors
required as long as Section 5.9 is fully com-
plied with.
65
<PAGE>71
(b) G-Modelo and the Controlling Share-
holders, in their capacity as shareholders, directors or
officers of G-Modelo and Diblo and as members of the
technical committees of the Control Trust, the Banamex
Trust and the Option Trust, agree to use their best ef-
forts and to take all actions necessary to ensure that
during the period the Investor and its authorized design-
ees, if any, own, in the aggregate, at least 71,376,124
shares of the outstanding G-Modelo capital stock, in
addition to the minority shareholder rights and protecti-
ons provided for in Section 7.2(a), the Investor shall be
entitled to the following rights and protections as a
minority shareholder of G-Modelo and Diblo:
(i) The Investor shall have the
right to elect ten Investor Nominees to the 21
person G-Modelo Board of Directors and at least
four Investor Nominees to G-Modelo's nine mem-
ber Executive Committee (and their respective
alternates).
(ii) Prior to implementation by
the G-Modelo management, the G-Modelo Board of
Directors shall approve the following by a
Qualified Vote: (A) the submission of the
annual financial statements and proposals to
the Ordinary Meeting of Shareholders of G-Mode-
lo to change the dividend policies of G-Modelo
and Diblo from those set forth in Section 5.9
or to approve any dividend or distribution not
in compliance with Section 5.9; (B) capital
expenditures or lease commitments over 15 mil-
lion United States dollars which were not in-
cluded in the annual budget previously ap-
proved; (C) entering any business other than
(I) the manufacture of beer, containers or
packaging materials therefor, (II) the produc-
tion of raw materials for the manufacture of
beer, containers or packaging materials, or
(III) the sale and distribution of beer; (D)
borrowing money, issuing guarantees or creating
liens or mortgages in excess of 15 million
United States dollars; (E) all pricing and
other policies for transactions between G-Mode-
lo or any G-Modelo Corporation, on the one
hand, and Procermex, Difa, Gondi, Tramo, Euroc-
66
<PAGE>
<PAGE>72
ermex, Iberocermex, Tapas, Promotora, Envases
or any other Subsidiary in which a Controlling
Shareholder has any ownership interest other
than through G-Modelo, on the other hand, to
assure that such transactions are carried out
at an arm's-length basis; provided, however,
-------- -------
that such approval shall not be withheld if the
resulting pricing for each such transaction is
at or below Market Price; and provided, fur-
-------- ----
ther, that such approval will be required with
----
respect to pricing or other policies for trans-
actions with Procermex only when they imply
changes to the pricing or policies for transac-
tion with Procermex existing as of March 24,
1993 (which policies are generally described in
Exhibit C hereto); (F) the annual appointment
of G-Modelo's external auditors, which shall be
one of the "Big 6" international accounting
firms; (G) entering into multi-year contracts
exceeding 15 million United States dollars in
the aggregate; (H) sales of assets exceeding 15
million United States dollars; (I) deviations
of over five percent that involve decisions by
management from the annual budget previously
approved; (J) any new license or sale of trade-
marks or technology or modification of same;
provided, however, that existing licensing
-------- -------
agreements may be renewed automatically without
such approval; and (K) closing a major produc-
tion facility.
(iii) Whenever any of the matters
described in (ii) above are to be approved by a
G-Modelo Corporation, such matter must first be
approved by a Qualified Vote of the G-Modelo
Board of Directors; provided, however, with re-
-------- -------
spect to the matters set forth in clause (A)
thereof, there shall be no Qualified Vote of
the G-Modelo Board of Directors required as
long as Section 5.9 is fully complied with.
(iv) The G-Modelo shareholders
may, only by a vote of 70 percent or more of
the outstanding shares of G-Modelo capital
stock entitled to vote at an Extraordinary
Meeting of Shareholders of G-Modelo, approve
(A) a merger, consolidation or spin-off involv-
67
<PAGE>
<PAGE>73
ing G-Modelo or a G-Modelo Corporation; (B) an
amendment to G-Modelo's charter or the Amended
G-Modelo By-laws; and (C) other company action
requiring shareholder approval at an Extraordi-
nary Meeting of Shareholders of G-Modelo.
(v) Except as otherwise provid-
ed in the Amended G-Modelo By-laws, all matters
requiring shareholder approval at an Ordinary
Meeting of Shareholders of G-Modelo shall be
done by a simple majority vote of the shares.
ARTICLE VIII
CONDITIONS TO THE INVESTOR'S OBLIGATIONS
----------------------------------------
The obligation of the Investor to consummate
the transactions contemplated by Article II shall be
subject to the satisfaction (or waiver) on or prior to
the Closing Date of all of the following conditions:
8.1. Representations, Warranties of the G-
-------------------------------------
Modelo Signatories. All representations and warranties
------------------
of the G-Modelo Signatories set forth in Article III
shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
8.2. No Prohibition. The consummation of the
--------------
transactions contemplated herein shall not be prohibited
or delayed by any order, decree or injunction of a court
of competent jurisdiction and there shall not have been
any action taken or any statute, rule or regulation or
order of any court or administrative agency enacted which
(a) prohibits or delays the Investor from consummating
the transactions contemplated hereby or (b) imposes any
material limitation on the ability of the Investor to
exercise full rights of ownership of the Series P-C
Shares or the Initial Diblo Shares.
68
<PAGE>
<PAGE>74
8.3. No Action. No action, suit or proceeding
---------
before any court or governmental or regulatory authority
shall be pending or threatened against A-B, A-BI or the
Investor or any of their Subsidiaries challenging the
validity or legality of the transactions contemplated by
this Agreement.
8.4. HSR Act. Each of A-B and G-Modelo and
-------
any other person (as defined in the HSR Act and the rules
and regulations thereunder) required in connection with
the transactions contemplated in this Agreement to file a
Notification and Report Form for Certain Mergers and
Acquisitions shall have made such filing and the applica-
ble waiting period with respect to each such filing shall
have expired or been terminated.
8.5. Certificates. The G-Modelo Signatories
------------
will furnish to the Investor such certificates and other
documents, instruments and writings to evidence the
fulfillment of the conditions set forth in Article IX as
the Investor may reasonably request.
8.6. Opinion. The G-Modelo Signatories will
-------
furnish to the Investor, the opinion of Santamarina Y
Steta in the form attached hereto as Exhibit D.
ARTICLE IX
CONDITIONS TO THE G-MODELO SIGNATORIES'
AND THE BANAMEX TRUST'S OBLIGATIONS
---------------------------------------
The obligations of the G-Modelo Signatories and
the Trustee on behalf of the Banamex Trust to consummate
the transactions contemplated in Article II shall be
subject to the satisfaction (or waiver) on or prior to
the Closing Date of all of the following conditions:
9.1. Representations and Warranties of A-B,
--------------------------------------
A-BI and the Investor. All representations and warran-
---------------------
ties of A-B, A-BI and the Investor set forth in Article
IV shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
69
<PAGE>75
9.2. No Prohibition. The consummation of the
--------------
transactions contemplated herein shall not be prohibited
or delayed by any order, decree or injunction of a court
of competent jurisdiction and there shall not have been
any action taken or any statute, rule or regulation or
order of any court or administrative agency enacted which
prohibits or delays the G-Modelo Signatories or the
Banamex Trust from consummating the transactions contem-
plated hereby.
9.3. No Action. No action, suit or proceeding
---------
before any court or governmental or regulatory authority
shall be pending or threatened against G-Modelo, any of
the G-Modelo Corporations, the Controlling Shareholders
or the Banamex Trust challenging the validity or legality
of the transactions contemplated by this Agreement.
9.4. HSR Act. Each of A-B and G-Modelo and
-------
any other person (as defined in the HSR Act and the rules
and regulations thereunder) required in connection with
the transactions contemplated in this Agreement to file a
Notification and Report Form for Certain Mergers and
Acquisitions shall have made such filing and the applica-
ble waiting period with respect to each such filing shall
have expired or been terminated.
9.5. Certificates. The Investor will furnish
------------
to the G-Modelo Signatories and the Trustee of the Banam-
ex Trust such certificates and other documents, instru-
ments and writings to evidence the fulfillment of the
conditions set forth in Article VIII as such parties may
reasonably request.
9.6. Opinion. The Investor will furnish to
-------
the Controlling Shareholders, the opinions of Stephen J.
Volland, Esq., Senior Associate General Counsel of A-B,
Skadden, Arps, Slate, Meagher & Flom and Creel, Garcia-
Cuellar y Muggenburg, in the forms attached hereto as
Exhibits E, F and G, respectively.
70
<PAGE>
<PAGE>76
ARTICLE X
INDEMNIFICATION
---------------
10.1. The Controlling Shareholders', G-Modelo
---------------------------------------
and Diblo Indemnification. Subject to the terms and
-------------------------
conditions of this Article X, the Controlling Sharehold-
ers shall, jointly and severally, indemnify, defend and
hold the Investor and its directors, officers, employees,
Subsidiaries and assigns (the "Investor Group") harmless
from and against any and all damages, liabilities, obli-
gations, claims, demands, judgments, settlements, costs
and expenses of any nature whatsoever, including reason-
able attorneys' fees (individually a "Loss" or collec-
tively "Losses"), directly or indirectly, asserted
against, resulting to, imposed upon or incurred by the
Investor Group or any member thereof, at any time after
the Closing Date and prior to the Expiration Date (as
defined in Section 13.1) by reason of or resulting from
any inaccuracy of any representation or warranty or any
breach or violation of any covenant or agreement of the
G-Modelo Signatories contained in this Agreement (collec-
tively, the "Investor Group Claims"); provided, however,
-------- -------
in the event that the Controlling Shareholders shall
fail, refuse or otherwise be unable to indemnify the
Investor Group to the full extent of its Losses (other
than as provided in the immediately succeeding sentence),
G-Modelo and Diblo shall, jointly and severally, indemni-
fy, defend and hold the Investor Group harmless from and
against any and all Losses which the Controlling Share-
holders shall have failed to indemnify the Investor Group
from. The provision for indemnification contained in
this Section 10.1 shall be operative and effective in
respect of Investor Group Claims (other than Investor
Group Claims by reason of or resulting from any inaccura-
cy of the representations or warranties set forth in
Sections 3.1, 3.2 and 3.4, as to which the limitations
contained in this sentence shall not be applicable and as
to which the Investor Group shall be indemnified to the
full extent of all such Investor Group Claims) only if
and to the extent the amount of such Investor Group
Claims exceeds 15 million United States dollars.
10.2. The Investor's Indemnification. Subject
------------------------------
to the terms and conditions of this Article X, the Inves-
tor shall indemnify, defend and hold the Controlling
Shareholders and G-Modelo and their directors, officers,
71
<PAGE>
<PAGE>77
employees, Subsidiaries and assigns (the "G-Modelo
Group") harmless from and against any and all Losses,
directly or indirectly, asserted against, resulting to,
imposed upon or incurred by the G-Modelo Group or any
member thereof, at any time after the Closing Date and
prior to the Expiration Date by reason of or resulting
from any inaccuracy of any representation or warranty or
any breach or violation of any covenant or agreement of
the Investor contained in this Agreement (collectively,
the "G-Modelo Group Claims" and together with the Inves-
tor Group Claims, the "Claims"). The provision for
indemnification by the Investor contained in this Section
10.2 shall be operative and effective in respect of
G-Modelo Group Claims only if and to the extent the
amount of such G-Modelo Group Claims (other than G-Modelo
Group Claims by reason of or resulting from any inaccura-
cy of the representation and warranty set forth in Sec-
tion 4.1, as to which the limitation contained in this
sentence shall not be applicable and as to which the G-
Modelo Group shall be indemnified to the full extent of
all such G-Modelo Group Claims) exceeds 15 million United
States dollars.
10.3. Conditions of Indemnification. The
-----------------------------
obligations and liabilities of the Controlling Sharehold-
ers and the Investor, as the case may be, under Sections
10.1 and 10.2 (herein referred to as the "Indemnifying
Party"), with respect to Claims made by third parties
shall be subject to the following terms and conditions:
(a) The person to whom such Claim relates
(the "Indemnified Party") will give the Indemnifying
Party prompt notice of such Claim, and the Indemnifying
Party will assume the defense thereof by representatives
chosen by it.
(b) If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to
assume the defense thereof, the Indemnified Party or any
other member of its group shall (upon further notice to
the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf
of and for the account and risk of the Indemnifying
Party, subject to the right of the Indemnifying Party to
assume the defense of such Claim at any time prior to the
settlement, compromise or final determination thereof.
72
<PAGE>
<PAGE>78
(c) Anything in this Section 10.3 to the
contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely
affect the Indemnified Party or any other member of the
Indemnified Party's group other than as a result of money
damages or other money payments, the Indemnified Party or
such member of the Indemnified Party's group shall have
the right to defend, at its own cost and expense, and to
compromise or settle such Claim with the consent of the
Indemnifying Party and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an uncon-
ditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party or such member of the
Indemnified Party's group, or both, a release from all
liability in respect of such Claim.
10.4. Remedies Cumulative. The remedies
-------------------
provided herein shall be cumulative and shall not pre-
clude assertion by any of the parties hereto of any other
rights or the seeking of any other remedies against any
other party hereto.
ARTICLE XI
TERMINATION PRIOR TO CLOSING
----------------------------
11.1. Termination. This Agreement may be
-----------
terminated at any time prior to the Closing:
(a) by mutual written consent of A-B and
the Controlling Shareholders;
(b) by either the Controlling Sharehold-
ers or A-B in writing, without liability to the terminat-
ing party on account of such termination (provided the
terminating party is not otherwise in default or in
breach of this Agreement), if the Closing shall not have
occurred on or before December 31, 1993; or
(c) by either the Controlling Sharehold-
ers or A-B in writing, without liability to the terminat-
ing party on account of such termination (provided the
terminating party is not otherwise in default or in
breach of this Agreement), if A-B, A-BI and the Investor
73
<PAGE>79
or the Controlling Shareholders, respectively, shall (i)
fail to perform in any material respect its covenants and
agreements contained herein required to be performed
prior to the Closing Date, or (ii) materially breach any
of their representations, warranties or covenants con-
tained herein if such breach would cause a condition to
the obligation of the terminating party to close not to
be satisfied and if such failure to perform or breach has
not been waived by the terminating party; provided,
--------
however, that a party's right to indemnification hereun-
-------
der shall not be affected by such party's waiver of its
right of termination pursuant to this Section 11.1 if
such right of termination arises from a willful breach of
this Agreement.
11.2. Procedure and Effect of Termination. In
-----------------------------------
the event of termination of this Agreement and abandon-
ment of the transactions contemplated hereby by either of
the parties pursuant to Section 11.1, written notice
thereof shall forthwith be given to all other parties,
and this Agreement shall terminate (other than Sections
5.1(b), 13.8, 13.9, 13.10, 13.11, 13.12 and Article XII)
and the transactions contemplated hereby shall be aban-
doned, without further action by any of the parties
hereto. If this Agreement is terminated as provided
herein:
(a) upon request therefor, each of the
parties hereto will redeliver all documents, work papers
and other material of the other parties relating to the
transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing
the same;
(b) no party hereto shall have any lia-
bility or further obligation to any other party to this
Agreement pursuant to this Agreement except as stated in
this Section 11.2; and
(c) all filings, applications and other
submissions made pursuant to the terms of this Agreement
shall, to the extent practicable, be withdrawn from the
agency or other Person to which made.
74
<PAGE>
<PAGE>80
ARTICLE XII
DISPUTE RESOLUTION
------------------
12.1. Arbitration. In the event of a dispute
-----------
among the parties with respect to the validity, intent,
interpretation, performance, enforcement or arbitrability
of any of the terms contained in this Agreement or any
claim arising out of or in connection with this Agree-
ment, except for disputes or claims involving the types
of matters set forth in Section 12.2, such dispute or
claim shall promptly be submitted for resolution to the
Board of Directors of G-Modelo. If the G-Modelo Board of
Directors, by a Qualified Vote, shall be unable to re-
solve the dispute within 30 days, the Controlling Share-
holders shall appoint a Controlling Shareholder Nominee
and the Investor shall appoint an Investor Nominee to a
special committee. The members of the special committee
shall use their best efforts to reach an amicable resolu-
tion of the dispute and any mutually acceptable resolu-
tion shall be deemed final and binding and shall be
implemented as soon as practicable. If the special
committee is unable to resolve the dispute within 30 days
after its appointment or, if either the Controlling
Shareholders or A-B shall have failed to appoint a repre-
sentative to the special committee, within 30 days after
either the Controlling Shareholders or A-B has appointed
its representative, the matter shall be submitted for
final resolution to an international arbitration panel
consisting of three arbitrators selected as follows: the
Chairman of A-B shall select one arbitrator; a majority
of the Controlling Shareholders shall select one arbitra-
tor; and the two arbitrators so appointed shall select a
third arbitrator. The third arbitrator shall be the
presiding arbitrator and may not be a citizen or resident
of either the United States or Mexico and must be unaf-
filiated with the parties hereto. In the event either
the Controlling Shareholders or A-B shall have failed to
select an arbitrator within 15 days after either the
Controlling Shareholders or A-B has selected its arbi-
trator or the two arbitrators so selected shall fail to
agree on a third arbitrator, such arbitrator shall be
selected by the United States Representative of the
International Chamber of Commerce. The place of arbitra-
tion shall be New York City, in the State of New York,
the United States of America. All arbitrators shall be
fluent in both the English and Spanish languages and
75
<PAGE>
<PAGE>81
their award shall be rendered in English. The English
language shall be used in all documents, briefs, evidence
and any other writings submitted to the arbitration
panel. All arbitration proceedings shall be conducted in
the English language. The arbitration procedure set
forth in this Section 12.1 shall be the sole and exclu-
sive means of settling or resolving any dispute referred
to in this Section 12.1. The arbitration shall be con-
ducted in accordance with the UNCITRAL Arbitration Rules
then in effect, as modified herein. The award of the
arbitrators shall be final and binding on the parties and
may be presented by any of the parties for enforcement in
any court of competent jurisdiction and the parties
hereby consent to the jurisdiction of such court solely
for purposes of enforcement of this arbitration agreement
and any award rendered hereunder. In any such enforce-
ment action, irrespective of where it is brought, none of
the parties will seek to invalidate or modify the deci-
sion of the arbitrators or otherwise to invalidate or
circumvent the procedures set forth in this Section 12.1
as the sole and exclusive means of settling or resolving
such dispute, including by appeal to any court which
would otherwise have jurisdiction in the matter. The
fees of the arbitrators and the other costs of such
arbitration shall be borne by the parties in such propor-
tions as shall be specified in the arbitration award.
