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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM --------- TO ---------
COMMISSION FILE NUMBER 1-7823
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
------------------------
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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<S> <C>
COMMON STOCK--$1 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
6 1/2% DEBENTURES DUE JANUARY 1, 2028 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. [ ]
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant.
$28,643,738,560 AS OF FEBRUARY 29, 2000
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 452,656,492 SHARES AS OF MARCH 8, 2000
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of Annual Report to Shareholders for the Year
Ended December 31, 1999............................... PART I, PART II, and PART IV
Portions of Definitive Proxy Statement for Annual
Meeting of Shareholders on April 26, 2000............. 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. The Company's operations are comprised of the
following business segments: domestic beer, international beer, packaging,
entertainment and other. Financial information with respect to the Company's
business segments appears in Note 14, "Business Segments," on pages
54-55 of the 1999 Annual Report to Shareholders, which Note hereby is
incorporated by reference.
Domestic beer volume was 95.7 million barrels in 1999 as compared with 92.7
million barrels in 1998. Worldwide sales of the Company's beer brands aggregated
102.9 million barrels in 1999 as compared with 99.8 million barrels in 1998 and
accounted for approximately 82% of the Company's consolidated net sales dollars
in 1999 and approximately 80% in 1998 and 1997. Worldwide beer volume is
comprised of domestic and international volume. Domestic volume represents
Anheuser-Busch brands produced and shipped within the United States.
International volume represents Anheuser-Busch brands produced overseas by
Company-owned breweries and under license and contract brewing agreements, plus
exports from the Company's U.S. breweries to markets around the world. Total
volume includes the Company's pro rata share of the volume of international
equity partners, Grupo Modelo, S.A. de C.V. and Companhia Antarctica Paulista
(for periods prior to July 1999 when the Company terminated its equity
partnership with Companhia Antarctica Paulista), combined with worldwide
Anheuser-Busch brand volume. Total beer volume was 118.0 million barrels and
111.0 million barrels in 1999 and 1998, respectively.
DOMESTIC BEER 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, Bud Ice, Bud Ice Light, Michelob, Michelob Light,
Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob
Classic Dark, Michelob Black & Tan Lager, Michelob Amber Bock, Michelob Pale
Ale, Michelob Honey Lager, Michelob Hefe-Weizen, Busch, Busch Light, Busch Ice,
Natural Light, Natural Ice, King Cobra, Red Wolf Lager, ZiegenBock Amber,
Hurricane Malt Liquor, Hurricane Ice, Pacific Ridge Ale, Tequiza, Safari Amber
Lager, Devon's Shandy, and Rhumba. ABI's products also include three non-alcohol
malt beverages, O'Doul's, Busch NA, and O'Doul's Amber. During 1999 ABI
introduced Rhumba and Devon's Shandy and discontinued Rio Cristal, Michelob
Malt, and Catalina Blonde. The Company brews Kirin Light, Kirin Lager, and
Kirin-Ichiban through a joint venture agreement with Kirin Brewing Company, Ltd.
of Japan for sale in the United States. ABI owns a 25% equity interest in
Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products
are distributed exclusively by ABI wholesalers in all new U.S. markets entered
by Redhook since 1994. ABI also owns a 31% interest in Portland-based Widmer
Brothers Brewing Company. Widmer products are distributed exclusively by ABI
wholesalers in all new U.S. markets entered by Widmer since 1997.
Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob
Light, Michelob Black & Tan Lager, Michelob Golden Draft, Michelob Golden Draft
Light, Michelob Classic Dark, Michelob Amber Bock, Michelob Honey Lager,
Michelob Hefe-Weizen, Busch, Busch Light, Natural Light, Natural Ice, Red Wolf
Lager, ZiegenBock Amber, Kirin-Ichiban, O'Doul's, O'Doul's Amber, Widmer beer
products, and Redhook Ales are sold in both draught and packaged form. Busch
Ice, King Cobra, Hurricane Malt Liquor, Michelob Dry, Michelob Pale Ale, Devon's
Shandy, Rhumba, Tequiza, Hurricane Ice, Kirin Lager, Kirin Light, and Busch NA
are sold only in packaged form. Pacific Ridge Ale and Safari Amber Lager are
sold only in draught form.
Budweiser, Bud Light, Bud Ice, Bud Ice Light, Michelob, Michelob Light,
Michelob Amber Bock, Tequiza, Natural Light, Natural Ice, O'Doul's Amber, and
O'Doul's are distributed and sold on a nationwide basis. Busch, Busch Light, and
Michelob Honey Lager are sold in 49 states; King Cobra, Michelob Hefe-Weizen,
Bud Dry, Red Wolf Lager, and Redhook Ales in 48 states; Michelob Black & Tan
Lager in 47 states; Michelob Pale Ale in 46 states; Michelob Classic Dark and
Busch NA in 45 states; Hurricane Malt Liquor in 43 states; Michelob Dry in 42
states; Kirin Lager and Kirin-Ichiban in 36 states; Kirin Light in 32 states;
Busch Ice in 20 states; Widmer beer products in 18 states; Michelob Golden Draft
and Michelob Golden Draft Light in 10 states; Devon's Shandy in 5 states;
Pacific Ridge Ale in 2 states; Rhumba, Hurricane Ice, Safari Amber Lager and
ZiegenBock Amber in 1 state.
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ABI has developed a system of twelve breweries, strategically located across
the country, to economically serve its distribution system. (See Item 2 of Part
I--Properties.) Ongoing modernization programs are part of ABI's overall
strategic initiatives. By using controlled environment warehouses and stringent
inventory monitoring policies, the quality and freshness of the product are
protected, thus providing ABI a significant competitive advantage.
During 1999 approximately 95% of the beer sold by ABI, measured in barrels,
reached retail channels through approximately 700 independent wholesalers. ABI
utilizes its regional vice-presidents, sales directors, key account and market
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
promotion programs to help stimulate sales. The remainder of ABI's domestic beer
sales in 1999 were made through twelve ABI owned and operated branches, which
perform similar sales, merchandising, and delivery services as wholesalers in
their respective areas. ABI's peak selling periods are the second and third
quarters.
There are more than 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, in part due to
differences in applicable state laws, the principal methods of competition are
product quality, taste and freshness, 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, Bud
Ice, Bud Ice Light, Michelob Golden Draft, and Michelob Golden Draft Light
compete primarily with premium priced beers. Michelob, Michelob Light, Michelob
Dry, Michelob Classic Dark, and Michelob Amber Bock compete in the
super-premium priced category. Busch, Busch Light, Natural Light, Busch Ice,
and Natural Ice compete with the sub-premium or popular priced beers. King
Cobra, Hurricane Malt Liquor, and Hurricane Ice compete against other brands in
the malt liquor segment. Kirin Lager, Kirin Light, and Kirin-Ichiban compete
primarily with imported malt beverages. Michelob Honey Lager, Michelob Pale
Ale, Michelob Black & Tan Lager, Tequiza, Red Wolf Lager, ZiegenBock Amber,
Michelob Hefe-Weizen, Pacific Ridge Ale, Safari Amber Lager, Devon's Shandy,
Rhumba, the Redhook products, and Widmer beer products compete primarily in the
specialty beers segment of the malt beverage market. O'Doul's and O'Doul's
Amber (premium priced) and Busch NA (sub-premium priced) compete in the
non-alcohol malt beverage category. Since 1957, ABI has led the United States
brewing industry in total sales volume. In 1999, its sales exceeded those of
its nearest competitor by more than 52 million barrels. ABI's domestic market
share (excluding exports) for 1999 was 47.5%. Including exports, ABI's share of
U.S. shipments for 1999 was 47.3%. Major competitors in the United States
brewing industry during 1999 included Philip Morris, Inc. (through its
subsidiary Miller Brewing Co.), Adolph Coors Co., and Pabst Brewery Co.
The Company's wholly-owned subsidiary, Busch Agricultural Resources, Inc.
("BARI"), operates rice milling and research facilities in Arkansas and
California; twelve grain elevators in the western and midwestern United States;
barley seed processing plants in Fairfield, Montana, Idaho Falls, Idaho, Powell,
Wyoming, and Moorhead, Minnesota; and a barley research facility in Ft. Collins,
Colorado. BARI also owns and operates malt plants in Manitowoc, Wisconsin,
Moorhead, Minnesota, and Idaho Falls, Idaho. In 1999, BARI sold the wild rice
processing business known as Gourmet House. Through wholly-owned subsidiaries,
BARI operates land application farms in Jacksonville, Florida and Fort Collins,
Colorado; hop farms in Bonners Ferry, Idaho and Huell, Germany; and an
international office in Mar del Plata, Argentina.
Another wholly-owned subsidiary, Wholesaler Equity Development Corporation,
shares equity positions with qualified partners in independent beer
wholesalerships and is currently invested in 8 wholesalerships.
INTERNATIONAL BEER OPERATIONS
International beer volume was 7.2 million barrels in 1999, compared with 7.1
million barrels in 1998. Anheuser-Busch International, Inc. ("ABII"), a
wholly-owned subsidiary of the Company, operates breweries in the United Kingdom
(U.K.) and China, negotiates and administers license and contract brewing
agreements on behalf of ABI with various foreign brewers and negotiates and
manages equity investments in foreign brewing partners. In addition, ABI's beer
products are being sold under import-distribution agreements in more than 80
countries and U.S. territories and to the U.S. military and diplomatic corps
outside the continental United States.
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In Canada, Budweiser and Bud Light are brewed and sold through a license
agreement with Labatt Brewing Co.
ABI, through ABII, participated with Kirin Brewing Company, Ltd. in a joint
venture in Japan, Budweiser Japan Company, Ltd., of which the Company was a 90%
shareholder, for marketing, distribution and sale of Budweiser. Effective
January 2000, the joint venture was converted to an exclusive licensing
agreement with Kirin for the production and sale of Budweiser in Japan.
Through Anheuser-Busch European Trade Ltd. ("ABET"), an indirect,
wholly-owned subsidiary of the Company, certain ABI beer brands are marketed,
distributed and sold in twenty-nine European countries. In the U.K., ABET sells
Budweiser, Bud Light, Bud Ice, Michelob, and Michelob Golden Draft brands to
selected on-premise accounts, brewers, wholesalers and directly to off-premise
accounts. In 1995, ABET and Scottish Courage Ltd. entered into a joint venture,
Stag Brewing Company Ltd., which brews and packages Budweiser at the Stag
Brewery near London, England. In 1997, ABET purchased Scottish Courage's 50%
interest in the joint venture company giving ABET full control over the
management and operation of the brewery. Michelob and Michelob Golden Draft
continue to be imported into the U.K. by ABET.
Budweiser is also brewed under license and sold by brewers in Korea
(Oriental Brewery Ltd.), the Republic of Ireland and Northern Ireland (Guinness
Ireland Ltd.), Italy (Birra Peroni Industriale) and the Philippines (Asia
Brewery, Inc.). In 1995, ABII entered into a contract brewing agreement with
Sociedad Anonima Damm, one of the largest brewers in Spain, giving the Spanish
brewer rights to contract brew and package beer under the brand name Budweiser
in Spain and to distribute it on a non-exclusive basis. In 1998, the Company
formed a new partnership with Brasseries Kronenbourg, the leading brewer in
France, for sale and distribution of Bud in France.
In 1996, ABII purchased a 5% equity interest (with options to increase its
equity stake to 30%) in Antarctica Empreendimentos e Participacoes Ltda.
("ANEP"), the principal operating subsidiary of Companhia Antarctica Paulista
("Antarctica"), one of Brazil's leading brewers, and formed a strategic
partnership with Antarctica. A component of the partnership was a joint venture
company named Budweiser Brasil Ltda. ("BBL") that marketed and distributed
locally-produced Budweiser in Brazil. CADE, the Brazilian anti-trust agency,
required the Company's equity purchase options to be mandatorily exercised at
specified dates. The first of the required fixed-dollar investment options was
set to expire in September 1999, but was determined by the Company to be no
longer economically attractive. Accordingly, in July 1999, the Company exercised
its right to end its equity partnership with Antarctica, and also discontinued
the BBL joint venture, effective December 1999, converting its Budweiser
production agreement to an export arrangement.
In 1995, the Company formed an alliance with Compania Cervecerias Unidas
S.A. ("CCU"), the leading Chilean brewer. Under the terms of the alliance, a
subsidiary of CCU in Argentina ("CCU-Argentina") brews and distributes Budweiser
under license in Argentina. CCU also distributes Budweiser in Chile. The Company
initially purchased a minority stake in CCU-Argentina, increased its ownership
to 8.2% in 1998 and to 10.7% in December 1999.
In 1995, the Company purchased an initial 80% equity interest in a joint
venture, renamed the Budweiser Wuhan International Brewing Company, Ltd., that
owns and operates a brewery in Wuhan, the fifth-largest city in China. This
ownership interest was subsequently increased to 86.6%. The Company also owns a
5% equity interest in Tsingtao Brewery Company Ltd., a leading Chinese brewer.
ABII also negotiates and oversees the Company's investments in international
brewing companies. In 1993, Anheuser-Busch purchased a 17.7% direct and indirect
equity interest in Grupo Modelo's operating subsidiary, Diblo, for $477 million.
In May 1997, the Company increased its direct and indirect equity ownership in
Diblo to 37% for an additional $605 million. In September 1998, the Company
completed the purchase of an additional 13.25% of Diblo for $556.5 million,
bringing the Company's total investment to $1.6 billion. The Company now owns a
50.2% direct and indirect interest in Diblo. However, the Company does not have
voting or other effective control in either Grupo Modelo or Diblo.
PACKAGING OPERATIONS
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 customers. (See Item 2 of Part 1--Properties).
Another wholly-owned subsidiary of the Company, Anheuser-Busch Recycling
Corporation
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("ABRC"), recycles aluminum cans at its plant in Hayward, California, for
conversion into new can sheet. The Company's wholly-owned subsidiary, Precision
Printing and Packaging, Inc. ("PPPI"), manufactures metalized and paper labels
at its plant in Clarksville, Tennessee. Eagle Packaging, Inc. ("EPI") was
established during 1999 to manufacture and sell crown and closure liners,
beginning in 2000. Packaging Business Services, Inc., another wholly-owned
subsidiary of the Company, provides administrative services and develops
existing and new businesses for MCC, ABRC, PPPI, and EPI.
FAMILY ENTERTAINMENT
The Company is active in the family entertainment field, primarily through
its wholly-owned subsidiary, Busch Entertainment Corporation ("BEC"), which
currently owns, directly and through subsidiaries, nine theme parks. BEC's tenth
park, Discovery Cove located in Orlando, Florida, is scheduled to open in summer
2000.
BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg,
Virginia, and SeaWorld theme parks in Orlando, Florida, San Antonio, Texas,
Aurora, Ohio, and San Diego, California. BEC operates water park attractions in
Tampa, Florida (Adventure Island) and Williamsburg, Virginia (Water Country,
U.S.A.), and an educational play park for children near Philadelphia,
Pennsylvania (Sesame Place). BEC also operates the Baseball City Sports Complex
near Orlando, Florida. Due to the seasonality of the theme park business, BEC
experiences higher revenues in the second and third quarters than in the first
and fourth quarters.
Through a Spanish affiliate, the Company also owns a 19.9% equity interest
in Port Aventura, S.A., which is a theme park near Barcelona, Spain.
The Company faces competition in the family entertainment field from other
theme and amusement parks, public zoos, public parks, and other family
entertainment events and attractions.
OTHER
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 The Kingsmill Resort and Conference Center in Williamsburg, Virginia.
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.).
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; and rice for the rice milling and processing 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 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. The Company requires aluminum can sheet for manufacture of cans and
lids. Can sheet prices are impacted by supply and demand for aluminum ingot and
fabrication.
ENERGY MATTERS
The Company uses natural gas, fuel oil, and coal as its primary fuel
materials. Supplies of fuels in quantities sufficient to meet ABI's total
requirements are expected to be available on a year-round basis during 2000. The
supply of natural gas, fuel oil, and coal is normally covered by yearly
contracts and no difficulty has been experienced in entering into these
contracts. The cost of fuel used by ABI increased in 1999 and is expected to
increase in 2000. 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.