12.2. Business Disagreements.
----------------------
(a) In the event that at any time follow-
ing the Closing there is a Fundamental Business Disagree-
ment (as hereinafter defined), the Investor shall have
the right to require (the "Dispute Right") that the
Controlling Shareholders purchase all, but not less than
all, of the shares of G-Modelo capital stock and the
Diblo Common Shares then owned, directly or indirectly,
by the Investor and its authorized designees, if any
(such aggregate number of shares being referred to herein
as the "Investor Shares"), at an aggregate purchase price
(the "Investor Share Price") equal to the aggregate
purchase price paid by the Investor and its authorized
designees, if any, for the Investor Shares, payable in
United States dollars in immediately available funds.
The Investor shall exercise the Dispute Right by delivery
of a written notice (the "Dispute Notice") to the Con-
trolling Shareholders in accordance with Section 13.10
indicating that (i) there exists a Fundamental Business
76
<PAGE>
<PAGE>82
Disagreement, (ii) the number of Investor Shares to be
purchased by the Controlling Shareholders, (iii) the
Investor Share Price, and (iv) the date and time fixed
for the consummation of such sale (which date shall not
be less than twenty nor more than forty days following
the date of the Investor Notice).
(b) In the event that the Controlling
Shareholders fail, refuse or are otherwise unable or un-
willing to purchase the Investor Shares pursuant to
subsection (a) above, the Controlling Shareholders shall
notify the Investor (the "Controlling Shareholder Re-
sponse Notice") of such determination within fifteen days
following the date of the Dispute Notice, and the Inves-
tor shall have the right to purchase all, but not less
than all, of the shares of G-Modelo capital stock and
Diblo Common Shares then owned by the Controlling Share-
holders or held in trust for the benefit of the Control-
ling Shareholders (the "Controlling Shareholder Shares")
at an aggregate purchase price equal to the product of
(i) the number of Controlling Shareholder Shares and (ii)
that fraction having the Investor Price as the numerator
and the aggregate number of Investor Shares as the denom-
inator, payable in United States dollars in immediately
available funds. The Investor shall notify the Control-
ling Shareholders (the "Investor Response Notice") of its
intention with respect to the purchase of the Controlling
Shareholder Shares within fifteen days following the date
of the Controlling Shareholder Response Notice. In the
event the Investor elects to purchase the Controlling
Shareholder Shares, the Investor Response Notice shall
specify the date and time fixed for the consummation of
such purchase (which date shall not be less than ten nor
more than forty days following the Controlling Sharehold-
er Response Notice).
(c) For purposes of this Section 12.2, a
"Fundamental Business Disagreement" shall mean a dis-
agreement between A-B and the Controlling Shareholders
over fundamental business direction, e.g., change in the
charter or by-laws, change in dividend policy, corporate
objectives, etc., including, but not limited to, dis-
agreements relating to those matters with respect to
which the Investor has minority shareholder protection as
identified in Section 7.2.
77
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<PAGE>83
ARTICLE XIII
MISCELLANEOUS
-------------
13.1. Survival of Representations, Warranties
---------------------------------------
and Covenants. All representations and warranties of the
-------------
parties hereto contained in this Agreement shall survive
the Closing Date, regardless of any investigation made by
the parties hereto, for a period ending on the third
anniversary of the Closing Date, except that the repre-
sentations and warranties set forth in Sections 3.1, 3.2,
3.3, 3.4 and 4.1 shall survive indefinitely and the
representations and warranties set forth in Section 3.13
and, to the extent the representations and warranties set
forth in Section 3.8 relate to liabilities for Taxes,
Section 3.8 shall survive until the later of the applica-
ble statutes of limitation or the final resolution of all
issues arising under Section 3.13 and Section 3.8. The
covenants and agreements contained herein to be performed
or complied with after the Closing shall survive without
limitation as to time, unless the covenant or agreement
specifies a term, in which case such covenant or agree-
ment shall survive for a period of three years following
the expiration of such specified term and shall thereupon
expire. The respective expiration dates for the survival
of the representations and warranties and the covenants
shall be referred to herein as the "Expiration Date."
13.2. Entire Agreement. This Agreement,
----------------
including the Exhibits and disclosure schedules hereto
and the other agreements, documents and instruments
referred to herein constitute the sole understanding of
the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings of the
parties hereto with respect to the transactions contem-
plated by this Agreement, including without limitation
the Heads of Agreement.
13.3. Successors and Assigns. The terms and
----------------------
conditions of this Agreement shall inure to the benefit
of and be binding upon the respective parties hereto and
their respective successors and permitted assigns; pro-
----
vided, however, that neither this Agreement nor any of
----- -------
the rights, obligations or interests hereunder shall be
assigned by any party without the prior written consent
of the other parties hereto; and provided, further, that
-------- -------
no assignment of this Agreement or any of the rights,
78
<PAGE>
<PAGE>84
obligations or interests hereof shall relieve the assign-
or of its obligations under this Agreement. Notwith-
standing anything to the contrary contained in this
Section 13.3, each of A-B, A-BI and the Investor may
assign any or all of its rights or obligations hereunder
to each other or to a Subsidiary without the prior writ-
ten consent of the G-Modelo Signatories; provided, howev-
-------- ------
er, that such Subsidiary shall agree in writing to be
--
bound by the terms and conditions of this Agreement, that
such assignment shall in no way limit or relieve any of
them of any of their obligations hereunder and that such
Subsidiary remains a Subsidiary of A-B.
13.4. Counterparts. This Agreement may be
------------
executed in counterparts, each of which shall for all
purposes be deemed to be an original and all of which
shall, taken together, constitute the same instrument.
13.5. Interpretation. The table of contents
--------------
and article and section headings contained in this Agree-
ment are solely for reference, shall not be deemed to
constitute part of this Agreement, and shall not affect
the interpretation hereof.
13.6. Amendment and Modification. Subject to
--------------------------
applicable law, this Agreement may be amended, modified
or supplemented only by written agreement of each of the
parties hereto with respect to any of the terms contained
herein.
13.7. Waiver of Compliance; Consents. Except
------------------------------
as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, cove-
nant, agreement or condition herein may be waived by the
parties entitled to the benefits thereof only by a writ-
ten instrument signed by such parties granting such
waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. When-
ever this Agreement requires or permits consent by or on
behalf of any of the parties hereto, such consent shall
be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in
this Section 13.7.
79
<PAGE>85
13.8. Broker's Fees. Each of A-B, A-BI, the
-------------
Investor, the G-Modelo Signatories, the Banamex Trust and
the Option Trust (a) represents and warrants that, it has
not taken and will not take any action that would cause
the other parties to have any obligation or liability to
any Person for a finder's or broker's fee, and (b) agrees
to indemnify the other parties for breach of the forego-
ing representation and warranty, whether or not the
Closing occurs.
13.9. Expenses. Whether or not the transac-
--------
tions contemplated hereby are consummated, each of the
Controlling Shareholders, G-Modelo, the G-Modelo Corpora-
tions, A-B, A-BI and the Investor shall pay all costs and
expenses incurred by it, or on its behalf, in connection
with this Agreement and the transactions contemplated
hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consul-
tants, accountants and counsel.
13.10. Notices. Any notice, request, instruc-
-------
tion or other document permitted or required to be given
hereunder by any party hereto to any other party shall be
in writing and delivered personally or by facsimile
transmission or sent by registered or certified mail,
postage prepaid, as follows:
if to G-Modelo or a G-Modelo Corporation, to:
Grupo Modelo, S.A. de C.V.
Campos Eliseos 400
11000 Mexico, D.F.
Attention: Chairman of the Board
Telephone No.: 011-52-5-281-0114
Facsimile No.: 011-52-5-280-5322
with a copy to:
Santamarina Y Steta, S.C.
Edif. "Omega"
Campos Eliseos 345, 2nd Floor
Col. Chapultepec Polanco
11560 Mexico, D.F.
Attention: Lic. Agustin Santamarina
Telephone No.: 011-52-5-281-4198
Facsimile No.: 011-52-5-280-6226
80<PAGE>
<PAGE>86
if to a Controlling Shareholder, to such
Controlling Shareholder:
c/o Grupo Modelo, S.A. de C.V.
Campos Eliseos 400
11000 Mexico, D.F.
Attention: Chairman of the Board
Telephone No.: 011-52-5-281-0114
Facsimile No.: 011-52-5-280-5322
with a copy to:
Santamarina Y Steta, S.C.
Edif. "Omega"
Campos Eliseos 345, 2nd Floor
Col. Chapultepec Polanco
11560 Mexico, D.F.
Attention: Lic. Agustin Santamarina
Telephone No.: 011-52-5-281-4198
Facsimile No.: 011-52-5-280-6226
if to A-B, A-BI or the Investor, to:
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
Attention: Vice President and General
Counsel
Telephone No.: 95-314-577-2000
Facsimile No.: 95-314-577-0776
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: J. Michael Schell, Esq.
Telephone No.: 95-212-735-3000
Facsimile No.: 95-212-735-2001
with a further copy to:
Creel, Garcia-Cuellar Y Muggenburg
Bosque de Ciruelos 304, Piso 2
Bosque de Las Lomas
11700 Mexico, D.F.
Attention: Lic. Samuel Garcia-Cuellar
81
<PAGE>
<PAGE>87
Telephone No.: 011-52-5-596-1017
Facsimile No.: 011-52-5-596-3309
if to the Option Trustee or the Banamex Trust-
ee, to:
Banco Nacional de Mexico, S.A., Trust
Division
Paseo de la Reforma No. 404, 14th Floor
Col. Juarez
06600 Mexico, D.F.
Attention: Sr. Eduardo Alvarez Morales
Sr. Fernando Montes de Oca
Telephone No.: 011-52-5-225-9733
Facsimile No.: 011-52-5-225-9751
or at such other address for a party as shall be speci-
fied by like notice. Any notice which is delivered
personally in the manner provided herein or by facsimile
transmission shall be deemed to have been duly given to
the party to whom it is directed upon actual receipt by
such party. Any notice which is addressed and mailed in
the manner herein provided shall be conclusively presumed
to have been duly given to the party to which it is
addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed
in the mail.
13.11. Governing Law. This Agreement shall be
-------------
construed in accordance with and governed by the laws in
force in the United Mexican States without regard to the
conflict of laws provisions thereof.
13.12. Public Announcements. Except as may be
--------------------
required by law, none of the parties hereto shall make
and the Controlling Shareholders shall ensure that no G-
Modelo Corporation makes any public statements, includ-
ing, without limitation, any press release, with respect
to this Agreement or the transactions contemplated hereby
without prior consultation and opportunity to comment
being afforded to the other parties.
82
<PAGE>
<PAGE>88
IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be duly executed on its
behalf as of the date first above written.
ANHEUSER-BUSCH COMPANIES, INC.
By: s/AUGUST A. BUSCH III
--------------------------
Name:
Title:
ANHEUSER-BUSCH INTERNATIONAL, INC.
By: s/JOHN H. PURNELL
---------------------------
Name:
Title:
ANHEUSER-BUSCH INTERNATIONAL
HOLDINGS, INC.
By: s/JESSE AGUIRRE
----------------------------
Name:
Title:
GRUPO MODELO, S.A. de C.V.
By: s/ANTONINO FERNANDEZ R.
----------------------------
Name:
Title:
DIBLO, S.A. de C.V.
By: s/ANTONINO FERNANDEZ R.
----------------------------
Name:
Title:
83
<PAGE>
<PAGE>89
BANCO NACIONAL DE MEXICO, S.A.,
AS TRUSTEE OF THE OPTION TRUST
By: s/LIC EDUARDO ALVAREZ MORALES
----------------------------
Lic. Eduardo Alvarez Morales, as
trustee delegate u/a dated June
11, 1993
By: s/FERNANDO MONTES DE OCA
----------------------------
Fernando Montes de Oca, as trustee
delegate u/a dated June 11, 1993
BANCO NACIONAL DE MEXICO, S.A., AS
TRUSTEE OF THE BANAMEX TRUST
By: s/LIC EDUARDO ALVAREZ MORALES
----------------------------
Lic. Eduardo Alvarez Morales, as
trustee delegate u/a dated June
11, 1993.
By: s/FERNANDO MONTES DE OCA
----------------------------
Fernando Montes de Oca, as trustee
delegate u/a dated June 11, 1993
s/ANTONINO FERNANDEZ R.
--------------------------------
Antonino Fernandez R., on his own
behalf and as a member of the te-
chnical committee of the Control
Trust
s/PABLO ARAMBURUZABALA
--------------------------------
Pablo Aramburuzabala, on his own
behalf and as a member of the te-
chnical committee of the Control
Trust
s/NEMESIO DIEZ R.
--------------------------------
Nemesio Diez R., on his own behalf
and as a member of the technical
committee of the Control Trust
84
<PAGE>
<PAGE>90
s/JUAN SANCHEZ-NAVARRO Y P.
----------------------------------
Juan Sanchez-Navarro y P., on his
own behalf and as a member of the
technical committee of the Control
Trust
s/VALENTIN DIEZ M.
----------------------------------
Valentin Diez M., on his own be-
half and as a member of the tech-
nical committee of the Control
Trust
s/PABLO GONZALEZ DIEZ
----------------------------------
Pablo Gonzalez Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/LUIS GONZALEZ DIEZ
----------------------------------
Luis Gonzalez Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/CESAREO GONZALEZ DIEZ
----------------------------------
Cesareo Gonzalez Diez, on his own
behalf and as a member of the
technical committee of the Control
Trust
s/THELMA YATES VDA DE ALVAREZ LOYO
----------------------------------
Thelma Yates Vda. de
Alvarez Loyo
85
<PAGE>91
s/EUSICINIA GONZALEZ DIEZ
--------------------------------
Eusicinia Gonzalez Diez
s/ROSARIO GONZALEZ DIEZ
--------------------------------
Rosario Gonzalez Diez
s/MA PAULINA GONZALEZ DIEZ
--------------------------------
Ma. Paulina Gonzalez Diez
s/ELEUTERIA GONZALEZ DIEZ
--------------------------------
Eleuteria Gonzalez Diez
s/LAURENTINO GARCIA GONZALEZ
--------------------------------
Laurentino Garcia Gonzalez
s/MA ANTONIA GARCIA GONZALEZ
--------------------------------
Ma. Antonia Garcia Gonzalez
s/MA TERESA GARCIA GONZALEZ
--------------------------------
Ma. Teresa Garcia Gonzalez
86
<PAGE>1
EX-10.20
January 24, 1994
Antonino Fernandez R.
Grupo Modelo, S.A. de C.V.
Campos Eliseos 400
11000 Mexico, D.F.
Dear Don Antonino:
This letter shall serve to confirm the understanding and agreement between A-B
and the Controlling Shareholders regarding Section 5.5 of the Investment
Agreement, which reads as follows:
"5.5 Election of A-B Director. The Controlling Shareholders shall be
------------------------
entitled to designate a G-Modelo director for election to the A-B
Board of Directors. Following such designation, A-B will use its
best efforts to nominate and cause such designee to be elected to
the A-B Board of Directors at the Annual Meeting of Shareholders
of A-B next succeeding such designation and to continue to
nominate and cause such a designee to be elected for so long as
the Investor owns ten percent or more of the total outstanding
shares of G-Modelo capital stock."
It is acknowledged and agreed that Anheuser-Busch fulfilled its obligations
under Section 5.5 when Pablo Aramburuzabala was appointed to the A-B Board as
a Class 1 Director, with a term continuing until the Annual Meeting of
Shareholders in 1995. A-B will use its best efforts to cause Pablo
Aramburuzabala (or another designee of the Controlling Shareholders) to be
nominated and elected to the A-B Board at the Annual Meeting of Shareholders
in 1995 and future years as long as the Investor owns ten percent or more of
the total outstanding shares of G-Modelo capital stock.