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BRAND NAMES AND TRADEMARKS
Some of the Company's major brand names used in its principal business
segments are mentioned in the discussion above. The Company regards consumer
recognition of and loyalty to all of its brand names and trademarks as 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 facilities 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, development
and engineering of cost effective innovative systems to minimize effects on the
environment from its operating facilities. A major portion of pollution
prevention and pollution control expenditures in 1999 and projected for 2000 was
or will be justified on the basis of cost reduction.
These projects, coupled with the Company's Environmental Management System
and an overall Company emphasis on pollution prevention and resource
conservation initiatives, are improving efficiencies and creating saleable
by-products from residuals. They have generally resulted in low cost operating
systems while reducing impact to air, water, and land.
ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS
The states of California, Connecticut, Delaware, Iowa, Maine, Massachusetts,
Michigan, New York, Oregon, and Vermont have adopted certain restrictive
packaging laws and regulations for beverages that require deposits on packages.
ABI continues to do business in these states. 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 to comply.
NUMBER OF EMPLOYEES
As of December 31, 1999, the Company had 23,645 full-time employees.
As of December 31, 1999, approximately 8,000 employees were represented by
the International Brotherhood of Teamsters. Seventeen other unions represented
approximately 1,100 employees. The labor agreement between ABI and the Brewery
and Soft Drink Workers Conference of the International Brotherhood of Teamsters,
which represents the majority of brewery workers, was scheduled to expire on
February 28, 1998; it was extended to March 29, 1998 while the parties continued
to negotiate a new agreement. Talks with the Teamsters reached impasse, and as a
result, the Company implemented its final contract offer on September 21, 1998.
The National Labor Relations Board has determined that the Company's bargaining
and implementation of its final offer did not violate federal labor law.
The Company considers its employee relations to be good.
ITEM 2. PROPERTIES
ABI has twelve breweries in operation at the present time, located in St.
Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California;
Jacksonville, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire;
Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and
Cartersville, Georgia. Title
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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
97% of capacity in 1999; during the peak selling periods (second and third
quarters), they operated at maximum capacity. The Company also owns an 86.6%
equity interest in a joint venture that owns and operates a brewery in Wuhan,
China. The Company also leases and operates the Stag Brewery near London,
England.
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; can manufacturing plants in
Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado,
Newburgh, New York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma,
California; and can lid manufacturing plants in Gainesville, Florida, Oklahoma
City, Oklahoma, and Riverside, California.
BEC operates its principal family entertainment facilities in Tampa,
Florida; Williamsburg, Virginia; San Diego, California; Aurora, Ohio; Orlando,
Florida; and San Antonio, Texas. The Tampa facility is 265 acres, Williamsburg
is 364 acres, San Diego is 182 acres, Aurora is 90 acres, Orlando is 224 acres,
and the San Antonio facility is 496 acres.
Except for the Baldwinsville brewery, the can manufacturing plants in
Newburgh, New York and Rome, Georgia, the SeaWorld park in San Diego,
California, the Stag Brewery, and the brewery in Wuhan, China, all of the
Company's principal properties are owned in fee. The lease for the land used by
the SeaWorld park in San Diego, California expires in 2048. The Company leases
the Stag Brewery from Scottish Courage, Ltd. In 1995, the joint venture that
operates the brewery in Wuhan was granted the right to use the property for a
period of 50 years from the appropriate governmental authorities. The Company
also leases a bottling line at its brewery in Cartersville, Georgia and a can
manufacturing plant in Rome, Georgia. 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, 1999.
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EXECUTIVE OFFICERS OF THE REGISTRANT
AUGUST A. BUSCH III (age 62) is presently Chairman of the Board and
President, and a 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.
PATRICK T. STOKES (age 57) 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 has
served in such capacity since 1990 and Chairman of the Board of the Company's
subsidiary, Anheuser-Busch International, Inc., and has served in such capacity
since November 1999.
JOHN H. PURNELL (age 58) is presently Executive Vice President of the
Company and has served in such capacity since January 1999. He previously served
as Vice President and Group Executive of the Company (1991-1998). He also
previously served as Chairman of the Board of the Company's subsidiary,
Anheuser-Busch International, Inc. (1980-November 1999), and as its Chief
Executive Officer (1991-1998).
W. RANDOLPH BAKER (age 53) is presently Vice President and Chief Financial
Officer of the Company and has served in such capacity since 1996. He previously
served as Vice President and Group Executive of the Company (1982-1996).
STEPHEN K. LAMBRIGHT (age 57) is presently Group Vice President and General
Counsel of the Company and has served in such capacity since 1997. He previously
served as Vice President and Group Executive of the Company (1984-1997).
ALOYS H. LITTEKEN (age 59) is presently Vice President-Corporate Engineering
of the Company and has served in such capacity since 1981.
WILLIAM L. RAMMES (age 58) is presently Vice President-Corporate Human
Resources of the Company and has served in such capacity since 1992. He is also
Chairman of the Board and President of the Company's subsidiary, Busch
Properties, Inc., and has served in such capacities since 1995.
JOSEPH L. GOLTZMAN (age 58) is presently Vice President and Group Executive
of the Company and has served in such capacity since 1993. He is also presently
Chairman, Chief Executive Officer and President of the Company's subsidiary,
Anheuser-Busch Recycling Corporation, Chairman (since 1995), President and Chief
Executive Officer (since 1993) of the Company's subsidiary, Metal Container
Corporation, Chairman, Chief Executive Officer (since 1996) and President (since
1993) of the Company's subsidiary, Packaging Business Services, Inc., Chairman
(since 1993), President (since January 1999), and Chief Executive Officer (since
1993) of the Company's indirect subsidiary, Precision Printing and Packaging,
Inc., and Chairman, Chief Executive Officer, and President (since 1999) of the
Company's indirect subsidiary, Eagle Packaging, Inc.
DONALD W. KLOTH (age 58) is presently Vice President and Group Executive of
the Company and has served in such capacity since 1994. He is also Chairman of
the Board and Chief Executive Officer of the Company's subsidiary, Busch
Agricultural Resources, Inc., and has served in such capacity since 1994.
JOHN E. JACOB (age 65) is presently Executive Vice President and Chief
Communications Officer, and a Director of the Company and has served in such
capacities since 1994 and 1990, respectively.
GERHARDT A. KRAEMER (age 67) is presently Senior Vice President-World
Brewing and Technology and has served in such capacity since 1996. During the
past five years, he also served as Vice President-Brewing of the Company's
subsidiary, Anheuser-Busch, Incorporated (1985-1996).
THOMAS W. SANTEL (age 41) is presently Vice President-Corporate Development
of the Company and has served in such capacity since 1996. During the past five
years, he also served as Director of Corporate Development (1994-1996).
7
<PAGE> 9
STEPHEN J. BURROWS (age 48) is presently Vice President-International
Operations of the Company and has served in such capacity since January 1999. He
previously served as Vice President-International Marketing of the Company
(1992-1998). He is also presently Chief Executive Officer and President of the
Company's subsidiary, Anheuser-Busch International, Inc. and has served as Chief
Executive Officer since January 1999 and as President since 1994. During the
past five years, he also served as Chief Operating Officer of Anheuser-Busch
International, Inc. (1994-1998).
VICTOR G. ABBEY (age 44) is presently Chairman of the Board and President of
the Company's subsidiary, Busch Entertainment Corporation and has served in such
capacities since March 1, 2000. During the past five years, he also served as
Executive Vice President and General Manager of the SeaWorld theme park in
Orlando, Florida (1997-February, 2000), Executive Vice President and General
Manager of the SeaWorld theme park in Cleveland, Ohio (1995-1997), and Vice
President-Administration and International of Busch Entertainment Corporation
(1992-1995).
PART II
The information required by Items 5, 6, 7, and 8 of this Part II are hereby
incorporated by reference from pages 25 through 59 of the Company's 1999 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 PricewaterhouseCoopers LLP, 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 by this Item with respect to Directors is hereby
incorporated by reference from pages 3 through 6 of the Company's Proxy
Statement for the Annual Meeting of Shareholders on April 26, 2000.
The information required by this Item with respect to Executive Officers is
presented on pages 7 and 8 of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated by reference
from page 8 and pages 19 through 25 of the Company's Proxy Statement for the
Annual Meeting of Shareholders on April 26, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is hereby incorporated by reference
from page 7 of the Company's Proxy Statement for the Annual Meeting of
Shareholders on April 26, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is hereby incorporated by reference
from pages 25 and 26 of the Company's Proxy Statement for the Annual Meeting of
Shareholders on April 26, 2000.