Capitalized terms used in this letter shall have the meaning given such terms
in the Investment Agreement.
Please indicate the Controlling Shareholders' agreement with the foregoing by
signing and returning the attached copy.
Sincerely,
ANHEUSER-BUSCH COMPANIES, INC.
S/JOHN H. PURNELL
- - - --------------------------------------------
John H. Purnell, Vice President and Group Executive
ACKNOWLEDGED AND AGREED as of the date above.
s/ANTONINO FERNANDEZ R.
- - - ---------------------------------------------
Antonino Fernandez R., on behalf of
the Controlling Shareholders
<PAGE>1
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
INTRODUCTION
This discussion summarizes the significant factors
affecting the consolidated operating results, financial
condition and liquidity/cash flows of Anheuser-Busch
Companies, Inc. during the three-year period ended
December 31, 1993. This discussion should be read in
conjunction with the Letter to Shareholders, financial
statements and financial statement footnotes included
in this annual report.
Two unusual occurrences had negative impacts on the THE PROFITABILITY
company's 1993 earnings. In September 1993, the company PROGRAM IS EXPECTED
announced a Profitability Enhancement Program which TO GENERATE COST
includes significant organizational and operational SAVINGS OF MORE
changes to improve sales and profitability. The Program THAN $100 MILLION
includes the following elements: A YEAR BY 1997.
- An enhanced retirement program for salaried
employees
- The write-down of underperforming assets and
investments
- The restructuring and reorganization of the company
This Program is expected to generate cost savings of
more than $100 million in 1994 and $400 million a year
by 1997.
The restructuring and reorganization element of
the Program includes the following initiatives
designed to increase efficiencies and reduce
operating costs:
- Brewery modernization programs based on the
successful practices employed at the company's
newer breweries. Such Programs include increased
employee involvement to improve quality and
efficiency throughout the entire 13-brewery
system.
- Relocation of the company's food products
operations to St. Louis. Additionally, bakery
facilities will be modernized and consolidated.
The Program is also designed to improve sales of the
company's premium beer products through aggressive
advertising and the introduction of new products. The
company's newest product, Ice Draft from Budweiser,
was rolled out nationwide in January 1994.
As a result of the Program, the company recognized
a $565 million ($1.26 per share) restructuring charge
during the third quarter 1993. Further information
concerning the details of the restructuring charge is
included in Note 2 to the Consolidated Financial
Statements.
Additionally, the Revenue Reconciliation Act of
1993, signed into law during the third quarter 1993,
increased the corporate federal statutory income tax
rate by one percentage point retroactive to January 1,
1993. This retroactive income tax rate increase
resulted in a $33 million, or $.12 per share, non-
recurring after-tax, non-cash charge related to
revaluation of the deferred tax liability in accordance
with Financial Accounting Standard No. 109 (FAS 109)-
Accounting for Income Taxes.
The non-recurring restructuring charge and the non-
recurring deferred tax revaluation charge distort
comparability of 1993 and 1992 reported financial
results. To facilitate evaluation and understanding
of the company's 1993 financial results, key financial
comparisons affected by these charges are disclosed in
this discussion both including and excluding the charges.
Earnings for 1992 were impacted by the adoption of
new accounting principles. Effective January 1, 1992 as
discussed in Note 3 to the Consolidated Financial
Statements, the company adopted the financial accounting
standards for postretirement benefits (FAS 106) and
income taxes (FAS 109). The company elected to immediately
recognize the cumulative effect of adoption of FAS 106/109
pertaining to years prior to 1992 through a one-time
cumulative effect adjustment which decreased 1992 net
income and earnings per share by $76.7 million and $.26,
respectively. These amounts are separately identified in
the company's consolidated 1992 income statement.
Implementation of FAS 106 in 1992 was based on benefit
levels in effect at the time of adoption. Certain changes
to these benefit levels were implemented in 1993, thereby
reducing the FAS 106 pretax expense amount in 1993 as
compared to 1992 by $27.0 million to $48.3 million.
32
<PAGE>2
OPERATIONS
SALES
Anheuser-Busch Companies, Inc. achieved record gross
sales during 1993 of $13.19 billion, an increase of
$123 million or nine-tenths of one percent (.9%) over
1992 gross sales of $13.06 billion. Gross sales for
1992 were 3.4% higher than 1991. Gross sales for 1991
were $12.63 billion, an increase of 8.8% over 1990.
However, gross sales for 1991 are not comparable
[PHOTO] to 1990 as a result of the 100% increase in the federal
excise tax on beer effective January 1, 1991. Gross
sales includes $1.68 billion, $1.67 billion and $1.64
billion, respectively, in federal and state excise
taxes for 1993, 1992 and 1991.
Net sales for 1993 were also a record $11.51 billion,
an increase of $111.6 million or one percent (1.0%)
over 1992 net sales of $11.39 billion. Net sales for
1992 were 3.6% higher than 1991. Net sales during 1991
were $11.0 billion, an increase of 2.4% over 1990.
The increase in gross and net sales in 1993 as
compared to 1992 was due to higher beer volume sales
as well as higher sales by the company's entertainment
subsidiaries. Net revenue per barrel declined
approximately 1% in 1993 due primarily to competitive
pricing, brand and packaging mix shifts and geographic
trends. Additionally, beer pricing was very competitive
in 1993 as competitive promotional activity increased
due to modest industry growth and efforts to protect
volume impacted by a weak economy in key beer-selling
states.
Anheuser-Busch, Inc., the company's brewing
subsidiary and largest contributor to consolidated
sales and profits, sold an industry record of 87.3
million barrels of beer in 1993, an increase of one-
half of one percent (.5%) compared to 1992 beer volume
of 86.8 million barrels. The company's 1993 beer volume
gains, built from the largest volume base in the
industry, were achieved despite the continued severe
economic weakness in key selling areas along the West
Coast.
[SALES GRAPH] In April 1993, the company instituted the "Proud To
Be Your Bud" campaign featuring new advertising and
merchandising programs and a wholesaler sales
incentive program designed to increase premium beer
sales. The success of this campaign has contributed
to an overall beer sales-to-retailers increase of
more than 1.5% from May through December versus the
same period last year.
Considering the competitive conditions in the beer
industry, the company's premium beer brands performed
well during 1993. Budweiser continues to dominate
across all demographic segments. Bud Light had
another excellent year in 1993 with double-digit
growth. Bud Light continues to outpace its major
competitor and is well-positioned to become the
leading light-beer brand in the United States.
In October 1993, Anheuser-Busch introduced a new
premium product-Ice Draft from Budweiser-to consumers
in the western United States. The company completed
the national rollout of Ice Draft in January 1994.
During 1993, the company's sales and volume growth
was impacted by slower regional economic recovery
which generated more intensive price competition in
key markets. During 1994, the company plans to
enhance premium brand volume growth through
aggressive marketing, the national rollout of Ice
Draft and price increases below the consumer price
index.
The company's 1994 quarterly beer sales volume
growth is not expected to follow a consistent
pattern. First quarter beer volume will increase more
significantly compared to 1993 due to the rollout of
Ice Draft and higher planned inventory levels.
Consistent with past practice, wholesaler inventory
levels will be raised prior to the February 28
expiration of the labor contract affecting the
majority of the company's beer production employees.
Negotiations are progressing, and the company expects
to reach final agreement with the union soon.
33
<PAGE>
<PAGE>3
FINANCIAL REVIEW
The increase in gross and net sales in 1992 as
compared to 1991 was due to higher beer volume,
higher revenue per barrel and higher sales by
the company's food products and entertainment
subsidiaries.
The increase in gross and net sales in 1991 as
compared to 1990 was due to higher revenue per
barrel and higher sales by the company's food
products subsidiaries.
Beer volume sales for 1992 were a one percent
increase over 1991 beer volume of 86.0 million ANHEUSER-BUSCH, INC.
barrels. This increase was achieved despite poor MAINTAINED ITS MARKET
economic conditions and the second-coolest summer SHARE IN 1993, WITH
in two decades. SALES VOLUME REPRESENT-
The company's 1991 beer sales volume was ING APPROXIMATELY 44.3%
86.0 million barrels, a slight decrease of OF TOTAL BREWING
462,000 barrels, or five-tenths of a percent, INDUSTRY SALES IN THE
compared to 1990 beer volume of 86.5 million U.S.
barrels. The sales volume decline was due
to higher beer prices to consumers reflecting
the 100% increase in the federal excise tax
effective January 1, 1991. The company's sales
volume decline in 1991 was considerably less
than the 2.0% volume decline for the brewing
industry as a whole.
Anheuser-Busch, Inc. maintained its market
share in 1993, with sales volume representing
approximately 44.3% of total brewing industry
sales in the U.S. (including imports and
nonalcohol brews), as estimated based on
information provided by The Beer Institute.
The 1992 market share amount was four-tenths of
one percent (.4%) of a share point higher than
1991. Market share for 1991 was 43.9%, a
five-tenths of one percent (.5%) share point
increase over 1990. Anheuser-Busch has led the
brewing industry in market share every year
since 1957.
The company began production at its 13th
brewery in the spring of 1993 in Cartersville, Ga.
The Cartersville brewery is the most modern
and efficient of the company's breweries and is
currently operating at approximately one-half its
ultimate capacity. When fully operational,
the Cartersville brewery will be able to provide
up to 6.5 million barrels of capacity. [TOTAL PAYROLL COST
GRAPH]
COST OF PRODUCTS AND SERVICES
Cost of products and services for 1993 was
$7.42 billion, a 1.5% increase over the $7.31
billion amount reported for 1992. This increase
follows a 2.2% and .8% increase in 1992 and 1991,
respectively. These increases primarily relate
to higher production costs for the company's
brewing subsidiary and other beer-related
operations, higher attendance at the company's
entertainment operations in 1993 and higher
sales of the company's food products
subsidiaries. The increase in 1992 over 1991 is
also due to the 1992 adoption of FAS 106. Such
increases, however, have been partially
offset by the company' ongoing productivity
improvement and cost reduction programs as well
as favorable packaging costs.
As a percent of net sales, cost of products and
services was 64.5% in 1993 as compared to 64.2%
in 1992 and 65.0% in 1991.
MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES
Marketing, distribution and administrative expenses
for 1993 were $2.31 billion, even with 1992 levels.
Expenses for 1993 benefited from lower postretirement
medical costs and the divestiture of the company's
Newark wholesale operation. The 1993 level compares to
increases of 8.6% for 1992 and 3.7% for 1991.
Marketing, distribution and administrative expenses
increased in 1992 and 1991 as a result of the higher
level of marketing activity, continuing development of
new products and beer brands together with related new
advertising and marketing programs, the intro-
34<PAGE>
<PAGE>4
duction of new entertainment attractions, and the
adoption of FAS 106 in 1992. Areas significantly
affected by these factors since 1990 include media
advertising, point-of-sale materials and developmental
expenses associated with new advertising and marketing
programs for established as well as new products,
payroll and related costs, business taxes,
depreciation, supplies, and general operating
expenses.
[PHOTO] TAXES AND PAYROLL COSTS
The company is significantly impacted by federal,
state and local taxes. Taxes applicable to 1993
operations (not including the many indirect taxes
included in materials and services purchased) totaled
$2.41 billion and highlight the burden of taxation on
the company and the brewing industry in general. Taxes
for 1993 decreased $149.3 million or 5.8% over 1992
taxes of $2.56 billion. This decrease follows
increases of 3.5% in 1992 and 53.1% in 1991.
The decrease in total taxes for 1993 is due primarily
to the company's lower earnings level as a result of
the restructuring charge offset partially by an
increase in beer sales volume, the FAS 109 deferred
tax revaluation adjustment and the 1% increase in the
federal statutory income tax rate effective January 1,
1993. The increase for 1992 over 1991 results
principally from the company's increase in beer sales
volume and higher earnings level. The increase in
total taxes for 1991 over 1990 substantially results
from increased beer excise taxes related to the 100%
increase in the federal excise tax on beer effective
January 1, 1991.
Payroll costs during 1993 totaled $2.48 billion, an
increase of $46.2 million or 1.9% over 1992 payroll
costs of $2.44 billion. Payroll costs increased 6.7%
in 1992 and 4.4% in 1991. The increase in payroll
costs reflects the 1992 adoption of FAS 106 and normal
increases in salary and wage rates and benefit costs.
Payroll costs for 1993 exclude severance pay and other
costs associated with the company's enhanced
retirement program.
[OPERATING INCOME Salaries and wages paid during 1993 totaled $1.97
GRAPH] billion. Pension, life insurance and health care
benefits amounted to $333.8 million and payroll taxes
were $174.7 million. Employment at December 31, 1993
was 43,345 compared to 44,790 at December 31, 1992,
reflecting approximately 1,200 employees who accepted
the enhanced retirement program.
At the time of publication of this annual report, the
company's national labor contract with the Brewery
Conference of the International Brotherhood of
Teamsters, representing the majority of brewery
workers, was scheduled to expire February 28, 1994. The
company and union representatives have been negotiating
the terms of a new labor contract for the past several
months, substantive progress has been made, and the
company anticipates that a final agreement with the
union will be reached.
OPERATING INCOME
Operating income, the measure of the company's
financial performance before interest costs and other
non-operating items, was impacted by the $565 million
restructuring charge. Therefore, operating income was
$1.21 billion for 1993, a decline of 31.8% compared to
1992 operation income of $1.78 billion. Excluding the
restructuring charge, operating income for 1993 and
1992 was $1.78 billion. Operating income for 1992 was
$1.78 billion, an increase of 3.1% over 1991. Operating
income was $1.72 billion in 1991, representing an
increase of 7.7% over the previous year. Operating
income as a percent of net sales was 10.5% in 1993
(15.4% excluding the restructuring charge) as compared
to 15.6% in 1992 and 15.7% in 1991.
35
<PAGE>
<PAGE>5
FINANCIAL REVIEW [NET INCOME/DIVIDENDS
ON COMMON STOCK
NET INTEREST COST/INTEREST CAPITALIZED GRAPH]
Net interest cost, or interest expense less
interest income, was $202.6 million in 1993,
an increase of $10.1 million (or 5.3%) when
compared to 1992 net interest cost of $192.5
million. Net interest cost in 1991 was $229.3
million. The increase in net interest cost
during 1993 is due primarily to higher
average debt balances outstanding during
the year ended December 31, 1993, primarily
as a result of financing international brewing
investments.
The decrease in net interest cost in 1992 and 1991
is due primarily to lower average debt balances out-
standing each year and a $502.2 million, or 16.0%,
reduction in total debt during the year ended
December 31, 1991. Specific information regarding
company financing (including the level of debt
activity and the leveraged ESOP) and the company's
capital expenditure program is presented in the
Liquidity and Capital Resources section of this
discussion.
Interest capitalized declined $11.0 million in
1993 as compared to 1992. The decline in interest
capitalized in 1993 is primarily related to the
1993 start-up of the company's new brewery in
Cartersville, Ga., which resulted in the cessation
of interest capitalization on the completed phase
of this major capital investment. It is anticipated
that capitalized interest in 1994 will be below 1993
levels as a result of the Cartersville brewery start-
up and continued low interest rates.
Interest capitalized increased $1.2 million in
1992 as compared to 1991. This compares to an $8.1
million decline in 1991 compared to 1990. Interest
capitalized fluctuates from year to year depending
upon the level of qualified construction-in-progress
and the weighted-average interest capitalization rate.
OTHER INCOME/(EXPENSE), NET
Other income/(expense), net, includes numerous
items of a non-operating nature which do not have a
material impact on the company's consolidated
results of operations (either individually or
in the aggregate).
This category provided income in 1993 of [EARNINGS PER SHARE-
$4.4 million compared to expense of $15.7 million FULLY DILUTED GRAPH]
in 1992 and expense of $18.1 million in 1991. The
favorable 1993 situation results from the initial
recognition of $8.1 million of dividend income
from an international investment accounted for
under the cost method and several non-recurring
gains related to asset disposals.
NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
Because of the $565 million pretax restructuring
charge and the $33 million after-tax deferred tax
revaluation adjustment, the company reported net
income of $594.5 million in 1993, a decline of
35.2% compared to 1992. Excluding these one-time
charges, the company would have reported net
income of $980.6 million, a decline of 1.4%
compared to 1992.
Net income before cumulative effect for 1992
was $994.2 million, an increase of 5.8% compared
with $939.8 million for 1991. Net income for
1991 was 11.6% higher than 1990.
The effective tax rate for 1993 of 43.4% is
not comparable to 1992, due to the impact of
the restructuring charge and the FAS 109
deferred tax revaluation adjustment. Excluding
these non-recurring items, the effective tax
rate for 1993 was 39.3%, reflecting the
retroactive impact of the 1% federal tax rate
increase signed into law during 1993. The
effective income tax rate was 38.4% in 1992
and 38.2% in 1991.
EARNINGS PER SHARE BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES
As with net income, 1993 earnings per share
were impacted by the special non-recurring
adjustments. Including these adjustments,
fully diluted earnings per share for 1993
were $2.17, a decrease of 32.2% compared
to 1992. Excluding the 1993 adjustments,
fully diluted earnings per share would have
been $3.55, an increase of 2.6% compared
to 1992.