8
<PAGE> 10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. FINANCIAL STATEMENTS:
Consolidated Balance Sheet at December 31, 1999 and 1998 40<F*>
Consolidated Statement of Income for the three years ended
December 31, 1999 41<F*>
Consolidated Statement of Changes in Shareholders Equity for the three
years ended December 31, 1999 42<F*>
Consolidated Statement of Cash Flows for the three years ended December
31, 1999 43<F*>
Notes to Consolidated Financial Statements 44-55<F*>
Report of Independent Accountants 39<F*>
<FN>
<F*>Incorporated herein by reference from the indicated pages of the 1999
Annual Report to Shareholders.
</TABLE>
<TABLE>
<C> <S> <C>
2. FINANCIAL STATEMENT SCHEDULE:
Report of Independent Accountants on Financial Statement Schedule F-1
For the three years ended December 31, 1999:
Schedule VIII--Valuation and Qualifying Accounts and Reserves F-2
3. EXHIBITS:
Exhibit 3.1 --Restated Certificate of Incorporation.
Exhibit 3.2 --By-Laws of the Company (as amended and restated
December 16, 1998). (Incorporated by reference to
Exhibit 3.2 to Form 10-K for the fiscal year ended
December 31, 1998).
Exhibit 4.1 --Form of Rights Agreement, dated as of October
26, 1994 between Anheuser-Busch Companies, Inc. and
Boatmen's Trust Company.
Exhibit 4.2 --Letter Agreement dated March 19, 1998 between
Anheuser-Busch Companies, Inc., Boatmen's Trust
Company, and ChaseMellon Shareholder Services, L.L.C.
amending the Form of Rights Agreement filed as
Exhibit 4.1 of this report. (Incorporated by
reference to Exhibit 4.2 to Form 10-K for the fiscal
year ended December 31, 1998).
Exhibit 4.3 --Indenture dated as of August 1, 1995 between the
Company and The Chase Manhattan Bank, as Trustee
(Incorporated by reference to Exhibit 4.1 in the Form
S-3 of the Company, Registration Statement No.
33-60885.) (Other indentures are not filed, but
the Company agrees to furnish copies of such
instruments to the Securities and Exchange
Commission upon request.)
Exhibit 10.1 --Anheuser-Busch Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors amended
and restated as of March 1, 2000.<F*>
Exhibit 10.2 --Anheuser-Busch Companies, Inc. Non-Employee
Director Elective Stock Acquisition Plan amended and
restated as of March 1, 2000.<F*>
Exhibit 10.3 --Anheuser-Busch Companies, Inc. Stock Plan for
Non-Employee Directors (Incorporated by reference
to Exhibit 4.1 in the Form S-8 of the Company,
Registration Statement No. 333-88015).<F*>
9
<PAGE> 11
Exhibit 10.4 --Anheuser-Busch Companies, Inc. 1981 Incentive
Stock Option/Non-Qualified Stock Option Plan (As
amended December 18, 1985, December 16, 1987,
December 20, 1988, July 22, 1992, September 22,
1993, December 20, 1995, and November 26, 1997.)
(Incorporated by reference to Exhibit 10.3 to
Form 10-K for the fiscal year ended December 31,
1997.)<F*>
Exhibit 10.5 --Anheuser-Busch Companies, Inc. 1981
Non-Qualified Stock Option Plan (As amended
December 18, 1985, June 24, 1987, December 20,
1988, July 22, 1992, December 20, 1995, and November
26, 1997.) (Incorporated by reference to Exhibit
10.4 to Form 10-K for the fiscal year ended December
31, 1997.)<F*>
Exhibit 10.6 --Anheuser-Busch Companies, Inc. 1989 Incentive
Stock Plan (As amended December 20, 1989, December
19, 1990, December 15, 1993, December 20, 1995, and
November 26, 1997.) (Incorporated by reference to
Exhibit 10.5 to Form 10-K for the fiscal year
ended December 31, 1997.)<F*>
Exhibit 10.7 --Anheuser-Busch Companies, Inc. 1998 Incentive
Stock Plan (Incorporated by reference to Exhibit A
to the Definitive Proxy Statement for Annual Meeting
of Shareholders on April 22, 1998.)<F*>
Exhibit 10.8 --U.K. Addendum to the Anheuser-Busch Companies,
Inc. 1998 Incentive Stock Plan/Rules for Inland
Revenue Approved Grants for Eligible Persons in the
United Kingdom.<F*>
Exhibit 10.9 --Anheuser-Busch Companies, Inc. Excess Benefit
Plan amended and restated as of March 1, 2000.<F*>
Exhibit 10.10--Anheuser-Busch Companies, Inc. Supplemental
Executive Retirement Plan amended and restated as
of March 1, 2000.<F*>
Exhibit 10.11--Anheuser-Busch Executive Deferred Compensation
Plan amended and restated as of March 1, 2000.<F*>
Exhibit 10.12--Anheuser-Busch 401(k) Restoration Plan amended
and restated as of March 1, 2000.<F*>
Exhibit 10.13--Form of Indemnification Agreement with Directors
and Executive Officers.<F*>
Exhibit 10.14--Anheuser-Busch Officer Bonus Plan as amended and
restated on November 24, 1999. (Incorporated by
reference to Exhibit A to the Definitive Proxy
Statement for Annual Meeting of Shareholders on
April 26, 2000.)<F*>
Exhibit 10.15--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 10.16--Letter agreement between Anheuser-Busch Companies,
Inc. and the Controlling Shareholders regarding
Section 5.5 of the Investment Agreement filed as
Exhibit 10.15 of this report.
Exhibit 10.17--Fourth Amendment to the Anheuser-Busch Deferred
Income Stock Purchase and Savings Plan as amended
and restated effective April 1, 1996.
Exhibit 10.18--Fifth Amendment to the Anheuser-Busch Deferred
Income Stock Purchase and Savings Plan as amended
and restated effective April 1, 1996.
Exhibit 12 --Ratio of Earnings to Fixed Charges.
10
<PAGE> 12
Exhibit 13 --Pages 25 through 59 of the Anheuser-Busch
Companies, Inc. 1999 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
F-1 of this report.
Exhibit 27 --Financial Data Schedule
<FN>
- --------
<F*>A management contract or compensatory plan or arrangement required to be
filed by Item 14(c) of this report.
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth quarter of 1999.
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 /s/ AUGUST A. BUSCH III
-------------------------------------------------
August A. Busch III
Chairman of the
Board and President
Date: March 22, 2000
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.
<TABLE>
<S> <C> <C>
/s/ AUGUST A. BUSCH III Chairman of the Board and President and March 22, 2000
-------------------------------------------------- Director (Principal Executive
(August A. Busch III) Officer)
/s/ W. RANDOLPH BAKER Vice President and Chief Financial March 22, 2000
-------------------------------------------------- Officer (Principal Financial Officer)
(W. Randolph Baker)
/s/ JOHN F. KELLY Vice President and Controller March 22, 2000
-------------------------------------------------- (Principal Accounting Officer)
(John F. Kelly)
/s/ BERNARD A. EDISON Director March 22, 2000
--------------------------------------------------
(Bernard A. Edison)
/s/ CARLOS FERNANDEZ G. Director March 22, 2000
--------------------------------------------------
(Carlos Fernandez G.)
/s/ JOHN E. JACOB Director March 22, 2000
--------------------------------------------------
(John E. Jacob)
/s/ JAMES R. JONES Director March 22, 2000
--------------------------------------------------
(James R. Jones)
/s/ CHARLES F. KNIGHT Director March 22, 2000
--------------------------------------------------
(Charles F. Knight)
Director March 22, 2000
--------------------------------------------------
(Vernon R. Loucks, Jr.)
12
<PAGE> 14
/s/ VILMA S. MARTINEZ Director March 22, 2000
--------------------------------------------------
(Vilma S. Martinez)
/s/ JAMES B. ORTHWEIN Director March 22, 2000
--------------------------------------------------
(James B. Orthwein)
/s/ WILLIAM PORTER PAYNE Director March 22, 2000
--------------------------------------------------
(William Porter Payne)
/s/ JOYCE M. ROCHE Director March 22, 2000
--------------------------------------------------
(Joyce M. Roche)
/s/ ANDREW C. TAYLOR Director March 22, 2000
--------------------------------------------------
(Andrew C. Taylor)
/s/ DOUGLAS A. WARNER III Director March 22, 2000
--------------------------------------------------
(Douglas A. Warner III)
/s/ EDWARD E. WHITACRE, JR. Director March 22, 2000
--------------------------------------------------
(Edward E. Whitacre, Jr.)