36
<PAGE>
<PAGE>6
Fully diluted earnings per share before cumulative
effect were $3.46 for 1992, an increase of 6.5%
compared with $3.25 for 1991. Fully diluted earnings
per share for 1990 were $2.95.
The difference between the company's year-to-year
percentage change in net income and earnings per
share is due to share repurchases.
EXCLUDING THE Fully diluted earnings per share assume the
ADJUSTMENTS FOR conversion (as of January 1, 1991) of
THE PROFITABILITY the company's 8% Convertible Debentures due 1996.
ENHANCEMENT In calculating fully diluted earnings per share,
PROGRAM AND THE weighted average shares outstanding are increased by
FAS 109 IMPACT the assumed conversion of the debentures and net
RELATED TO THE income is increased by the after-tax interest
REVENUE RECONCILIA- expense on the debentures.
ACT OF 1993, FULLY
DILUTED EARNINGS FINANCIAL POSITION
PER SHARE WOULD LIQUIDITY AND CAPITAL RESOURCES
HAVE BEEN $3.55 The company's primary sources of liquidity are
FOR THE YEAR, AN cash provided from operating activities and certain
INCREASE OF 2.6% financing activities. Information on the company's
COMPARED TO 1992. consolidated cash flows (operating activities,
financing activities and investing activities) for
the past three years is set forth in the
Consolidated Statement of Cash Flows in this annual
report.
Working capital at December 31, 1993 was $(20.4)
million as compared to $356.0 million at December
31, 1992.
During 1993, the company issued the following
debt:
- $489.4 million increase in commercial paper;
- $200 million, 7 3/8% debentures due 2023; and
- $10 million medium-term notes.
During 1993, the company reduced long-term debt as
follows:
- Redeemed $53.5 million, 8% dual currency notes;
- Redeemed $100 million, 8% notes; and
- Redeemed $49.1 million, 10% sinking fund
debentures.
During 1992, the company issued the following
debt:
- $150 million medium-term notes; and
- $200 million, 6.9% 10-year notes.
[CASH FLOW FROM During 1992, the company reduced long-term debt as
OPERATIONS GRAPH] follows:
- Redeemed $100 million, 8 7/8% notes;
- Redeemed $86 million, 8.55% sinking fund
debentures;
- Redeemed $25 million, 7.95% sinking fund
debentures; and
- Lowered commercial paper borrowings by $24.7
million.
Gains/losses on debt reduction activities
(either individually or in the aggregate) were
not material to the company's consolidated financial
statements during 1993 or 1992.
At December 31, 1993 and 1992 there were $569.1
million and $79.7 million, respectively, of
commercial paper borrowings outstanding classified
as long-term debt. The commercial paper is intended
to be maintained on a long-term basis, with ongoing
credit provided by the company's revolving credit
agreements (discussed below).
The company had fully hedged its foreign currency
exposure for debt service payments on foreign
currency denominated debt through agreements with
various lending institutions.
The company believes its strong beer wholesaler
network is a major factor in its long-term growth.
Therefore, the company believes that affording beer
wholesalers the opportunity to invest in the company
will further this goal. In 1989, the company
registered with the Securities and Exchange
Commission (SEC) a total of $300 million of seven-
year convertible debentures (ultimately convertible
into common stock) as part of its Wholesaler
Investment Program. A total of $241.7 million of the
debentures were issued. The debentures are subject
to mandatory redemption at the end of seven years,
optional redemption/repurchase at the company's or
holder's discretion after three years, and special
redemption/repurchase based on the occurrence of
certain redemption events with respect to particular
holders.
37
<PAGE>
<PAGE>7
FINANCIAL REVIEW
The company utilizes SEC shelf registration
statements to provide financing flexibility. At
December 31, 1992 a total of $550 million was
available for debt issuance under shelf
registration statements. In 1993, the company
issued $210 million in debt as previously
described. As of December 31, 1993, the company
had a total of $340 million remaining available
for issuance under shelf registration statements.
During the next five years, the company plans
to continue capital expenditure programs DURING THE NEXT FIVE
designed to take advantage of growth and YEARS, THE COMPANY
productivity improvement opportunities for its beer PLANS TO CONTINUE
and beer-related, food products and entertainment CAPITAL EXPENDITURE
segments. Cash flow from operating activities will PROGRAMS DESIGNED TO
provide the principal support for these capital TAKE ADVANTAGE OF
investments. GROWTH AND
However, a capital expenditure program of this PRODUCTIVITY IMPROVE-
magnitude (as well as possible business acquisitions) MENT OPPORTUNITIES
may require external financing from time to time. FOR ITS BEER AND
The nature and timing of external financing will BEER-RELATED, FOOD
vary depending upon the company's evaluation of PRODUCTS AND
existing market conditions and other economic ENTERTAINMENT
factors. SEGMENTS.
In addition to its long-term debt financing,
the company has access to the short-term
capital market utilizing its bank credit agreements
and commercial paper. The company has
formal bank credit agreements which are discussed
in Note 6 to the Consolidated Financial
Statements. These agreements provide the company
with immediate and continuing sources of liquidity.
The company's ratio of total debt to total
capitalization was 41.6% including the 1993 non-
recurring special charges, 36.4% and 37.3% at December
31, 1993, 1992 and 1991, respectively. The company's
fixed charge coverage ratio was 7.6x for the year
ended December 31, 1993 (5.2x including the 1993 non-
recurring special charges) and 7.8x and 6.4x for the
years ended December 31, 1992 and 1991, respectively.
As more fully described in Note 9 to the Con-
solidated Financial Statements, the company [CAPITAL
added an employee stock ownership plan (ESOP) EXPENDITURES/
feature to its existing Deferred Income Stock DEPRECIATION AND
Purchase and Savings Plans in 1989. Approximately AMORTIZATION
60% of total salaried and hourly employees GRAPH]
are eligible for participation in the ESOP. In 1989,
the ESOP borrowed $500 million, guaranteed by the
company, and used the proceeds to buy approximately
11.3 million shares of common stock from the company.
The ESOP shares are being allocated to participants
over 15 years as contributions are made to the plan.
Through the various company stock ownership plans,
employees of Anheuser-Busch control approximately
10% of the company's outstanding common stock.
In accordance with generally accepted accounting
principles, the unpaid principal portion of the ESOP
debt is reflected on the company's balance sheet as
long-term debt with an equal, offsetting reduction
to Shareholders Equity. In addition, total ESOP
expense is allocated to interest expense and operating
expense based upon the ratio of interest and principal
payments on the debt.
CAPITAL EXPENDITURES
The company has a formalized and intensive review
procedure for all capital expenditures. The most
important measure of acceptability of a capital
project is its projected discounted cash flow return on
investment.
Capital expenditures in 1993 amounted to $776.9
million as compared with $737.2 million in 1992. During
the past five years, capital expenditures totaled $4.2
billion.
Capital expenditures for 1993 for the company's beer
and beer-related operations were $529.7 million. Major
expenditures by the company's brewing subsidiary included
continuing construction of the company's new brewery in
Cartersville, Ga., and numerous modernization projects
designed to improve productivity at all breweries.
The remaining 1993 capital expenditures totaling $247.2
million were made by the company's food products and
entertainment operations. Major expenditures included
numerous Campbell Taggart and Eagle Snacks modernization
and productivity improvement projects, as well as new
Busch Entertainment attractions.
38
<PAGE>
<PAGE>8
The company expects its capital expenditures in 1994
to approximate $800 million. Capital expenditures
during the five-year period 1994-1998 are expected to
approximate $4 billion.
ENVIRONMENTAL MATTERS
[PHOTO] The company is subject to federal, state and local
environmental protection laws and regulations and is
operating within such laws or is taking action aimed at
assuring compliance with such laws and regulations.
Compliance with these laws and regulations is not
expected to materially affect the company's competitive
position. The company has not been identified as a
Potentially Responsible Party (PRP) at an Environmental
Protection Agency designated clean-up site which could
have a material impact on the company's consolidated
financial statements.
In recognition of the importance of environmental
laws and regulations, the company has established an
Environmental Policy Committee. This committee, which
reports directly to the Audit Committee of the Board of
Directors, is comprised of senior company executives.
The mission of the committee is to (a) monitor and
interpret environmental policies to insure high
standards of corporate responsibility; (b) establish a
framework to assure strict compliance in the operations
of all of the company's businesses with all
environmental regulations; (c) provide adequate
resources-human, financial and physical-required to
assure compliance with all environmental laws and
policies; and (d) exercise oversight responsibilities
of company environmental programs.
OTHER MATTERS
In June 1993, the company purchased a 17.7% equity
interest in Grupo Modelo, Mexico's largest brewer, and
its subsidiaries for $477 million. The company is
accounting for its investment in Modelo under the cost
method. The investment is included in the balance sheet
within the caption "Investments in and advances to
affiliated companies."
In connection with the purchase, three Anheuser-Busch
representatives have been elected to the Modelo board
and a Modelo representative has been elected to serve
on the Anheuser-Busch board.
The agreement gives Anheuser-Busch options to
increase its investment to a minority position in
Modelo of approximately 35% and to acquire an
additional minority interest in Modelo's subsidiaries.
These options may be exercised between mid-1995 and the
end of 1997. Under certain circumstances involving the
non-exercise of such options by Anheuser-Busch, at
either party's election, Modelo may repurchase
approximately half of Anheuser-Busch's investment at
cost and repurchase the remainder at prevailing market
rates.
In July 1993, the company purchased a 5% interest in
China's largest brewer, Tsingtao Brewery Co., Ltd., for
$16.4 million. The purchase occurred in conjunction
with Tsingtao's initial public offering of shares on
the Stock Exchange of Hong Kong. This public offering
represented approximately 35% of the company, including
the 5% purchased by Anheuser-Busch. The initial 5%
purchase by Anheuser-Busch (which will be accounted for
under the cost method and is included in the balance
sheet within the caption "Investments in and advances
to affiliated companies") is a strategic investment
which may lead to additional commercial or investment
relationships between the two companies.
In December 1993, the company acquired the remaining
50% of International Label Company for $19.2 million.
The acquisition was accounted for using the purchase
method of accounting, and the excess cost of the
acquisition over the assets acquired is being amortized
on a straight-line basis over 40 years.
DIVIDENDS
Cash dividends paid to common shareholders were
$370.0 million in 1993 and $338.3 million in 1992.
Dividends on common stock are paid in the months of
March, June,
39
<PAGE>
<PAGE>9
FINANCIAL REVIEW
September and December of each year. In the
second quarter of 1993, effective with the
September dividend, the Board of Directors
increased the quarterly dividend rate by 12.5%
from $.32 to $.36 per share. Annual dividends
per common share increased 13.3% in 1993 to
$1.36 per share compared to $1.20 per share in
1992. In 1993, dividends were $.32 for each of
the first two quarters and $.36 for the last
two quarters, as compared to $.28 for the first
two quarters and $.32 for the last two quarters
of 1992.
The company has paid dividends in each of the THE COMPANY HAS
past 61 years. During that time, the company's PAID DIVIDENDS IN
stock has split on seven different occasions and EACH OF THE PAST 61
stock dividends were paid three times. YEARS. DURING THAT
TIME, THE COMPANY'S
At December 31, 1993, common shareholders of STOCK HAS SPLIT ON
record numbered 67,612 compared with 67,273 SEVEN DIFFERENT
at the end of 1992. OCCASIONS AND STOCK
DIVIDENDS WERE PAID
THREE TIMES.
PRICE RANGE OF COMMON STOCK
The company's common stock is listed on the
New York Stock Exchange (NYSE) under the symbol
"BUD". The table below summarizes the high and
low closing prices on the NYSE.
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------
PRICE RANGE OF COMMON STOCK
- - - ---------------------------------------------------------------
1993 1992
- - - ---------------------------------------------------------------
QUARTER HIGH LOW HIGH LOW
- - - ---------------------------------------------------------------
<S> <C> <C> <C> <C>
First............... 60 50-3/4 60-1/2 54-7/8
Second.............. 53-3/4 47-3/8 56-7/8 52-1/8
Third............... 48-1/4 44-1/8 57-3/4 53
Fourth.............. 50-5/8 45-1/2 60 53-5/8
- - - ------------------------------------------------------------------
</TABLE>
The closing price of the company's common stock at
December 31, 1993 and 1992 was $49.125
and $58.50, respectively.
COMMON STOCK AND OTHER SHAREHOLDERS EQUITY [SHAREHOLDERS
Shareholders equity was $4.26 billion at EQUITY/LONG-
December 31, 1993, as compared with $4.62 billion TERM DEBT GRAPH]
at December 31, 1992. The decrease in shareholders
equity during the year is primarily related to 1993
special charges, the share repurchase program and
dividends. The book value of each common share of
stock at December 31, 1993 was $15.94, as compared
to $16.60 at December 31, 1992.
In 1993, the return on shareholders equity was 13.4%
as compared to 22.0% in 1992. Excluding the non-
recurring special charges, return on shareholders
equity for 1993 would have been 21.2%.
The Board of Directors has approved various
resolutions in recent years authorizing the company
to repurchase shares of its common stock for investment
purposes and to meet the requirements of the company's
various stock purchase and savings plans. In June 1992
the board authorized the repurchase of 20 million shares.
The company has acquired 12.6 million, 9.6 million and
23,500 shares of common stock in 1993, 1992 and 1991 for
$639.8 million, $518.7 million and $1.1 million,
respectively. At December 31, 1993, approximately five
million shares were available for repurchase under the
June 1992 authorization.
INFLATION
General inflation has not had a significant impact on
the company over the past three years and is not expected
to have a significant impact in the foreseeable future.
40
<PAGE>
<PAGE>10
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Anheuser-Busch Companies, Inc. is responsible for the
financial statements and other information included in this annual report.
Management has selected those generally accepted accounting principles it
considers appropriate to prepare the financial statements and other data
contained herein.
The company maintains accounting and reporting systems, supported by an
internal control system, which management believes are adequate to provide
reasonable assurances that assets are safeguarded against loss from
unauthorized use or disposition and financial records are reliable for
preparing financial statements. During 1993, the company's internal
auditors, in conjunction with Price Waterhouse, its independent
accountants, performed a comprehensive review of the adequacy of the
company's internal accounting control system. Based on the comprehensive
review, it is management's opinion that the company has an effective system
of internal accounting control.
The Audit Committee of the Board of Directors, which consists of six non-
management directors, oversees the company's financial reporting and
internal control systems, recommends selection of the company's public
accountants and meets with the public accountants and internal auditors to
review the overall scope and specific plans for their respective audits.
The committee held four meetings during 1993. A more complete description
of the functions performed by the Audit Committee can be found in the
company's proxy statement.
The report of Price Waterhouse on its examinations of the consolidated
financial statements of the company appears below.
REPORT OF INDEPENDENT ACCOUNTANTS
- - - ---------------------------------------------------------------------------
PRICE WATERHOUSE
February 7, 1994
To the Shareholders and Board of Directors of One Boatmen's Plaza
Anheuser-Busch Companies, Inc. St. Louis, MO 63101
We have audited the accompanying Consolidated Balance Sheet of Anheuser-
Busch Companies, Inc. and its subsidiaries as of December 31, 1993 and
1992, and the related Consolidated Statements of Income, Changes in
Shareholders Equity and Cash Flows for each of the three years in the
period ended December 31, 1993. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements audited by us
present fairly, in all material respects, the financial position of
Anheuser-Busch Companies, Inc. and its subsidiaries at December 31, 1993
and 1992, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
As discussed in Note 3 to the financial statements, the company changed
its method of accounting for postretirement benefits other than pensions
and income taxes in 1992.
PRICE WATERHOUSE
41
<PAGE>
<PAGE>11
<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies, Inc., and Subsidiaries
<CAPTION>
ASSETS (In millions)
- - - -----------------------------------------------------------------------------------------
DECEMBER 31, 1993 1992
- - - -----------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and marketable securities ............................... $ 127.4 $ 215.0
Accounts and notes receivable, less allowance for doubtful
accounts of $6.7 in 1993 and $4.9 in 1992................... 751.1 649.8
Inventories
Raw materials and supplies.................................. 385.5 417.7
Work in process............................................. 99.4 88.7
Finished goods.............................................. 141.8 154.3
Total inventories......................................... 626.7 660.7
Other current assets.......................................... 290.0 290.3
-------- --------
Total current assets........................................ 1,795.2 1,815.8
- - - -----------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS:
Investments in and advances to affiliated companies........... 629.5 171.6
Investment properties......................................... 151.9 164.8
Deferred charges and other non-current assets................. 310.7 356.3
Excess of cost over net assets of acquired businesses, net.... 495.9 505.7
-------- -------
1,588.0 1,198.4
- - - -----------------------------------------------------------------------------------------
PLANT AND EQUIPMENT:
Land.......................................................... 281.9 273.3
Buildings..................................................... 3,445.5 3,295.2
Machinery and equipment....................................... 7,656.5 7,086.9
Construction in progress...................................... 343.2 729.7
-------- ---------
11,727.1 11,385.1
Accumulated depreciation...................................... (4,230.0) (3,861.4)
-------- ---------
7,497.1 7,523.7
-------- ---------
$10,880.3 $10,537.9
--------- ---------
- - - -----------------------------------------------------------------------------------------
<FN>
The accompanying statements should be read in conjunction with the Notes to Consolidated
Financial Statements appearing on pages 47-59 of this report.
</TABLE>
42
<PAGE>
<PAGE>12
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS EQUITY (In millions)
- - - ----------------------------------------------------------------------------------------
DECEMBER 31, 1993 1992
- - - ----------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable............................................ $ 812.5 $ 737.4
Accrued salaries, wages and benefits........................ 243.9 257.3
Accrued interest payable.................................... 54.9 52.4
Due to customers for returnable containers.................. 50.3 48.2
Accrued taxes, other than income taxes...................... 121.7 117.0
Estimated income taxes...................................... 91.0 38.8
Restructuring accrual....................................... 189.2 -
Other current liabilities................................... 252.1 208.7
-------- --------
Total current liabilities................................. 1,815.6 1,459.8
- - - ----------------------------------------------------------------------------------------
POSTRETIREMENT BENEFITS....................................... 607.1 538.3
- - - ----------------------------------------------------------------------------------------
LONG-TERM DEBT................................................ 3,031.7 2,642.5
- - - ----------------------------------------------------------------------------------------
DEFERRED INCOME TAXES......................................... 1,170.4 1,276.9
- - - ----------------------------------------------------------------------------------------
COMMON STOCK AND OTHER SHAREHOLDERS EQUITY:
Common stock, $1.00 par value, authorized
800,000,000 shares........................................ 342.5 341.3
Capital in excess of par value.............................. 808.7 762.9
Retained earnings........................................... 6,023.4 5,794.9
Foreign currency translation adjustment..................... (33.0) (1.4)
-------- --------
7,141.6 6,897.7
Treasury stock, at cost..................................... (2,479.6) (1,842.9)
ESOP debt guarantee offset.................................. (406.5) (434.4)
-------- --------
4,255.5 4,620.4
- - - ----------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES................................. - -
$10,880.3 $10,537.9
========= =========
- - - ----------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<PAGE>13
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions, except per share data)
- - - --------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 1992 1991
- - - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales................................................... $13,185.1 $13,062.3 $12,634.2
Less federal and state excise taxes................... 1,679.8 1,668.6 1,637.9
--------- --------- ---------
Net sales............................................... 11,505.3 11,393.7 10,996.3
Cost of products and services......................... 7,419.7 7,309.1 7,148.7
--------- -------- ---------
Gross profit............................................ 4,085.6 4,084.6 3,847.6
Marketing, distribution and administrative expenses... 2,308.7 2,308.9 2,126.1
Restructuring charge.................................. 565.0 - -
--------- --------- ---------
Operating income........................................ 1,211.9 1,775.7 1,721.5
Other income and expenses:
Interest expense...................................... (207.8) (199.6) (238.5)
Interest capitalized.................................. 36.7 47.7 46.5
Interest income....................................... 5.2 7.1 9.2
Other income/(expense), net........................... 4.4 (15.7) (18.1)
--------- --------- ---------
Income before income taxes.............................. 1,050.4 1,615.2 1,520.6
--------- --------- ---------
Provision for income taxes:
Current............................................... 562.4 561.9 479.1
Deferred.............................................. (139.5) 59.1 101.7
Revaluation of deferred tax liability (FAS 109)....... 33.0 - -
--------- --------- ---------
455.9 621.0 580.8
--------- --------- ---------
Net income, before cumulative effect of
accounting changes.................................... 594.5 994.2 939.8
Cumulative effect of changes in the method of
accounting for postretirement benefits (FAS 106)
and income taxes (FAS 109), net of tax benefit
of $186.4 million..................................... - (76.7) -
--------- --------- ---------
NET INCOME.............................................. $ 594.5 $ 917.5 $ 939.8
========= ========= =========
- - - ---------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE:
Net income, before cumulative effect.................. $ 2.17 $ 3.48 $ 3.26
Cumulative effect of accounting changes............... - (.26) -
--------- --------- ---------
Net income............................................ $ 2.17 $ 3.22 $ 3.26
========= ========= =========
FULLY DILUTED EARNINGS PER SHARE:
Net income, before cumulative effect.................. $ 2.17 $ 3.46 $ 3.25
Cumulative effect of accounting changes............... - (.26) -
--------- --------- ---------
Net income............................................ $ 2.17 $ 3.20 $ 3.25
========= ========= =========
- - - ---------------------------------------------------------------------------------------------------------
<FN>
The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on
pages 47-59 of this report.
</TABLE>
44<PAGE>
<PAGE>14
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Anheuser-Busch Companies, Inc., and Subsidiaries
SHAREHOLDERS EQUITY (In millions, except per share data)
- - - ------------------------------------------------------------------------------------------------------------------------
ESOP FOREIGN
CAPITAL IN DEBT CURRENCY
COMMON EXCESS OF RETAINED TREASURY GUARANTEE TRANSLATION
STOCK PAR VALUE EARNINGS STOCK OFFSET ADJUSTMENT
- - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1990............ $335.7 $558.9 $4,563.3 $(1,323.1) $(485.0) $ 29.3
Net income.............................. 939.8
Common dividends
($1.06 per share)..................... (301.1)
Shares issued under
stock plans........................... 2.7 92.2 7.8
Conversion of Convertible
Debentures............................ .1 3.4
Reduction of ESOP debt
guarantee............................. 23.8
Treasury stock acquired................. (1.1)
Foreign currency translation
adjustment............................ (8.6)
- - - ------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1991............ 338.5 654.5 5,209.8 (1,324.2) (461.2) 20.7
Net income.............................. 917.5
Common dividends
($1.20 per share)..................... (338.3)
Shares issued under
stock plans........................... 2.8 107.6 5.9
Conversion of Convertible
Debentures............................ .8
Reduction of ESOP debt
guarantee............................. 26.8
Treasury stock acquired................. (518.7)
Foreign currency translation
adjustment............................ (22.1)
- - - ------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992............ 341.3 762.9 5,794.9 (1,842.9) (434.4) (1.4)
Net income.............................. 594.5
Common dividends
($1.36 per share)..................... (370.0)
Shares issued under
stock plans........................... 1.2 44.2 4.0
Reduction of ESOP debt
guarantee............................. 27.9
Treasury stock acquired net
of treasury shares issued............. 1.6 (636.7)
Foreign currency translation
adjustment............................ (31.6)
- - - -----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993............ $342.5 $808.7 $6,023.4 $(2,479.6) $(406.5) $(33.0)
- - - -----------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on
pages 47-59 of this report.
</TABLE>
45
<PAGE>
<PAGE>15
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions)
- - - --------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 1992 1991
- - - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income............................................ $ 594.5 $ 917.5 $ 939.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization..................... 608.3 567.0 534.1
(Decrease)/increase in deferred
income taxes.................................... (106.5) 62.0 104.5
Restructuring charge ($565 million
less cash payments of $65.1 million)............ 499.9 - -
Cumulative effect of
accounting changes.............................. - 76.7 -
Decrease/(increase) in non-cash
working capital................................. 99.6 (13.4) (208.5)
Other, net........................................ 56.7 18.9 24.8
-------- -------- ---------
Cash provided by operating activities................... 1,752.5 1,628.7 1,394.7
- - - ---------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures.................................. (776.9) (737.2) (702.5)
Business acquisitions................................. (524.3) (41.4) (15.7)
-------- -------- ---------
Cash (used for) investing activities.................... (1,301.2) (778.6) (718.2)
- - - ----------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in long-term debt............................ 689.2 351.3 .6
Decrease in long-term debt............................ (267.7) (343.8) (479.1)
Dividends paid to shareholders........................ (370.0) (338.3) (301.1)
Acquisition of treasury stock......................... (639.8) (518.7) (1.1)
Shares issued under stock plans and
conversion of Convertible Debentures................ 49.4 117.1 106.2
-------- -------- ---------
Cash (used for) financing activities.................. (538.9) (732.4) (674.5)
- - - ---------------------------------------------------------------------------------------------------------
Net increase/(decrease) in cash and
marketable securities during the year................. (87.6) 117.7 2.0
Cash and marketable securities at
beginning of year..................................... 215.0 97.3 95.3
-------- -------- ---------
Cash and marketable securities at
end of year........................................... $ 127.4 $ 215.0 $ 97.3
-------- -------- ---------
- - - ---------------------------------------------------------------------------------------------------------
<FN>
The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on
pages 47-59 of this report.
</TABLE>
46
<PAGE>
<PAGE>16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - - ---------------------------------------------------------------------------
1. SUMMARY OF This summary of significant accounting principles and
SIGNIFICANT policies of Anheuser-Busch Companies, Inc. and its
ACCOUNTING subsidiaries is presented to assist the reader in
PRINCIPLES evaluating the company's financial statements included
AND POLICIES in this report. These principles and conform to
generally accepted accounting principles.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the
company and all its subsidiaries. All significant
intercompany transactions have been eliminated.
FOREIGN CURRENCY TRANSLATION
Adjustments resulting from foreign currency
transactions are recognized in income, whereas
adjustments resulting from the translation of financial
statements are reflected as a separate component of
shareholders equity.
EXCESS OF COST OVER NET ASSETS OF ACQUIRED BUSINESSES
The excess of the cost over the net assets of
acquired businesses is amortized on a straight-line
basis over a period of 40 years. Accumulated
amortization at December 31, 1993 and 1992 was $74.2
million and $63.0 million, respectively.
INVENTORIES AND PRODUCTION COSTS
Inventories are valued at the lower of cost or
market. Cost is determined under the last-in, first-out
method (LIFO) for substantially all brewing inventories
and under the first-in, first-out method (FIFO) for
substantially all food product inventories.
PLANT AND EQUIPMENT
Plant and equipment is carried at cost and includes
expenditures for new facilities and those which
substantially increase the useful lives of existing
facilities. Maintenance, repairs and minor renewals are
expensed as incurred. When properties are retired or
otherwise disposed, the related cost and accumulated
depreciation are eliminated from the respective
accounts and any gain or loss on disposition is
reflected in income or expense.
Depreciation is provided principally on the straight-
line method over the estimated useful lives of the
assets, resulting in depreciation rates on buildings
ranging from 2% to 10% and on machinery and equipment
ranging from 4% to 25%.
CAPITALIZATION OF INTEREST
Interest relating to the cost of acquiring certain
fixed assets is capitalized. The capitalized interest
is included as part of the cost of the related asset
and is amortized over its estimated useful life.
INCOME TAXES
The provision for income taxes is based on the income
and expense amounts as reported in the Consolidated
Statement of Income. The company has elected to utilize
certain provisions of federal income tax laws and
regulations to reduce current taxes payable. Effective
in 1992, deferred income taxes are recognized for the
effect of temporary differences between financial and
tax reporting in accordance with the requirements of
Statement of Financial Accounting Standards No. 109.
Prior to 1992, deferred taxes were recognized for the
effect of timing differences between financial and tax
reporting in accordance with the requirements of
Accounting Principles Board Opinion No. 11.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND
CONCENTRATION OF CREDIT RISK
The company is party to certain financial instruments
with off-balance-sheet risk incurred in the normal
course of business. These financial instruments include
financial guarantees, foreign currency forward and
option contracts designated as hedges, foreign currency
payment swaps and interest rate swaps. The company's
exposure to credit loss in the event of non-performance
by the counterparty to these financial instruments
(either individually or in the aggregate) is not
material.
The company does not have a material concentration of
accounts receivable or credit risk.
47
<PAGE>
<PAGE>17
FINANCIAL REVIEW
FAIR VALUE OF FINANCIAL INSTRUMENTS
Long-term debt is the only significant financial
instrument of the company with a fair value
different than its recorded value. As of December 31,
1993, the fair value of long-term debt was $3.1
billion compared to its recorded value of $3.0 billion.
The fair value of long-term debt was estimated based
on the quoted market values for the same or similar
debt issues, or rates currently available for debt
with similar terms.
RESEARCH AND DEVELOPMENT, ADVERTISING, PROMOTIONAL
COSTS AND INITIAL PLANT COSTS
Research and development, advertising, promotional
costs and initial plant costs are expensed in the year
in which these costs are incurred.
EARNINGS PER SHARE
Earnings per share of common stock are based on
the weighted average number of shares of common stock
outstanding during the respective years as shown below
(in millions):
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------
1993 1992 1991
- - - --------------------------------------------------------------------------
<S> <C> <C> <C>
Primary weighted average shares............ 274.3 285.8 287.9
Fully diluted weighted average shares...... 279.3 290.8 292.9
- - - --------------------------------------------------------------------------
</TABLE>
Fully diluted earnings per share of common stock
assume the conversion of the company's 8% convertible
debentures due 1996 and the elimination of the related
after-tax interest expense.
- - - ---------------------------------------------------------------------------
In September 1993, the company announced a 2-PROFITABILITY
Profitability Enhancement Program to improve sales ENHANCEMENT
and profitability. The Program, which involves PROGRAM
significant organizational and operational changes,
includes the following elements:
- An enhanced retirement program for salaried
employees
- The write-down of under-performing assets and
investments
- Restructuring and reorganization of the company
As a result of the Program, the company recognized
a $565 million restructuring charge during third
quarter 1993.
The Program includes a 10% reduction in the salaried
workforce (approximately 1,200 employees). This reduction
was achieved through an enhanced retirement program.
The enhanced retirement program offered salaried employees
age 53 or older certain incentives and the opportunity to
retire effective December 31, 1993. Incentives included
pension credits for an additional five years of service
and five years of age. The total cost of the enhanced
retirement program was $142 million and is discussed in
more detail in Note 10.
In addition, as part of the Program, the company plans
to restructure and reorganize certain operations at a cost
of $278 million. The restructuring and reorganization
portion of the Program includes relocation of the company's
Campbell Taggart, Inc. and Eagle Snacks, Inc. corporate
offices to St. Louis; the closing of several smaller
non-beer manufacturing operations; and the rationaliza-
tion of brewing operations based on the successful
practices employed at its newer breweries. Also
included in the Program is $145 million for the
write-down of under-performing assets and investments
to their net realizable (economic) values.
- - - --------------------------------------------------------------------------
Effective January 1, 1992, the company adopted 3-ADOPTION
Statements of Financial Accounting Standards No. 106 IMPACT OF NEW
(FAS 106), "Employers' Accounting for Postretirement ACCOUNTING
Benefits Other Than Pensions," and No. 109 (FAS 109), PRONOUNCEMENTS
"Accounting for Income Taxes."
The company elected to immediately recognize the
cumulative effect of adoption of FAS 106/109 pertaining
to years prior to 1992 through a one-time adjustment
which impacted 1992 net income as follows (in millions):
<PAGE>
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------------
1992 Net Income
Increase (Decrease)
- - - ---------------------------------------------------------------------------
<S> <C>
Postretirement benefits (FAS 106).................... $(319.5)
Accounting for income taxes (FAS 109)................ 242.8
-------
Net income impact.................................... $ (76.7)
=======
Fully diluted earnings per share impact.............. $ (.26)
========
- - - ---------------------------------------------------------------------------
</TABLE>
48
<PAGE>
<PAGE>18
Implementation of FAS 106 in 1992 was based on
benefit levels in effect at the time of
adoption. Certain changes to these benefit levels
were implemented in 1993, thereby reducing the pretax
expense level in 1993 by $27.0 million to $48.3
million.
Assuming constant statutory tax rates, FAS 109 is
not expected to have a significant ongoing financial
impact on the company. However, statutory tax rate
changes, as occurred in August 1993, require
revaluation of the deferred tax liability, with the
net change recognized in the income statement in the
year the tax rate change is enacted.
- - - --------------------------------------------------------------------------
4-ACQUISITIONS In March 1993, the company announced the
AND BUSINESS establishment of a joint venture with Japan's largest
INVESTMENTS brewer, Kirin Brewery, to market and sell Budweiser
in Japan. The joint venture replaces a prior
license-brewing contract in Japan and is 90% owned
by the company and 10% owned by Kirin. The joint
venture began operations in September 1993.
In June 1993, the company announced the purchase of
a 17.7% equity interest in Grupo Modelo, Mexico's
largest brewer, and its subsidiaries for $477
million. This investment is accounted for under the
cost method and included in the balance sheet within
the caption "Investments in and advances to
affiliated companies." During 1993, the company
recorded $8.1 million in dividends related to this
investment.
The agreement gives the company options to increase
its investment in Grupo Modelo to a minority position
of approximately 35% and to acquire an additional
minority interest in its subsidiaries. These options
are exercisable between mid-1995 and the end of 1997.
Under certain circumstances involving the non-
exercise of these options by the company at either
party's election, Grupo Modelo may repurchase
approximately half of the company's investment at
cost and repurchase the remainder at prevailing
market rates.
In July 1993, the company purchased a 5% interest
in China's largest brewer, Tsingtao Brewery Company
Limited, for $16.4 million. The purchase occurred in
conjunction with Tsingtao's initial public offering
on the Stock Exchange of Hong Kong. This initial 5%
purchase by the company, accounted for under the cost
method and included in the balance sheet within the
caption "Investments in and advances to affiliated
companies," is a strategic investment which may lead
to additional commercial or investment relationships
between the two companies.