</TABLE>
13
<PAGE> 15
ANHEUSER-BUSCH COMPANIES, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants on Financial Statement
Schedule...................................................... F-1
Consent of Independent Accountants.............................. F-1
Financial Statement Schedule for the Years 1999, 1998 and 1997:
Valuation and Qualifying Accounts and Reserves (Schedule
VIII)..................................................... F-2
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements and
Notes.
Separate financial statements of subsidiaries not consolidated have been
omitted because, in the aggregate, the proportionate shares 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 SCHEDULE
To the Board of Directors
of Anheuser-Busch Companies, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 1, 2000 appearing in the 1999 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 schedule listed in Item 14(a)
of this Form 10-K. In our opinion, the financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
St. Louis, Missouri
February 1, 2000
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-71105) and
in the Registration Statements on Forms S-8 (No. 2-77829, No. 33-4664,
No. 33-36132, No. 33-39714, No. 33-39715, No. 33-46846, No. 33-53333, No.
33-58221, No. 33-58241, No. 333-67027, No. 333-71309, No. 333-71311, and No.
333-88015) of Anheuser-Busch Companies, Inc. of our report dated February
1, 2000 which appears in 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 dated February 1, 2000 on the
financial statement schedule, which appears on page F-1 of this Form 10-K.
PricewaterhouseCoopers LLP
St. Louis, Missouri
March 22, 2000
F-1
<PAGE> 17
<TABLE>
<CAPTION>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(CONTINUING OPERATIONS BASIS, IN MILLIONS)
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Reserve for doubtful accounts (deducted from related
assets):
Balance at beginning of period.......................... $ 5.5 $ 4.9 $ 3.1
Additions charged to costs and expenses................. 1.0 1.3 2.0
Additions (recoveries of uncollectible accounts
previously written off ).............................. .1 .3 .1
Deductions (uncollectible accounts written off )........ (.2) (1.0) (.3)
------ ------ ------
Balance at end of period................................ $ 6.4 $ 5.5 $ 4.9
====== ====== ======
Deferred income tax asset valuation allowance under FAS 109:
Balance at beginning of period.......................... $117.0 $ 92.5 $ 81.7
Additions to valuation allowance charged to costs and
expenses.............................................. 3.5 28.1 13.2
Deductions from valuation allowance (utilizations and
expirations).......................................... (14.1) (3.6) (2.4)
Reductions due to changes in foreign business
operations............................................ (92.8) -- --
------ ------ ------
Balance at end of period................................ $ 13.6 $117.0 $ 92.5
====== ====== ======
</TABLE>
F-2
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
ANHEUSER-BUSCH COMPANIES, INC.
ANHEUSER-BUSCH COMPANIES, INC. was incorporated under the name ABC
ACQUISITION COMPANY, and its original certificate of incorporation was filed
with the Secretary of State of Delaware on February 21, 1979. This Restated
Certificate of Incorporation has been duly adopted by the board of directors
of this corporation pursuant to Section 245 of the General Corporation Law of
the State of Delaware. This Restated Certificate of Incorporation only
restates and integrates and does not amend the corporation's certificate of
incorporation and other certificates and instruments filed with the Secretary
of State of Delaware pursuant to Section 104 of the General Corporation Law
of the State of Delaware, and there is no discrepancy between the provisions
of such certificate of incorporation, certificates and instruments and this
Restated Certificate of Incorporation.
FIRST. The name of the Corporation is Anheuser-Busch Companies, Inc.
SECOND. The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose for which the Corporation is formed is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH. The aggregate number of shares which the Corporation shall have
authority to issue is 1,640,000,000, of which 40,000,000 shares shall be
Preferred Stock having a par value of $1 per share and 1,600,000,000 shares
shall be Common Stock having a par value of $1 per share. A description of
each of such classes of stock and the designation and the powers, preferences
and rights, and the qualifications, limitations or restrictions thereof, of
each class of stock of the Corporation which are fixed by this Restated
Certificate of Incorporation, and the express grant of authority to the Board
of Directors to fix by resolution or resolutions the designations and the
powers, preferences and rights of each other class, and the qualifications,
limitations or restrictions thereof, are as follows:
1. The Board of Directors shall have authority, by resolution or
resolutions, at any time and from time to time to divide and establish any or
all of the unissued shares of Preferred Stock not then allocated to any
series of Preferred Stock into one or more series, and, without limiting the
generality of the foregoing, to fix and determine the designation of each
such series, the number of shares which shall constitute such series and the
following relative rights and preferences of the shares of each series so
established:
<PAGE> 2
(a) the annual dividend rate payable on shares of such series, the
time of payment thereof, whether such dividends shall be cumulative or
non-cumulative, and the date or dates from which any cumulative dividends
shall commence to accrue;
(b) the price or prices at which and the terms and conditions, if
any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the event of
the voluntary or involuntary dissolution, liquidation or winding-up of the
affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of such
series;
(f) the terms and conditions, if any, on which shares of such
series may be converted into shares of stock of the Corporation of any other
class or classes or into shares of any other series of the same or any other
class or classes;
(g) whether, and if so the extent to which, shares of such series
may participate with the Common Stock in any dividends in excess of the
preferential dividend fixed for shares of such series or in any distribution
of the assets of the Corporation, upon a liquidation, dissolution or
winding-up thereof, in excess of the preferential amount fixed for shares of
such series; and
(h) any other designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of shares of such series not fixed and
determined by law or in this Restated Certificate of Incorporation.
2. Each series of Preferred Stock shall be so designated as to
distinguish the shares thereof from the shares of all other series.
Different series of Preferred Stock shall not be considered to constitute
different classes of shares for the purpose of voting by classes except as
otherwise fixed by the Board of Directors with respect to any series at the
time of the creation thereof.
3. So long as any shares of Preferred Stock are outstanding, the
Corporation shall not declare and pay or set apart for payment any dividends
(other than dividends payable in Common Stock or other stock of the
Corporation ranking junior to the Preferred Stock as to dividends) or make
any other distribution on such junior stock, if at the time of making such
declaration, payment or distribution the Corporation shall be in default with
respect to any dividend payable on, or any obligation to retire, shares of
Preferred Stock.
2
<PAGE> 3
4. Subject to such limitations, if any, as may be contained in the
resolution or resolutions providing for the issue of Preferred Stock of any
series adopted by the Board of Directors, shares of Preferred Stock
purchased, redeemed or otherwise acquired by the Corporation (excepting
shares of such stock acquired on the conversion or exchange thereof into or
for other shares of the Corporation) (a) shall, upon the filing by the
Corporation of a Certificate pursuant to Delaware law reducing its capital in
respect of such shares, have the status of authorized and unissued shares of
Preferred Stock and may be reissued by the Corporation at any time as shares
of any series of Preferred Stock and (b) shall, unless and until a
certificate with respect thereto is filed as aforesaid, constitute treasury
stock; and shares of Preferred Stock acquired on the conversion or exchange
thereof into or for other shares of the Corporation shall, after such
conversion or exchange, have the status of authorized and unissued shares of
Preferred Stock and may be reissued by the Corporation at any time as shares
of any series of Preferred Stock.
5. Subject to the provisions of any applicable law or the By-Laws of the
Corporation as from time to time amended with respect to the closing of the
transfer books or the fixing of a record date for the determination of
stockholders entitled to vote, and except as otherwise provided by law or in
resolutions of the Board of Directors establishing any series of Preferred
Stock pursuant to this Article, the holders of outstanding shares of Common
Stock of the Corporation shall exclusively possess the voting power for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock of the Corporation being entitled to one vote for each
share of such stock standing in such holder's name on the books of the
Corporation.
FIFTH. The business and affairs of the Corporation shall be managed by
or under the direction of a Board of Directors consisting of not less than
three nor more than twenty-one directors, the exact number of directors to be
determined from time to time by resolution adopted by the affirmative vote of
a majority of the entire Board of Directors. The directors shall be divided
into three groups, designated Group I, Group II and Group III. Each group of
directors shall consist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board of Directors and
shall serve for a three-year term.