In December 1993, the company acquired the
remaining 50% of International Label Company for
$19.2 million. The acquisition was accounted for
using the purchase method of accounting and the
excess cost of the acquisition over the assets
acquired is being amortized on a straight-line basis
over 40 years.
- - - --------------------------------------------------------------------------
5-INVENTORY Approximately 66.5% and 69.0% of total inventories
VALUATION at December 31, 1993 and 1992, respectively, are
stated on the last-in, first-out (LIFO) inventory
valuation method. Had average-cost (which
approximates replacement cost) been used with respect
to such inventories at December 31, 1993 and 1992,
total inventories would have been $105.5 million and
$107.1 million higher, respectively.
- - - -------------------------------------------------------------------------
6-CREDIT The company's revolving credit agreements totaling
AGREEMENTS $500 million were terminated January 31, 1993. The
company's new credit agreements totaling $800 million
expire in January 1995 ($400 million) and February
1996 ($400 million). The agreements provide that the
company may select among various loan arrangements
with differing maturities and among a variety of
interest rates, including a negotiated rate. At
December 31, 1993 and 1992 the company had no
outstanding borrowings under these agreements. Fees
under these agreements amounted to $.9 million in
1993, $.6 million in 1992 and $.7 million in 1991.
49<PAGE>
<PAGE>19
FINANCIAL REVIEW
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------------
Long-term debt at December 31 consisted of the follow- 7-LONG-TERM
ing (in millions): DEBT
- - - ---------------------------------------------------------------------------
1993 1992
- - - ---------------------------------------------------------------------------
<S> <C> <C>
Commercial paper.........................................$ 569.1 $ 79.7
Medium-term Notes Due 1993 to 2002(interest from
4.6% to 9.0%)............................................ 225.0 285.0
8% Dual Currency Japanese Yen/U.S. Dollar Notes Due 1995. - 53.5
8-3/4% Notes Due July 15, 1995........................... 100.0 100.0
8% Notes Due October 1, 1996............................. - 100.0
8% Convertible Debentures Due 1996....................... 237.1 237.2
8-3/4% Notes Due 1999.................................... 250.0 250.0
6.9% Notes Due 2002...................................... 200.0 200.0
9% Debentures Due 2009................................... 350.0 350.0
7-3/8% Debentures Due 2023............................... 200.0 -
ESOP Debt Guarantee...................................... 406.5 434.4
Sinking Fund Debentures.................................. 364.6 413.7
Industrial Revenue Bonds................................. 110.3 115.6
Other Long-term Debt..................................... 19.1 23.4
-------- --------
$3,031.7 $2,642.5
- - - ---------------------------------------------------------------------------
The company's sinking fund debentures at December 31 are as follows
(in millions):
- - - ---------------------------------------------------------------------------
1993 1992
- - - ---------------------------------------------------------------------------
8-5/8% Debentures maturing 1997 to 2016.................. $150.0 50.0
8-1/2% Debentures maturing 1998 to 2017.................. 150.0 150.0
10% Debentures maturing 1999 to 2018..................... 150.9 200.0
Less: Debentures held in treasury........................ (86.3) (86.3)
------ ------
$364.6 $413.7
- - - ---------------------------------------------------------------------------
</TABLE>
The company utilizes SEC shelf registration
statements to provide financing flexibility. At
December 31, 1992, a total of $550 million was
available for debt issuance under shelf registra-
tion statements. In 1993, the company issued $210
million in debt. As of December 31, 1993, the
company had a total of $340 million remaining
available for issuance under shelf registration
statements.
In 1989 the company registered with the SEC $300
million of convertible debentures as part of its
Beer Wholesaler Investment Program, $241.7 million
of which were issued to Qualified Holders. The
debentures may only be held by a qualified,
independently owned beer wholesaler (and certain
related parties) and may be converted into a 5%
convertible preferred stock, par value $1.00, at a
conversion price of $47.60 per share. Each share
of the convertible preferred stock may be converted
into one share of the company's common stock. The
convertible debentures and convertible preferred
stock are subject to mandatory redemption at the
end of seven years, optional redemption/repurchase
at the company's or holder's discretion after three
years, and special redemption/repurchase options
based upon the occurrence of certain events with
respect to particular holders.
During 1993, the company redeemed the following
long-term debt:
- $53.5 million, 8.0% Dual Currency Notes;
- $100 million, 8.0% Notes; and
- $49.1 million, 10% Sinking Fund Debentures
Gains/losses on these redemptions (either individually
or in the aggregate) were not material to the company's
Consolidated Financial Statements.
At December 31, 1993 and 1992, there were $569.1
million and $79.7 million, respectively, of commercial
paper borrowings outstanding classified as long-term debt.
The commercial paper is intended to be maintained on a
long-term basis with ongoing credit provided by the
company's revolving credit agreements.
50<PAGE>
<PAGE>20
The company's Dual Currency Japanese Yen/U.S. Dollar
Notes were issued at a discount from the redemption
value and subsequently converted into a U.S. dollar
liability resulting in an effective interest rate of
10%, as compared to a stated rate of 8%. This debt was
redeemed during 1993. The company had fully hedged its
foreign currency exposure for interest payments
related to this debt through an agreement with an
international lending institution.
During 1992 the company entered into a financial
fixed-rate swap agreement on a notional amount of $200
million. The company is obligated to pay a fixed rate
of 6.54% per year for the four-year period beginning
January 1, 1994. In return, the company will receive a
floating interest rate based on commercial paper
rates.
The aggregate maturities on all long-term debt are
$31, $287, $270, $50 and $76 million, respectively,
for each of the years ending December 31, 1994 through
1998. These aggregate maturities do not include the
future maturities of the ESOP debt guarantee.
- - - ---------------------------------------------------------------------------
8-STOCK The company had an Incentive Stock Option/Non-
OPTION PLANS Qualified Stock Option Plan and a Non-Qualified Stock
Option Plan for certain qualified employees which
expired on December 21, 1991. Under the terms of the
plans, options were granted at not less than the fair
market value of the shares at the date of grant. The
Non-Qualified Stock Option Plan provided that
optionees could be granted Stock Appreciation Rights
(SARs) in tandem with stock options. The exercise of a
SAR cancels the related option and the exercise of an
option cancels the related SAR. At December 31, 1993
and 1992, a total of 2,778,824 and 3,350, 952 shares,
respectively, were reserved for possible future
issuance under these plans.
In April 1990, the shareholders approved an
Incentive Stock Plan for certain qualified employees.
The plan (as amended) provides for the grant of
options and SARs. Under the terms of the plan, options
may be granted at not less than the fair market value
of the shares at the date of grant. At December 31,
1993 and 1992, a total of 19,051,066 and 9,908,929
shares, respectively, were reserved for future
issuance under this plan.
Presented below is a summary of activity for the
plans for the years ended December 31:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
1993 1992 1991
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of the year. 10,887,085 12,285,133 15,224,650
Options granted during the year.............. 2,023,400 2,213,026 668,516
Options and SARs exercised during the year... (1,399,573) (3,464,070) (3,390,645)
Options cancelled during the year............ (147,703) (147,004) (217,388)
------------ ------------- -------------
Options outstanding at end of the year....... 11,363,209 10,887,085 12,285,133
------------ ------------- -------------
Options exercisable at end of the year....... 8,009,951 8,298,103 8,859,962
------------- ------------- -------------
Option price range per share................. $12.28-$58.56 $10.31-$58.56 $10.31-$56.00
------------------------------------------------------------------------------------------
</TABLE>
The plans provide for acceleration of exercisability
of the options upon the occurrence of certain events
relating to a change of control, merger, sale of
assets or liquidation of the company (Acceleration
Events). The Non-Qualified Plan and the Incentive
Stock Plan also provide that optionees may be granted
Limited Stock Appreciation Rights (LSARs). LSARs
become exercisable, in lieu of the option or SAR, upon
the occurrence, six months following the date of
grant, of an Acceleration Event. These LSARs entitle
the holder to a cash payment per share equivalent to
the excess of the share value (under terms of the
LSAR) over the grant price. As of December 31, 1993
and 1992, there were 1,411,379 and 1,618,278
respectively, of LSARs outstanding.
- - - ---------------------------------------------------------------------------
9-EMPLOYEE In 1989, the company added an Employee Stock
STOCK Ownership Plan (ESOP) to its existing Deferred Income
OWNERSHIP Stock Purchase and Savings Plans. Approximately 60% of
PLAN all salaried and hourly employees are eligible for
participation in the ESOP. The ESOP borrowed $500
million for a term of 15 years at an interest rate of
8.3% and used the proceeds to buy approximately 11.3
million shares of common stock from the company. The
ESOP debt is guaranteed by the company and ESOP shares
are being allocated to participants over 15 years as
contributions are made to the plans.
ESOP cash contributions and ESOP expense accrued
during the calendar year are determined by several
factors including the market price and number of
shares allocated to participants, ESOP debt service,
dividends on unallocated shares and the company's
matching contribution. Over the 15-year life of the
ESOP, total expense will equal the total cash
contributions made by the company.
51
<PAGE>
<PAGE>21
FINANCIAL REVIEW
ESOP cash contributions are made in March and
September, based on the plan year which ends March 31.
A summary of ESOP cash contributions and dividends on
unallocated ESOP shares for the three years ended
December 31 is presented below (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash contributions.......................................... $ 39.4 $ 33.1 $ 32.6
====== ====== ======
Dividends................................................... $ 10.6 $ 10.4 $ 10.2
====== ====== ======
- - - -------------------------------------------------------------------------------------------
</TABLE>
Total ESOP expense is allocated to operating expense
and interest expense based upon the ratio of principal
and interest payments on the debt. ESOP expense for
each of the three years ended December 31 is presented
below (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating expenses......................................... $ 18.6 $ 14.2 $ 13.2
Interest expenses.......................................... 21.8 18.8 19.9
------ ------ ------
Total expense.............................................. $ 40.4 $ 33.0 $ 33.1
- - - -------------------------------------------------------------------------------------------
</TABLE>
- - - ----------------------------------------------------------------------
As discussed in Note 2, in September 1993 the 10-RETIREMENT
company announced a Profitability Enhancement Program BENEFITS
that included an enhanced retirement program. Total
costs related to the enhanced retirement program were
$142 million. Included in this cost was $90 million in
special pension benefits, offset by $35 million in
curtailment gains (for a net cost of $55 million).
Additionally, a $23.5 million charge for postretirement
benefits other than pensions is included in the total
cost. The remaining portion of the cost relates to
severance benefits and other expenses of implementing
the plan.
PENSION PLANS
The company has pension plans covering substantially
all of its employees. Total pension expense for each
of the three years ended December 31 is presented below
(in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Single-employer defined benefit plans........................ $ (2.5) $ (3.9) $ (3.5)
Multi-employer plans......................................... 48.4 47.4 47.6
Defined contribution plans................................... 13.2 12.6 11.6
------- ------ ------
$ 59.1 $ 56.1 $ 55.7
- - - -------------------------------------------------------------------------------------------
</TABLE>
Net pension benefit for single-employer defined
benefit plans was comprised of the following for
the three years ended December 31 (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during the year)............... $ 45.7 $ 42.0 $ 34.0
Interest cost on projected benefit obligation................ 65.1 60.0 54.1
Assumed return on assets..................................... (99.5) (92.3) (76.6)
Amortization of prior service cost, actuarial
gains/losses and the excess of market value of
plan assets over projected benefit obligation
at January 1, 1986......................................... (13.8) (13.6) (15.0)
------ ------ ------
Net pension benefit...................................... $ (2.5) $ (3.9) $ (3.5)
- - - ------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<PAGE> 22
The key actuarial assumptions used in determining pension
expense for single-employer defined benefit plans were as
follows for each of the years ended December 31:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate............................................... 9.0% 9.0% 10.0%
Long-term rate of return on plan assets..................... 10.0% 10.0% 9.0%
Weighted-average rate of compensation increase.............. 6.5% 6.5% 6.5%
- - - -------------------------------------------------------------------------------------------
</TABLE>
The actual gain on pension assets was $120.4 million, $102.2
million and $145.7 million in 1993, 1992 and 1991, respectively.
The following tables set forth the funded status of all
company single-employer defined benefit plans at December 31
(in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992
- - - -------------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair market value-primarily corporate equity
securities and publicly traded bonds...........................$ 1,020.0 $1,117.4
--------- --------
Accumulated benefit obligation:
Vested benefits................................................ (721.2) (576.1)
Nonvested benefits............................................. (58.2) (40.3)
--------- --------
Accumulated benefit obligation................................... (779.4) (616.4)
Effect of projected compensation increases....................... (135.1) (152.8)
--------- --------
Projected benefit obligation..................................... (914.5) (769.2)
--------- --------
Plan assets in excess of projected benefit obligation............$ 105.5 $ 348.2
- - - -------------------------------------------------------------------------------------------
- - - -------------------------------------------------------------------------------------------
1993 1992
- - - -------------------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation consist
of the following components:
Unamortized excess of market value of plan assets over
projected benefit obligation at January 1, 1986 being
amortized over 15 years......................................$ 70.9 $ 119.1
Unrecognized net actuarial gains/(losses)...................... (70.9) 73.9
Prior service costs............................................ (43.7) (27.8)
Prepaid pension................................................ 149.2 183.0
------ -------
$105.5 $ 348.2
- - - ------------------------------------------------------------------------------------------
</TABLE>
The assumptions used in determining the funded status of
these plans as of December 31 were as follows:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992
- - - -------------------------------------------------------------------------------------------
<S> <C> <C>
Discount rate....................................................... 7.5% 9.0%
Weighted-average rate of compensation increase ..................... 5.5% 6.5%
- - - -------------------------------------------------------------------------------------------
</TABLE>
The decline in the funded status of the plans in 1993 is
due to assets paid to retirees in conjunction with the
enhanced retirement program and the lower discount rate.
Contributions to multi-employer plans in which the company
and its subsidiaries participate are determined in accordance
with the provisions of negotiated labor contracts and are based
on employee-hours worked.
POSTRETIREMENT BENEFITS
As discussed in Note 3, the company adopted FAS 106,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions," effective January 1, 1992.
The company provides certain health care and life insurance
benefits to eligible retired employees. Salaried participants
generally become eligible for retiree health care benefits
after reaching age 55 with 10 years of service or after
reaching age 65. Bargaining unit employees generally become
eligible for retiree health care benefits after reaching
age 55 with 10-15 years of service or after reaching age 65.
53
<PAGE>
<PAGE>23
FINANCIAL REVIEW
The following table sets forth the accumulated
postretirement benefit obligation (APBO) and the
total postretirement benefit liability for all
single-employer defined benefit plans at
December 31 (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992
- - - -------------------------------------------------------------------------------------------
<S> <C> <C>
Retirees............................................................$191.7 $ 110.6
Fully eligible active plan participants............................. 139.0 146.0
Other active plan participants...................................... 232.6 304.4
------ --------
Accumulated postretirement benefit obligation (APBO)................ 563.3 561.0
Unrecognized prior service benefits................................. 109.8 -
Unrecognized net actuarial (losses)................................. (51.2) -
------ --------
Total postretirement benefit liability..............................$621.9 $ 561.0
====== ========
- - - -------------------------------------------------------------------------------------------
</TABLE>
As of December 31, 1993 and 1992, $607.1 million
and $538.3 million of this obligation was classified
as a long-term liability and $14.8 million and $22.7
million was classified as a current liability,
respectively.
Net periodic postretirement benefits expense for
single-employer defined benefit plans for 1993 and
1992 was comprised of the following (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992
- - - -------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost (benefits attributed to service during the year).......$ 21.1 $ 29.8
Interest cost on accumulated postretirement benefit obligation...... 39.2 45.5
Amortization of prior service (benefit)............................. (6.5) -
Amortization of curtailment loss/(gain)............................. (4.5) -
Amortization of actuarial loss/(gain)............................... (1.0) -
------ --------
Net periodic postretirement benefits expense........................$ 48.3 $ 75.3
====== ========
- - - ------------------------------------------------------------------------------------------
</TABLE>
In measuring the APBO, a 12.5% annual trend rate
for health care costs was assumed for 1993. This
rate is assumed to decline ratably over the next
12 years to 6.5% and remain at that level thereafter.
The weighted average discount rate used in determining
the APBO was 8% and 9%, respectively, at December 31,
1993 and 1992.
If the assumed health care cost rate changed by 1%,
the APBO as of December 31, 1993 would change by 13.4%.
The effect of a 1% change in the cost trend rate on
the service and interest cost components of net
periodic postretirement benefits expense would be a
change of 17.4%.
<PAGE>
- - - --------------------------------------------------------------------------
The provision for income taxes consists of the 11-INCOME TAXES
following for the three years ended December 31
(in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current Tax Provision:
Federal......................................................$459.5 $460.6 $386.7
State and foreign............................................ 102.9 101.3 92.4
------ ------ ------
562.4 561.9 479.1
------ ------ ------
Deferred Tax Provision:
Federal..................................................... (126.2) 50.3 93.3
State and foreign........................................... (13.3) 8.8 8.4
------ ------ ------
(139.5) 59.1 101.7
------ ------ ------
$422.9 $621.0 $580.8
====== ====== ======
- - - ------------------------------------------------------------------------------------------
</TABLE>
The deferred tax provision results from differences
in the recognition of income and expense for tax and
financial reporting purposes. The primary differences
are related to fixed assets (tax effect of $51.5
million in 1993, $67.6 million in 1992 and $75.9
million in 1991) and the restructuring charge benefit
($184 million) in 1993.
Under the liability method, at December 31, 1993 the
company had deferred tax liabilities of $1,759 million
and deferred tax assets of $588 million. The principal
temporary differences included in deferred tax
liabilities are related to fixed assets ($1,548
million). The principal temporary differences included
in deferred tax assets are related to accrued
postretirement benefits ($232.2 million) and other
accruals and temporary differences ($355.9 million)
which are not deductible for tax purposes until paid or
utilized.
54
<PAGE>
<PAGE>24
On August 10, 1993, the Revenue Reconciliation Act of
1993 was signed into law. As a result, the federal
statutory income tax rate was retroactively increased,
effective January 1, 1993, by 1% to 35%. This resulted
in a $33 million non-recurring, after-tax, non-cash
charge related to revaluation of the deferred tax
liability in accordance with FAS 109.
The company's effective tax rate was 43.4% in 1993,
38.4% in 1992 and 38.2% in 1991. A reconciliation
between the statutory rate and the effective rate is
presented below:
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C>
Statutory rate..................................................35.0% 34.0% 34.0%
State income taxes, net of federal benefit...................... 4.7 3.9 3.8
Revaluation of deferred tax liability........................... 3.1 - -
Other........................................................... .6 .5 .4
---- ---- ----
Effective tax rate.............................................. 43.4% 38.4% 38.2%
- - - -------------------------------------------------------------------------------------------
- - - ----------------------------------------------------------------------------------------------------------------------------
12-CASH FLOWS For purposes of the Statement of Cash Flows, all
short-term investments with maturities of 90 days or
less are considered cash equivalents. Such amounts
include marketable securities of $4.8 million in 1993
and $104.6 million in 1992. The effect of foreign
currency exchange rate fluctuations was not material
for 1993, 1992 and 1991.
Supplemental information with respect to the
Statement of Cash Flows is presented below (in
millions):
</TABLE>
<TABLE>
CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid, net of capitalized interest...................$ 168.6 $ 158.0 $ 205.8
Income taxes paid............................................ 510.2 552.3 480.0
Excise taxes paid............................................ 1,673.4 1,663.0 1,606.6
- - - -------------------------------------------------------------------------------------------
CHANGES IN NON-CASH WORKING CAPITAL
Decrease/(increase) in non-cash current assets:
Accounts receivable........................................$ (101.3) $ 5.0 $ (92.2)
Inventories................................................ 34.0 (25.1) (68.4)
Other current assets....................................... .3 (50.3) (38.8)
Increase/(decrease) in current liabilities:
Accounts payable........................................... 75.1 27.6 (1.4)
Accrued salaries, wages and benefits....................... (13.4) 34.0 (24.0)
Accrued interest payable................................... 2.5 (6.1) (13.8)
Due to customers for returnable containers................. 2.1 3.7 (.1)
Accrued taxes, other than income taxes..................... 4.7 6.1 39.4
Estimated income taxes..................................... 52.2 (6.4) (34.0)
Other current liabilities.................................. 43.4 (1.9) 24.8
------- ------ -------
Decrease/(increase) in non-cash working capital.............. $ 99.6 $ (13.4) $(208.5)
- - - -------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<PAGE>25
FINANCIAL REVIEW
- - - ----------------------------------------------------------------------
STOCK ACTIVITY
13-PREFERRED
Activity in the company's stock categories for AND COMMON
each of the three years ended December 31 is STOCK
summarized below:
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------
Common Stock Common Stock
Issued In Treasury
- - - ----------------------------------------------------------------------------------
<S> <C> <C>
BALANCE, DECEMBER 31, 1990....................... 335,683,313 (53,377,060)
Shares issued under stock plan................... 2,696,554
Conversions of Convertible Debentures............ 72,477
Treasury stock acquired.......................... (23,500)
- - - ----------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1991....................... 338,452,344 (53,400,560)
Shares issued under stock plans.................. 2,931,179
Conversions of Convertible Debentures............ 16,805
Treasury stock acquired.......................... (9,597,492)
- - - ----------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992....................... 341,400,328 (62,998,052)
Shares issued under stock plans.................. 1,180,011
Conversions of Convertible Debentures............ 2,100
Treasury stock acquired.......................... (12,643,125)
Treasury stock issued............................ 95,413
- - - ----------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993....................... 342,582,439 (75,545,764)
- - - ----------------------------------------------------------------------------------
</TABLE>
At December 31, 1993 and 1992, 40,000,000 shares
of $1.00 par value preferred stock were authorized
and unissued.
STOCK REPURCHASE PROGRAMS
The Board of Directors has approved various
resolutions authorizing the company to purchase
shares of its common stock for investment purposes
and to meet the requirements of the company's
various stock purchase and incentive plans. In June
1992 the board authorized the repurchase of 20
million shares. The company has acquired 12.6
million, 9.6 million and 23,500 shares of common
stock in 1993, 1992 and 1991 for $639.8 million,
$518.7 million and $1.1 million, respectively. At
December 31, 1993, approximately 5.0 million shares
were available for repurchase under the 1992
authorization.
STOCKHOLDER RIGHTS PLAN
In 1985, the Board of Directors adopted a
Stockholder Rights Plan pursuant to which the board
declared a dividend of one preferred stock purchase
right on each outstanding share of common stock of
the company. The rights have subsequently been
amended in certain respects, and the description
below reflects the terms of the rights as amended.
After the rights become exercisable and until such
time as the rights expire or are redeemed, they will
entitle the holder to purchase one one-hundredth of
a share of a new Series B Junior Participating
Preferred Stock, par value $1.00 per share
(4,000,000 shares were reserved for issuance at
December 31, 1993 and 1992), at a purchase price of
$50 per one one-hundredth of a share. The rights
will become exercisable on the earlier to occur of
(i) the tenth calendar day following a public
announcement that a person or group (an "Acquiring
Person") has acquired 20% or more of the common
stock of the company, or (ii) the tenth business day
following the commencement of a tender offer or
exchange offer by a third party which, upon
consummation, would result in such party's control
of 30% or more of the common stock of the company.
If, at any time after the rights have become non-
redeemable, the company is the surviving corporation
in a merger with an Acquiring Person and its common
stock is not changed or exchanged, or an Acquiring
Person becomes the beneficial owner of more than 30%
of the then outstanding shares of common stock, each
right will entitle the holder, other than the
Acquiring Person, to purchase that number of shares
of common stock of the company which has a market
value of twice the exercise price of the right.
If, at any time after the rights have become non-
redeemable, the company is acquired in a merger or
other business combination transaction or 50% or
more of its assets or earning power is sold, each
right will entitle its holder to purchase that
number of shares of common stock of the acquiring
company which has a market value of twice the
exercise price of the right.
56
<PAGE>
<PAGE>26
The rights, which do not have voting rights, expire
on December 27, 1995, and may be redeemed by the
company at a price of 2-1/2 cents per right at any
time prior to expiration or the date on which the
company's Board of Directors permits the rights to
become non-redeemable (subject to reinstatement in
certain circumstances).
- - - ---------------------------------------------------------------------------
14-COMMITMENTS In connection with plant expansion and improvement
AND programs, the company had commitments for capital
CONTINGENCIES expenditures of approximately $315.9 million at
December 31, 1993. Obligations under capital and
operating leases are not material.
The company and certain of its subsidiaries are
involved in certain claims and legal proceedings in
which monetary damages and other relief are sought.
The company is vigorously contesting these claims.
However, resolution of these claims is not expected
to occur quickly, and their ultimate outcome cannot
presently be predicted. In any event, it is the
opinion of management that any liability of the
company or its subsidiaries for claims or proceedings
will not materially affect its financial position.
- - - ---------------------------------------------------------------------------
15-BUSINESS The company's principal business segments are beer
SEGMENTS and beer-related, food products and entertainment.
The beer and beer-related segment produces and sells
the company's beer products. Included in this segment
are the company's raw material acquisition, malting,
can manufacturing, recycling, communications and
transportation operations.
The food products segment consists of the company's
food and food-related operations which include the
company's baking and snack food subsidiaries and
certain rice operations.
The entertainment segment consists of the company's
theme parks, baseball, stadium and real estate
development operations.
Sales between segments, export sales and non-United
States sales are not material. The company's equity
in earnings of affiliated companies has been included
in other income and expense. No single customer
accounted for more than 10% of sales.
Summarized below is the company's business segment
information for 1993, 1992 and 1991 (in millions).
Intra-segment sales have been eliminated from each
segment's reported net sales.
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
Net Sales Operating Income (1) (2)
- - - -------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beer and Beer-Related........$ 8,668.9 $ 8,609.6 $ 8,323.5 $1,339.6 $1,645.4 $1,581.5
Food Products................ 2,123.2 2,131.1 2,068.7 (84.9) 75.4 95.0
Entertainment................ 741.8 684.3 617.9 (42.8) 54.9 45.0
Eliminations................. (28.6) (31.3) (13.8) - - -
--------- --------- --------- -------- -------- --------
Consolidated.................$11,505.3 $11,393.7 $10,996.3 $1,211.9 $1,775.7 $1,721.5
========= ========= ========= ======== ======== ========
- - - -------------------------------------------------------------------------------------------
<FN>
(1) Operating income excludes other expense, net, which is not allocated among segments.
For 1993, 1992 and 1991 other expense, net of $161.5 million, $160.5 million and $200.9
million, respectively, includes net interest expense, other income and expense, and
equity in earnings of affiliated companies.
(2) Operating income for 1993 includes the impact of the one-time, pretax restructuring
charge of $565 million as a result of the company's Profitability Enhancement Program.
The one-time charge relates to business segments as follows: $267.5 million for the
beer and beer-related segment; $165.9 million for the food products segment; and $131.6
million for the entertainment segment.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
Depreciation and
Identifiable Assets Amortization Expense (4)
- - - -------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beer and Beer-Related....... $ 7,515.0 $ 6,864.8 $6,660.6 $429.2 $395.1 $381.4
Food Products............... 1,510.4 1,584.1 1,359.7 103.0 100.9 89.5
Entertainment............... 1,470.5 1,588.2 1,565.7 76.1 71.0 63.2
Corporate (3)............... 384.4 500.8 400.5 - - -
--------- --------- --------- ------ ------- -------
Consolidated................ $10,880.3 $10,537.9 $9,986.5 $608.3 $567.0 $534.1
========= ========= ======== ====== ======= =======
- - - -------------------------------------------------------------------------------------------
<FN>
(3) Corporate assets principally include cash, marketable securities, investment in
affiliated companies and certain fixed assets.
(4) Consolidated depreciation and amortization expenses include $17.4 million, $15.8
million and $16.0 million of depreciation expense related to corporate assets for 1993,
1992 and 1991, respectively.
</TABLE>
57
<PAGE>
<PAGE>27
FINANCIAL REVIEW
<TABLE>
<CAPTION>
-----------------------------------------------
CAPITAL EXPENDITURES
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beer and Beer-Related......................... $529.7 $490.4 $511.5
Food Products................................. 122.7 109.5 82.5
Entertainment................................. 124.5 137.3 108.5
------ ------ ------
Consolidated.................................. $776.9 $737.2 $702.5
====== ====== ======
- - - -------------------------------------------------------------------------------------------
- - - -----------------------------------------------------------------------------------------------------------------
Additional income statement information (in millions): 16-ADDITIONAL
- - - ------------------------------------------------------------------------------------------- INFORMATION
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
Maintenance....................... $415.5 $403.0 $405.4
====== ====== ======
Advertising costs................. $701.6 $747.6 $682.6
====== ====== ======
- - - -------------------------------------------------------------------------------------------
</TABLE>
Summarized below is selected financial information
for Anheuser-Busch, Inc. (a wholly owned subsidiary of
Anheuser-Busch Companies, Inc.) as of and for the years
ended December 31 (in millions):
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------------------
1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Statement Information:
Net sales.................... $ 7,624.0 $7,669.9 $7,475.4
Gross profit................. 2,844.8 2,875.6(2) 2,707.5
Net income (1)............... 712.7(3) 860.5(2) 829.4
Balance Sheet Information:
Current assets............... 670.6 667.8
Non-current assets........... 11,185.6 9,945.4
Current liabilities.......... 813.2 693.7
Non-current liabilities (1).. 3,431.4 3,020.6
- - - -------------------------------------------------------------------------------------------
<FN>
(1) Anheuser-Busch, Inc. is co-obligor for all outstanding Anheuser-Busch Companies, Inc.
indebtedness. Accordingly, all such debt is included as an element of non-current
liabilities and the interest thereon is included in the determination of net income.
(2) Gross profit and net income for 1992 reflect the January 1, 1992 adoption of FAS 106.
Excluding the adoption of FAS 106, gross profit would have been $2,907.7 million and
net income would have been $883.1 million, respectively.
(3) Net income for 1993 reflects $89.6 million representing Anheuser-Busch, Inc.'s share of
the $565 million pretax restructuring charge.
</TABLE>
58
<PAGE>
<PAGE>28
- - - ---------------------------------------------------------------------------
17-QUARTERLY Summarized quarterly financial data for 1993 and
FINANCIAL 1992 (in millions, except per share data)
DATA appears below. Gross profit, net income and
(UNAUDITED) earnings per share for each quarter of 1992 have
been retroactively restated to reflect the company's
adoption, as of January 1, 1992, of FAS 106 and
FAS 109.
<TABLE>
<CAPTION>
-------------------------
EARNINGS/(LOSS) PER SHARE
-------------------------------------------------------------------------------------------------------
- - - -
NET SALES GROSS PROFIT NET INCOME/(LOSS) PRIMARY FULLY DILUTED
- - - --------------------------------------------------------------------------------------------------------
1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
- - - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First quarter $ 2,503.4 $ 2,621.1 $ 850.3 $ 930.9 $194.1 $138.4 $ .69 $ .48 $ .69 $ .48
Second quarter 2,990.8 2,953.4 1,092.9 1,092.8 308.6 308.4 1.12 1.07 1.11 1.06
Third quarter 3,156.7 3,091.6 1,179.3 1,139.4 (75.0) 309.1 (.28) 1.09 (.28) 1.08
Fourth quarter 2,854.4 2,727.6 963.1 921.5 166.8 161.6 .62 .58 .62 .58
- - - --------------------------------------------------------------------------------------------------------
Annual $11,505.3 $11,393.7 $4,085.6 $4,084.6 $594.5 $917.5 $2.17 $3.22 $2.17 $3.20
- - - --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
For accounting purposes, the net impact of the
one-time cumulative effect adjustment of $76.7
million ($.26 per share) for years prior to 1992,
for both FAS 106 and FAS 109, is reflected entirely
in net income and earnings per share of the first
quarter of 1992.
Third quarter 1993 net income and earnings per
share include the impact of the one-time pretax
restructuring charge of $565 million related to
the company's Profitability Enhancement Program
and the $33 million deferred tax liability
revaluation charge due to the 1% tax rate increase.
Excluding these items, third quarter 1993 net
income and fully diluted earnings per share
would have been $311.1 million and $1.13,
respectively, and net income and fully diluted
earnings per share for the year would have
been $980.6 million and $3.55, respectively.
59
<PAGE>
<PAGE>29
<TABLE>
<CAPTION>
FINANCIAL SUMMARY-OPERATIONS
Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions, except per share data)
- - - ----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- - - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS
Barrels sold....................................................................... 87.3 86.8 86.0
Sales.............................................................................. $13,185.1 $13,062.3 $12,634.2
Federal and state excise taxes................................................... 1,679.8 1,668.6 1,637.9
- - - ----------------------------------------------------------------------------------------------------------------------------
Net sales.......................................................................... 11,505.3 11,393.7 10,996.3
Cost of products and services.................................................... 7,419.7 7,309.1 7,148.7
- - - ----------------------------------------------------------------------------------------------------------------------------
Gross profit....................................................................... 4,085.6 4,084.6 3,847.6
Marketing, distribution and administrative expenses.............................. 2,308.7 2,308.9 2,126.1
Restructuring charge............................................................. 565.0 - -
- - - ----------------------------------------------------------------------------------------------------------------------------
Operating income................................................................... 1,211.9(1) 1,775.7(2) 1,721.5
Interest expense................................................................. (207.8) (199.6) (238.5)
Interest capitalized............................................................. 36.7 47.7 46.5
Interest income.................................................................. 5.2 7.1 9.2
Other income/(expense), net...................................................... 4.4 (15.7) (18.1)
- - - ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes......................................................... 1,050.4(1) 1,615.2(2) 1,520.6
Income taxes (current/deferred).................................................. 422.9 621.0 580.8
Revaluation of deferred tax liability 33.0 - -
--------- -------- ---------
Net income, before cumulative effect of accounting changes......................... 594.5(1) 994.2(2) 939.8
Cumulative effect of changes in the method of accounting
for postretirement benefits (FAS 106) and income taxes
(FAS 109), net of tax benefit of $186.4 million.................................. - (76.7) -
--------- -------- ---------
NET INCOME......................................................................... $ 594.5(1) $ 917.5 $ 939.8
========= ======== =========
- - - ----------------------------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE:
Net income before cumulative effect................................................ $ 2.17$ 3.48(2) $ 3.26
Cumulative effect of accounting changes............................................ - (.26) -
--------- -------- ---------
Net income......................................................................... $ 2.17(1)$ 3.22 $ 3.26
========== ======== =========
FULLY DILUTED EARNINGS PER SHARE:
Net income before cumulative effect................................................ $ 2.17 $ 3.46(2) $ 3.25
Cumulative effect of accounting changes............................................ - (.26) -
--------- --------- ---------
Net income......................................................................... $ 2.17(1) $ 3.20 $ 3.25
========= ========= =========
Cash dividends paid:
Common stock..................................................................... 370.0 338.3 301.1
Per share...................................................................... 1.36 1.20 1.06
Preferred stock.................................................................. - - -
Per share...................................................................... - - -
Average number of common shares:
Primary.......................................................................... 274.3 285.8 287.9
Fully diluted.................................................................... 279.3 290.8 292.9
- - - ----------------------------------------------------------------------------------------------------------------------------
<FN>
NOTES TO FINANCIAL SUMMARY-OPERATIONS
Note: All per share information and average number of common shares data reflect the September 12, 1986 two-for-one stock
split and the June 14, 1985 three-for-one stock split. All amounts reflect the acquisition of Sea World as of December 1,
1989. Financial information prior to 1988 has been restated to reflect the adoption in 1988 of Financial Accounting Standards
No. 94, Consolidation of Majority-Owned Subsidiaries.