At each annual meeting of shareholders, successors to the group of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the groups so as to maintain the number
of directors in each group as nearly equal as possible, and any additional
director of any group elected to fill a vacancy resulting from an increase in
such group shall hold office for a term that shall coincide with the
remaining term of that group, but in no case will a decrease in the number of
directors shorten the term of any incumbent director.
3
<PAGE> 4
A director shall hold office until the annual meeting for the year in
which his or her term expires and until his or her successor shall be elected
and shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors that results from an increase in the number of directors may be
filled by a majority of the Board of Directors then in office, provided that
a quorum is present, and any other vacancy occurring in the Board of
Directors may be filled by a majority of the directors then in office, even
if less than a quorum, or by a sole remaining director. Any director elected
to fill a vacancy not resulting from an increase in the number of directors
shall have the same remaining term as that of his or her predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred or preference stock issued by the Corporation
shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of shareholders, the election, term
of office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Restated Certificate of Incorporation
applicable thereto.
SIXTH. The Board of Directors of the Corporation shall have the power,
without the assent or vote of the stockholders, to make By-Laws for the
Corporation, and to amend, alter or repeal the same.
SEVENTH. The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Restated Certificate of Incorporation
in the manner now or hereafter prescribed by the statues of the State of
Delaware and this Restated Certificate of Incorporation, and all rights
herein conferred on officers, directors and stockholders are expressly to
this reservation.
EIGHTH. A. In addition to any affirmative vote required by law, any
other provision of this Restated Certificate of Incorporation, the By-laws of
the Corporation or otherwise, and except as otherwise expressly provided in
Sections B or C of this Article EIGHTH, a Business Transaction with or a
Stock Repurchase from, or proposed by or on behalf of, an Interested
Shareholder or an Affiliate or Associate of an Interested Shareholder shall
require the approval by not less than a majority vote of the holders of all
of the Corporation's outstanding Voting Stock, voting together as a single
class, which is beneficially owned by persons other than such Interested
Shareholder and its Affiliates and Associates. Such affirmative vote shall be
required notwithstanding the fact that no vote may otherwise be required, or
that a lesser percentage or separate class vote may be required, by law, any
other provision of this Restated Certificate of Incorporation, the By-laws of
the Corporation or otherwise.
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any Business Transaction involving an Interested Shareholder or
an Affiliate or Associate of an Interested Shareholder, and such Business
Transaction shall require only such affirmative vote, if any, as is required
by law, any other provision of this Restated Certificate of Incorporation,
the By-laws of the Corporation or otherwise, if all of the conditions
specified in either of the following Paragraphs 1 or 2 are met:
4
<PAGE> 5
1. The Business Transaction shall have been approved (or shall have
been effected in accordance with a written agreement approved) by a majority
of the Disinterested Directors, whether such approval is given prior to or
subsequent to the acquisition of beneficial ownership of the Voting Stock
that caused such Interested Shareholder to become an Interested Shareholder.
A Business Transaction with an Interested Shareholder or an Affiliate or an
Associate of an Interested Shareholder shall be deemed to have been approved
by a majority of the Disinterested Directors if such Business Transaction
either (i) was expressly approved (or the agreement pursuant to which it was
effected was expressly approved) by a majority of Disinterested Directors,
or (ii) is within a category of Business Transactions with such Interested
Shareholder or its Affiliates or Associates authorized to be entered into by
a resolution or resolutions adopted by, and not subsequently rescinded by, a
majority of Disinterested Directors.
2. The Business Transaction is a Business Combination and all of the
following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value
as of the date of the consummation of the Business Transaction of
consideration other than cash to be received per share by holders of
the Corporation's Common Stock in such Business Transaction shall be
at least equal to the highest amount determined under clauses (i) and
(ii) below:
(i) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of such Interested Shareholder or
any Affiliate or Associate of such Interested Shareholder for
any shares of Common Stock in connection with the acquisition
by such Interested Shareholder or any such Affiliate or
Associate of beneficial ownership of shares of Common Stock
within (x) the two-year period immediately prior to the first
public announcement of the proposed Business Transaction (the
"Announcement Date"), or (y) in the transaction in which such
Interested Shareholder became an Interested Shareholder,
whichever is higher; and
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which such
Interested Shareholder became an Interested Shareholder (the
"Determination Date"), whichever is higher.
b. The aggregate amount of cash and the Fair Market Value
as of the date of the consummation of the Business Transaction of
consideration other than cash to be received per share by holders of
shares of any class or series of outstanding Capital Stock other than
Common Stock shall be at least equal to the highest amount determined
under clauses (i), (ii) and (iii) below:
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(i) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of such Interested Shareholder or
any Affiliate or Associate of such Interested Shareholder for
any shares of such class or series of Capital Stock in
connection with the acquisition by such Interested Shareholder
or any such Affiliate or Associate of beneficial ownership of
shares of such class or series of Capital Stock (x) Within the
two-year period immediately prior to the Announcement Date, or
(y) in the transaction in which such Interested Shareholder
became an Interested Shareholder, whichever is higher;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(iii) the highest preferential amount per share, if
any, to which the holders of shares of such class or series of
Capital Stock would be entitled in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, regardless of whether the Business
Transaction to be consummated constitutes such an event.
The provisions of this Paragraph 2.b shall be required to be met with
respect to every class or series of outstanding Capital Stock,
whether or not such Interested Shareholder or any Affiliate or
Associate of such Interested Shareholder has previously acquired
beneficial ownership of any shares of the particular class or series
of Capital Stock.
c. The consideration to be received by holders of a particular
class or series of outstanding Capital Stock shall be in cash or in
the same form as previously has been paid by or on behalf of such
Interested Shareholder and its Affiliates and Associates in
connection with their direct or indirect acquisition of beneficial
ownership of shares of such class or series of Capital Stock. If the
consideration so paid for shares of any class or series of Capital
Stock varied as to form, the form of consideration for such class or
series of Capital Stock shall be either cash or the form used to
acquire beneficial ownership of the largest number of shares of such
class or series of Capital Stock previously acquired by such
Interested Shareholder and its Affiliates and Associates. The prices
determined in accordance with Paragraphs 2.a and 2.b of this Section
B shall be subject to an appropriate adjustment in the event of any
stock dividend, stock split, combination of shares or similar event.
d. After the Determination Date and prior to the consummation
of such Business Transaction: (i) except as approved by a majority of
the Disinterested Directors, there shall have been no failure to
declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) payable in accordance with the
terms of any outstanding
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<PAGE> 7
Capital Stock; (ii) there shall have been no reduction in the annual
rate of dividends paid on the Common Stock (except as necessary to
reflect any stock split, stock dividend or subdivision of the Common
Stock), except as approved by a majority of the Disinterested
Directors; (iii) there shall have been an increase in the annual rate
of dividends paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction that has
the effect of reducing the number of outstanding shares of Common
Stock, unless the failure so to increase such annual rate is approved
by a majority of the Disinterested Directors; and (iv) neither such
Interested Shareholder nor any Affiliate or Associate of such
Interested Shareholder shall have become the beneficial owner of any
additional shares of Capital Stock except as part of the transaction
that results in such Interested Shareholder becoming an Interested
Shareholder and except in a transaction that, after giving effect
thereto, would not result in any increase in such Interested
Shareholder's or any such Affiliate's or Associate's percentage
beneficial ownership of any class or series of Capital Stock.
e. A proxy or information statement describing the proposed
Business Transaction and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Act") (or any subsequent provisions replacing such
Act, rules or regulations) shall be mailed to all shareholders of the
Corporation at least 30 days prior to the consummation of such
Business Transaction (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions). The proxy or information statement shall contain on the
first page thereof, in a prominent place, any statement as to the
advisability (or inadvisability) of the Business Transaction that the
Disinterested Directors, or any of them, may choose to make and, if
deemed advisable by a majority of the Disinterested Directors, the
opinion of an investment banking firm selected by a Majority of the
Disinterested Directors as to the fairness (or not) of the terms of
the Business Transaction from a financial point of view to the
holders of the outstanding shares of Capital Stock other than such
Interested Shareholder and its Affiliates or Associates, such
investment banking firm to be paid a reasonable fee for its services
by the Corporation.