</TABLE>
60
<PAGE>
<PAGE>30
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984 1983
- - - ----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
86.5 80.7 78.5 76.1 72.3 68.0 64.0 60.5
$11,611.7 $10,283.6 $9,705.1 $9,110.4 $8,478.8 $7,756.7 $7,218.8 $6,714.7
868.1 802.3 781.0 760.7 724.5 683.0 657.0 624.3
- - - ----------------------------------------------------------------------------------------------------------------------------
10,743.6 9,481.3 8,924.1 8,349.7 7,754.3 7,073.7 6,561.8 6,090.4
7,093.5 6,275.8 5,825.5 5,374.3 5,026.5 4,729.8 4,464.6 4,161.0
- - - ----------------------------------------------------------------------------------------------------------------------------
3,650.1 3,205.5 3,098.6 2,975.4 2,727.8 2,343.9 2,097.2 1,929.4
2,051.1 1,876.8 1,834.5 1,826.8 1,709.8 1,498.2 1,338.5 1,226.4
- - - - - - - -
----------------------------------------------------------------------------------------------------------------------------
1,599.0 1,328.7 1,264.1 1,148.6 1,018.0 845.7 758.7 703.0
(283.0) (177.9) (141.6) (127.5) (99.9) (96.5) (106.0) (115.4)
54.6 51.5 44.2 40.3 33.2 37.2 46.8 32.9
7.0 12.6 9.8 12.8 9.6 21.3 22.8 12.5
(25.5) 11.8 (16.4) (9.9) (13.6) (23.3) (29.6) (14.8)
- - - ----------------------------------------------------------------------------------------------------------------------------
1,352.1 1,226.7 1,160.1 1064.3 947.3(3) 784.4 692.7 618.2
509.7 459.5 444.2 449.6 429.3 340.7 301.2 270.2
- - - - - - - -
- - - --------- --------- -------- -------- -------- -------- -------- --------
842.4 767.2 715.9 614.7 518.0(3) 443.7 391.5 348.0
- - - - - - - -
- - - --------- --------- -------- -------- -------- -------- -------- --------
$ 842.4 $ 767.2 $ 715.9 $ 614.7 $ 518.0(3) $ 443.7 $ 391.5 $ 348.0
========= ========= ======== ======== ======== ======== ======== ========
- - - -----------------------------------------------------------------------------------------------------------------------------
$ 2.96 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08
- - - - - - - -
- - - --------- --------- -------- -------- -------- -------- -------- --------
$ 2.96 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08
========= ========= ======== ======== ======== ======== ======== ========
$ 2.95 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08
- - - - - - - -
- - - --------- --------- -------- -------- -------- -------- -------- --------
$ 2.95 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08
========= ========= ======== ======== ======== ======== ======== ========
265.0 226.2 188.6 148.4 120.2 102.7 89.7 78.3
.94 .80 .66 .54 .44 .36 2/3 .31 1/3 .27
- - - 20.1 26.9 27.0 27.0 29.7
- - - 3.23 3.60 3.60 3.60 3.60
284.6 286.2 292.2 301.5 306.6 312.6 317.4 321.0
289.7 286.2 292.2 301.5 306.6 312.6 317.4 321.0
- - - ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) 1993 results include the impact of two non-recurring special charges. These charges are (1) a restructuring charge
($565 million pretax) and (2) a revaluation of the deferred tax liability due to the 1% increase in federal tax rates
($33 million after-tax). Excluding these non-recurring special charges, operating income, pretax income, net income and
fully diluted earnings per share would have been $1,776.9 million, $1,615.4 million, $980.6 million and $3.55 ,
respectively.
(2) 1992 operating income, income before income taxes, net income and earnings per share reflect the 1992 adoption of the
new Financial Accounting Standards pertaining to Postretirement Benefits (FAS 106) and Income Taxes (FAS 109). Excluding
the financial impact of these Standards, 1992 operating income, income before income taxes, net income and fully diluted
earnings per share would have been $1,830.8 million, $1,676.0 million, $1,029.2 million and $3.58, respectively.
(3) Effective January 1, 1986, the company adopted the provisions of Financial Accounting Standards No. 87 (FAS 87),
Employers' Accounting For Pensions. The financial effect of FAS 87 adoption was to increase 1986 income before income
taxes $45 million, net income $23 million and earnings per share $.08.
</TABLE>
61
<PAGE>
<PAGE>31
<TABLE>
<CAPTION>
FINANCIAL SUMMARY-BALANCE SHEET AND OTHER INFORMATION
Anheuser-Busch Companies, Inc., and Subsidiaries
(In millions, except per share and statistical data)
- - - ----------------------------------------------------------------------------------------------------------
1993 1992 1991
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE SHEET INFORMATION
Working capital (deficit).......................... $ (20.4) $ 356.0 $ 224.9
Current ratio...................................... 1.0 1.2 1.2
Plant and equipment, net........................... 7,497.1 7,523.7 7,196.5
Long-term debt..................................... 3,031.7 2,642.5 2,644.9
Total debt to total capitalization................. 41.6% 36.4% 37.3%
Deferred income taxes.............................. 1,170.4 1,276.9 1,500.7
Convertible redeemable preferred stock............. - - -
Shareholders equity................................ 4,255.5 4,620.4 4,438.1
Return on shareholders equity...................... 13.4%(4) 22.0%(2) 23.2%
Book value per share............................... 15.94 16.60 15.57
Total assets....................................... 10,880.3 10,537.9 9,986.5
- - - ----------------------------------------------------------------------------------------------------------
OTHER INFORMATION
Capital expenditures............................... 776.9 737.2 702.5
Depreciation and amortization...................... 608.3 567.0 534.1
Effective tax rate................................. 43.4% 38.4% 38.2%
Price/earnings ratio............................... 22.6(4) 16.9(3) 18.9
Percent of pretax profit on net sales.............. 9.1% 14.2% 13.8%
Market price range of common stock (high/low)...... 60-44 1/860 1/2-52 1/8 61 1/2-39 5/8
- - - ----------------------------------------------------------------------------------------------------------
<FN>
NOTES TO FINANCIAL SUMMARY-BALANCE SHEET AND OTHER INFORMATION
Note: All per share information reflects the September 12, 1986 two-for-one stock split and the June 14, 1985 three-for-one
stock split. All amounts reflect the acquisition of Sea World as of December 1, 1989. Financial information prior to 1988 has
been restated to reflect the adoption in 1988 of Financial Accounting Standards No. 94, Consolidation of Majority-Owned
Subsidiaries.
(1) This percentage has been calculated by including convertible redeemable preferred stock as part of equity because it was
convertible into common stock and was trading primarily on its equity characteristics.
(2) This percent has been calculated based on net income before the cumulative effect of accounting changes.
(3) This ratio has been calculated based on fully diluted earnings per share before the cumulative effect of accounting
changes.
(4) These ratios have been calculated based on reported net income. Excluding the two non-recurring 1993 charges ($565
million pretax restructuring charge and $33 million after-tax FAS 109 charge) return on shareholders equity would have
been 21.2% and the price/earnings ratio would have been 13.8.
</TABLE>
62<PAGE>
<PAGE>32
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984 1983
- - - ------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 14.4 $ (25.7) $ 15.2 $ 75.8 $ (3.7) $ 116.0 $ 71.5 $ 173.1
1.0 1.0 1.0 1.1 1.0 1.1 1.1 1.2
7,063.8 6,671.3 5,467.7 4,994.8 4,494.9 3,960.8 3,579.5 3,269.8
3,147.1 3,307.3 1,615.3 1,422.6 1,164.0 904.7 879.5 1,003.1
46.1% 52.4% 34.2% 33.0% 31.6%(1) 26.9%(1) 28.2%(1) 32.8%(1)
1,396.2 1,315.9 1,212.5 1,164.3 1,094.0 964.7 757.9 574.3
- - - - 286.9 287.6 286.9 286.0
3,679.1 3,099.9 3,102.9 2,892.2 2,313.7 2,173.0 1,951.0 1,766.5
24.9% 24.7% 23.9% 22.4% 20.5%(1) 18.9%(1) 18.2%(1) 18.0%(1)
13.03 10.95 10.95 9.87 8.61 7.84 6.91 6.09
9,634.3 9,025.7 7,109.8 6,547.9 5,898.1 5,192.9 4,592.5 4,386.8
- - - ------------------------------------------------------------------------------------------------------------------------------
898.9 1,076.7 950.5 841.8 796.2 611.3 532.3 441.3
495.7 410.3 359.0 320.1 281.2 240.0 207.9 191.3
37.7% 37.5% 38.3% 42.2% 45.3% 43.4% 43.5% 43.7%
14.6 14.4 12.9 16.4 15.5 14.9 9.8 9.6
12.6% 12.9% 13.0% 12.7% 12.2% 11.1% 10.6% 10.2%
45-34 1/4 45 7/8-30 5/8 34 1/8-29 1/8 39 3/4-26 3/8 28 5/8-20 22 7/8-11 7/8 12 3/8-8 7/8 12 7/8-9 3/4
- - - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
<PAGE>33
INVESTOR INFORMATION
- - - --------------------------------------------------------------------------
Anheuser-Busch Companies, Inc. is a diversified THE CORPORATION
corporation whose subsidiaries include the
world's largest brewing organization, the country's
second-largest producer of fresh-baked
goods and the country's second-largest theme park
operator. The company also has interests in
container manufacturing and recycling, malt and rice
production, international brewing and beer marketing,
snack foods, international baking, refrigerated and
frozen foods, real estate development, major league
baseball, stadium ownership, creative services,
railcar repair and transportation services, and
metalized-label printing.
- - - ---------------------------------------------------------------------------
Trademarks of the corporation and its subsidiaries TRADEMARKS
include: Anheuser-Busch, the A & Eagle Design,
Budweiser, Bud, Bud Dry, Bud Light, King of Beers,
Michelob, Michelob Dry, Michelob Light, Michelob Classic
Dark, Michelob Golden Draft, Mich, Busch, Natural Light,
King Cobra, O'Doul's, Busch Gardens, Adventure Island,
Kingsmill, Cardinals, Eagle (for snacks), Rainbo,
Colonial, Earth Grains, Sea World and Shamu, among others.
- - - --------------------------------------------------------------------------
The annual meeting of shareholders will be held on ANNUAL MEETING
Wednesday, April 27, 1994, in Los Angeles, Calif.
A formal notice of the meeting together with a proxy
statement will be mailed to shareholders in mid-March 1994.
- - - --------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE ADDITIONAL
SECURITIES AND EXCHANGE COMMISSION (FORM 10-K) IS INFORMATION
AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON
WRITTEN REQUEST TO JOBETH G. BROWN, VICE PRESIDENT
AND SECRETARY, ANHEUSER-BUSCH COMPANIES, INC.,
ONE BUSCH PLACE, ST. LOUIS, MO. 63118.
A copy of the corporation's "Fact Book," which
contains general information about the company,
may be obtained by writing to Corporate Communications,
Anheuser-Busch Companies, Inc., One Busch Place,
St. Louis, Mo. 63118.
Anheuser-Busch Companies, Inc. common stock is listed COMMON STOCK
and traded on the New York Stock Exchange and the
London, Frankfurt, Paris, Zurich, Geneva, Basle and
Tokyo Stock Exchanges. It is also traded on the Boston,
Midwest, Cincinnati, Pacific and Philadelphia Stock
Exchanges and the over-the-counter market. Options in
the company's common stock are traded on the Philadelphia
Stock Exchange. The stock is quoted as "AnheuserB" in
stock table listings in daily newspapers in the U.S.;
the abbreviated ticker symbol is "BUD."
- - - ---------------------------------------------------------------------------
Dividends on common stock are normally paid in the DIVIDENDS
months of March, June, September and December.
- - - --------------------------------------------------------------------------
The company's Dividend Reinvestment Plan allows DIVIDEND
shareholders to reinvest dividends in Anheuser-Busch REINVESTMENT
Companies, Inc. common stock automatically, regularly
and conveniently-without service charges or brokerage
fees. In addition, participating shareholders may
supplement the amount invested with voluntary cash
investments on the same cost-free basis. Plan
participation is voluntary and shareholders may join
or withdraw at any time.
Full details concerning the Anheuser-Busch plan are available from:
Boatmen's Trust Company
Dividend Reinvestment Agent
P.O. Box 14793
St. Louis, Mo. 63178-4793
(314) 466-1357 (local)
(800) 456-9852 (long distance)
64
<PAGE>
- - - ---------------------------------------------------------------------------
TRANSFER AGENT AND Boatmen's Trust Company
REGISTRAR- 510 Locust Street
COMMON STOCK St. Louis, Mo. 63101
(314) 466-1357 (local)
(800) 456-9852 (long distance)
- - - ---------------------------------------------------------------------------
DIVIDEND Boatmen's Trust Company
DISBURSING AGENT 510 Locust Street
St. Louis, Mo. 63101
(314) 466-1357 (local)
(800) 456-9852 (long distance)
- - - ---------------------------------------------------------------------------
TRUSTEE For all notes and debentures:
DEBENTURES/NOTES Chemical Bank
55 Water Street
New York, N.Y. 10041
- - - --------------------------------------------------------------------------
FISCAL AGENT- 8% dual-currency Japanese yen/U.S. dollar notes:
NOTES The Industrial Bank of Japan, Limited
3-3 Marunouchi 1-Chome
Chiyoda-ku
Tokyo 100, Japan
- - - --------------------------------------------------------------------------
INDEPENDENT Price Waterhouse
ACCOUNTANTS One Boatmen's Plaza
St. Louis, Mo. 63101
- - - --------------------------------------------------------------------------
CORPORATE OFFICE One Busch Place
St. Louis, Mo. 63118
(314) 577-2000
65
<PAGE>
<PAGE>34
APPENDIX
In Exhibit 13 to the printed Form 10-K, the following bar
graphs appear, all depicting data for 1989, 1990, 1991, 1992 and
1993: on page 33, "SALES" depicting gross sales and net sales in
billions of dollars; on page 34, "TOTAL PAYROLL COST" depicting
total payroll cost in millions of dollars; on page 35, "OPERATING
INCOME" depicting operating income in millions of dollars; on
page 36, "NET INCOME/DIVIDENDS ON COMMON STOCK" depicting net
income and dividends in millions of dollars and "EARNINGS PER
SHARE-FULLY DILUTED" depicting fully diluted earnings per share
data; on page 37, "CASH FLOW FROM OPERATIONS" depicting cash flow
from operations in millions of dollars; on page 38, "CAPITAL
EXPENDITURES/DEPRECIATION AND AMORTIZATION" depicting capital
expenditures and depreciation and amortization in millions of
dollars; and, on page 40, "SHAREHOLDERS EQUITY/LONG-TERM DEBT"
depicting shareholders equity and long-term debt in millions of
dollars.
In Exhibit 13 to the printed Form 10-K, the following photos
appear: on pages 33, a photo of the Company's Ice Draft from
Budweiser product; on page 35, a photo of the Company's Busch
Light and Busch products; and, on page 39, a photo of a partial
bag of Eagle brand Thins potato chips.
<PAGE>1
EX-21
<TABLE>
SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC.
----------------------------------------------
<CAPTION>
STATE OF DOING BUSINESS
NAME OF COMPANY INCORPORATION UNDER NAME OF
- - - --------------- ------------- -------------
<S> <C> <C>
Anheuser-Busch, Incorporated Missouri Anheuser-Busch,Incorporated
Campbell Taggart, Inc. Delaware Campbell Taggart, Inc.
Busch Entertainment Corporation Delaware Busch Entertainment Corporation
Anheuser-Busch International, Inc. Delaware Anheuser-Busch International, Inc.
Metal Container Corporation Delaware Metal Container Corporation
Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc.
</TABLE>
All other subsidiaries of the Company, considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary as of December 31,
1993.