C. The provisions of Section A of this Article EIGHTH shall not be
applicable to a Stock Repurchase with, or proposed by or on behalf of, an
Interested Shareholder or an Affiliate or Associate of an Interested
Shareholder, and such Stock Repurchase shall require only such affirmative
vote, if any, as is required by law, any other provision of this Restated
Certificate of Incorporation, the By-laws of the Corporation or otherwise, if
the conditions specified in either of the following Paragraphs 1 or 2 are
met:
1. The Stock Repurchase is made pursuant to a tender offer or
exchange offer for a class of Capital Stock made available on the same
basis to all holders of such class of Capital Stock.
2. The Stock Repurchase is made pursuant to an open market purchase
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<PAGE> 8
program approved by a majority of the Disinterested Directors, provided
that such repurchase is effected on the open market and is not the result
of a privately negotiated transaction.
D. For the purposes of this Article EIGHTH:
1. The term "Business Transaction" shall mean:
a. any merger or consolidation of the Corporation with, or
any sale or transfer of all or substantially all of the Corporation's
assets to, (i) any Interested Shareholder or (ii) any other
corporation (whether or not itself an Interested Shareholder) which
is or after such merger, consolidation, sale or transfer would be an
Affiliate or Associate of an Interested Shareholder, or any
liquidation or dissolution of the Corporation (any such merger,
consolidation, sale, transfer, liquidation or dissolution being
referred to herein as a "Business Combination"); and
b. any other transaction (other than a Stock Repurchase)
between the Corporation or any Subsidiary, on the one hand, and any
Interested Shareholder or any Affiliate or Associate of an Interested
Shareholder, on the other hand, and any amendment to the By-laws of
the Corporation proposed by or on behalf of any Interested
Shareholder or any Affiliate or Associate of an Interested
Shareholder; and
c. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation), or any merger
or consolidation of the Corporation with any Subsidiary, or any other
transaction (whether or not with or otherwise involving an Interested
Shareholder) that has the effect, directly or indirectly, of
increasing the percentage beneficial ownership of any class or series
of Capital Stock held by, or the voting power with respect to the
Corporation of, any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
d. any agreement, contract or other arrangement providing
or any one or more of the actions specified in the foregoing clauses
a. to c.
2. The term "Stock Repurchase" shall mean any repurchase by the
Corporation or any Subsidiary of any shares of Capital Stock at a price
greater than the then Fair Market Value of such shares from an Interested
Shareholder or an Affiliate or Associate of an Interested Shareholder if
beneficial ownership of one-quarter or more of all shares of Capital
Stock beneficially owned by such Interested Shareholder and its
Affiliates and Associates were acquired (disregarding shares acquired as
part of a pro-rata stock dividend or stock split) within a period of less
than two years prior to the date of such repurchase (or the date of an
agreement in respect thereof).
3. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article
FOURTH of this Restated
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<PAGE> 9
Certificate of Incorporation, and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters submitted to
shareholders of the Corporation generally.
4. The term "person" shall mean any individual, firm, corporation
or other entity and shall include any group comprised of any person and
any other person with whom such person or any Affiliate or Associate of
such person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing of
Capital Stock.
5. The term "Interested Shareholder" shall mean any person (other
than the Corporation or any Subsidiary, or any pension, profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary, or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who (a) is the
beneficial owner of Voting Stock representing ten percent (10%) or more
of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock; or (b) is an Affiliate or Associate of the
Corporation and at any time within the two-year period immediately prior
to the date in question was the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled to be cast
by the holders of all then outstanding shares of Voting Stock.
6. A person shall be a "beneficial owner" of any Capital Stock (a)
which such person or any of its Affiliates or Associates beneficially
owns, directly or indirectly; (b) which such person or any of its
Affiliates or Associates has, directly or indirectly, (i) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or (c) which are
beneficially owned, directly or indirectly, by any other person with
which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Capital Stock. For the
purposes of determining whether a person is an Interested Shareholder
pursuant to Paragraph 5 of this Section D, the number of shares of
Capital Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of Paragraph 6 of
this Section D, but shall not include any other shares of Capital Stock
that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
7. A person shall be deemed to be an "Affiliate" of a specified
person, if such person directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified person. A person shall be deemed to be an
"Associate" of a specified person, if such person is (a) a corporation or
organization (other than the Corporation or any Subsidiary) of which such
specified person is an officer or partner or of which such specified
person is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities, (b) a trust or other estate
(other than
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<PAGE> 10
any pension, profit-sharing, employee stock ownership or other employee
benefit plan of the Corporation or any Subsidiary) in which such
specified person has a substantial beneficial interest or as to which
such specified person serves as trustee or in a similar fiduciary
capacity, or (c) a relative or spouse of such specified person, or a
relative of such spouse, who has the same home as such specified person.
8. The term "Subsidiary" means any corporation of which a majority
of any class of equity security is beneficially owned by the Corporation,
as well as any Affiliate of the Corporation which is controlled by the
Corporation; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in Paragraph 5 of this Section D, the
term "Subsidiary" shall mean only a company of which a majority of each
class of equity security is beneficially owned by the Corporation.
9. With respect to any Business Transaction with, or proposed by or
on behalf of, an Interested Shareholder or an Affiliate or Associate of
an Interested Shareholder, and with respect to any proposal of the kind
referred to in Section H of this Article EIGHTH, which is proposed by or
on behalf of an Interested Shareholder or an Affiliate or Associate of an
Interested Shareholder, the term "Disinterested Director" means any
member of the Board of Directors of the Corporation (the "Board") who is
not an Affiliate or Associate or representative of such Interested
Shareholder and was a Member of the Board either on February 27, 1985 or
prior to the time that such Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director, while such
successor is a member of the Board, who is not an Affiliate or Associate
or representative of such Interested Shareholder and is recommended or
elected to succeed the Disinterested Director by a majority of
Disinterested Directors.
10. The term "Fair Market Value" means (a) in the case of cash,
the amount of such cash; (b) in the case of stock, the highest closing
sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities
exchange registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by a majority of
the Disinterested Directors in good faith; and (c) in the case of
property other than cash or stock, the fair market value of such property
on the date in question as determined in good faith by a majority of the
Disinterested Directors.
11. In the event of any Business Transaction in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in Paragraphs 2.a and 2.b of Section B of this Article
EIGHTH shall include the
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shares of Common Stock and/or the shares of any other class or series of
Capital Stock retained by the holders of such shares.
E. A majority of the Disinterested Directors shall have the power and
duty to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry, all questions arising
under this Article EIGHTH, including, without limitation, (a) whether a
person is an Interested Shareholder, (b) the number of shares of Capital
Stock or other securities beneficially owned by any person, (c) whether a
person is an Affiliate or Associate of another, and (d) whether the
consideration to be received in any Stock Repurchase by the Corporation or
any Subsidiary exceeds the then Fair Market Value of the shares of Capital
Stock being repurchased. Any such determination made in good faith shall be
binding and conclusive on all parties.
F. Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
G. The fact that any Business Transaction complies with the provisions
of Section B of this Article EIGHTH shall not be construed to impose any
fiduciary duty, obligation or responsibility on the Board, or any member
thereof, to approve such Business Transaction or recommend its adoption or
approval to the stockholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board, or any member
thereof, with respect to evaluations of or actions and responses taken with
respect to such Business Transaction.
H. Notwithstanding any other provisions of this Restated Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Restated Certificate of Incorporation or the By-laws of the Corporation), any
proposal to amend or repeal, or adopt any provision of this Restated
Certificate of Incorporation inconsistent with, this Article EIGHTH which is
proposed by or on behalf of an Interested Shareholder or an Affiliate or
Associate of an Interested Shareholder shall require approval by not less
than a majority vote of the holders of all then outstanding shares of Voting
Stock which are beneficially owned by persons other than such Interested
Shareholder and its Affiliates and Associates, voting together as a single
class; provided, however, that this Section H shall not apply to, and such
majority vote shall not be required for, any amendment, repeal or adoption
which does not affect the provisions of this Article EIGHTH relating to Stock
Repurchases and which is recommended by a majority of the Disinterested
Directors, if a majority of the directors then in office are Disinterested
Directors.
NINTH. A. The Corporation shall indemnify to the full extent authorized
or permitted by law any person made, or threatened to be made, a party to any
action or proceeding (whether civil or criminal or otherwise) by reason of
the fact that he, his testator or intestate, is or was a director or officer
of the Corporation or by reason of the fact that such director or officer, at
the request of the Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
in any capacity. Nothing contained herein shall affect any rights to
indemnification to which employees other than directors and officers may be
entitled by
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law. No amendment or repeal of this Section A of Article NINTH shall apply
to or have any effect on any right to indemnification provided hereunder with
respect to any acts or omissions occurring prior to such amendment or repeal.
B. The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or is serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of the
law. The Corporation may create a trust fund, grant a security interest
and/or use other means (including, without limitation, letters of credit,
surety bonds and/or other similar arrangements), as well as enter into
contracts providing for indemnification to the fullest extent permitted by
law and including as part thereof any or all of the foregoing, to ensure the
payment of such sums as may become necessary to effect full indemnification.
IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this
Restated Certificate of Incorporation to be signed by JoBeth G. Brown, its
Vice President and Secretary, as of this 7th day of May, 1999.
/s/ JoBeth G. Brown
----------------------------------
Vice President and Secretary
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CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
ANHEUSER-BUSCH COMPANIES, INC.
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 has been
created by means of adoption by the Board of Directors of a resolution on
December 18, 1985, and 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 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)
$10 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
fraction of a share of Series B Preferred Stock. In the event the Corporation
shall at any time after September 12, 1986, 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) 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.
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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 $10 per share on
the Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
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 after September
12, 1986, 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 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
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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 exercised 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 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
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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 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 vacancies 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
4
<PAGE> 17
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 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 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 winding up 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 $50 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
5
<PAGE> 18
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 after September 12, 1986, 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, 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 after September 12,
1986, 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
--------
with 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.
6
<PAGE> 19
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 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.
<PAGE> 1
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of October 26, 1994 (the
"Agreement"), between Anheuser-Busch Companies, Inc., a Delaware
corporation (the "Company"), and Boatmen's Trust Company, 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 Board of Directors of
the Company authorized and declared a dividend distribution of one
right for each share of Common Stock (as hereinafter defined) of the
Company outstanding at the close of business on December 27, 1985
(the "1985 Record Date"), and authorized the issuance of one right
for each share of Common Stock of the Company issued between the
1985 Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as defined in the
Rights Agreement, dated as of December 18, 1985, as amended on July
23, 1986 (the "1985 Agreement") and as amended and restated as of
December 17, 1986 (the "1986 Agreement") between the Company and
Centerre Trust Company of St. Louis, the predecessor to the Rights
Agent), 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 Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), upon the terms and subject to
the conditions set forth in the 1985 Agreement (the "1985 Rights");
WHEREAS, on July 23, 1986, the Board of Directors, in
accordance with Section 26 of the 1985 Agreement, determined it
desirable and in the best interests of the Company and its
stockholders for the Company to supplement and amend certain
provisions of the 1985 Agreement and on July 23, 1986 implemented
such changes by executing an amendment to the 1985 Agreement;
WHEREAS, effective as of December 17, 1986, the Board of
Directors in accordance with Section 26 of the 1985 Agreement,
determined it desirable and in the best interests of the Company and
its stockholders for the Company to amend and restate the 1985
Agreement and on December 17, 1986 implemented such amendment and
restatement by executing the 1986 Agreement;
WHEREAS, on October 26, 1994, the Board of Directors
determined it desirable and in the best interests of the Company and
its stockholders for the Company to extend the 1986 Agreement and to
implement such extension by executing this Agreement; and
WHEREAS, on October 26, 1994 (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 of the Company outstanding upon the Expiration Date (as
defined in the 1986 Agreement) (the "Record Date"), and authorized
the issuance of one Right (as such number may hereafter 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 Certificate of
Incorporation, upon the terms and subject to the conditions
hereinafter set forth (the "Rights").
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
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 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, or any Person who becomes an
Acquiring Person solely as a result of a reduction in the number of
shares of Common Stock outstanding due to the repurchase of shares
of Common Stock by the Company, unless and until such Person shall
purchase or otherwise become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock.
(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 conversion 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;
<PAGE> 3
(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 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 solici-
tation 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; provided, however, that nothing in this
--------
paragraph (c) shall cause a Person engaged in the
business as an underwriter of securities to be deemed
the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation
in good faith in a firm commitment underwriting until
the expiration of forty days after the date of such
acquisition.
(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 equity securities or other equity interest having
power to control or direct the management, of such Person.
<PAGE> 4
(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.
(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.
<PAGE> 5
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.
3. Issue of Rights Certificates.
----------------------------
(a) Until the earlier of (i) the close of
business on the tenth business 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 14d-2(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 Date"), (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 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.
<PAGE> 6
(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 set forth in the
Rights Agreement between Anheuser-Busch Companies, Inc.
and Boatmen's Trust Company, dated as of October 26,
1994 (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
issued to, or held by, any Person who is, was or becomes
an Acquiring Person or any Affiliate or Associate
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
and certificates containing the legends specified in the 1985
Agreement and the 1986 Agreement and with respect to previously
issued certificates that contain no comparable 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.
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 A 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.
<PAGE> 7
(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 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.
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 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.
<PAGE> 8
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 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.
<PAGE> 9
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 of Preferred Stock (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 October 31, 2004 (the "Final Expiration Date"),
or (ii) the time 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 $195, 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 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.
<PAGE> 10
(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 occurrence 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
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.
<PAGE> 11
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.
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 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 temporarily 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.
<PAGE> 12
(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 Com-
pany's satisfaction that no such tax is due.
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 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.
<PAGE> 13
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 Agreement (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 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.
<PAGE> 14
(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 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").
<PAGE> 15
(iii) In the event that the number of
shares of Common Stock which are authorized by the
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 (1) 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 equiva-
lents")), (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 Company 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.
<PAGE> 16
(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 equivalent 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.
(c) In case the Company shall fix a record 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 (excluding 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.
<PAGE> 17
(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 hereinafter 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 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 reclassi-
fication, 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
"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.
<PAGE> 18
(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 shall be equal
to the "current market price" of one share of Preferred
Stock divided by 100.
(e) Anything herein to the contrary notwith-
standing, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) 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.
<PAGE> 19
(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 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-hun-
dredths 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 Certifi-
cates 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 evidencing 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.
<PAGE> 20
(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 hereunder.
(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.
(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 consolida-
tion, 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.
<PAGE> 21
(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.
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.
<PAGE> 22
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)
hereof, 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 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.
<PAGE> 23
(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) 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 11(a)(ii) Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable
in the manner described in Section 13(a).
<PAGE> 24
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 Certifi-
cates 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.
(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 Pre-
ferred 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 (1) 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.
<PAGE> 25
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 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.
16. Agreement of Rights Holders. Every 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
(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.
<PAGE> 26
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 thereby, 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.
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 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.
<PAGE> 27
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 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.
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.
<PAGE> 28
(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 Secretary, 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, default, 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.
<PAGE> 29
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 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.
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.
<PAGE> 30
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 business 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 $.01 per
Right, as such 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.
<PAGE> 31
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.
(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.
<PAGE> 32
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:
Boatmen's Trust Company
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.
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
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; provided,
--------
however, that at any time prior to (i) the existence of an Acquiring Person or
(ii) 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 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
14d-2(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 Board of Directors of the
Company may amend this Agreement to increase the Purchase Price or extend the
Final Expiration Date. 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.
<PAGE> 33
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.
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.
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).
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. Without limiting the foregoing, if any
provision requiring a majority of the Board of Directors of the
Company to be Continuing Directors to act is held by any court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board of
Directors of the Company in accordance with applicable law and the
Company's Certificate of Incorporation and By-Laws.
<PAGE> 34
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.
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.
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.
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.
Corporate Seal
By /s/ Laura Reeves By /s/ Ellis W. McCracken, Jr.
----------------------------------- --------------------------------
Name: Laura Reeves Name: Ellis W. McCracken, Jr.
Title: Assistant Secretary Title: Vice President and
General Counsel
Attest: BOATMEN'S TRUST COMPANY
Corporate Seal
By /s/ R. Clasquin By /s/ H. E. Bradford
----------------------------------- --------------------------------
Name: R. Clasquin Name: H. E. Bradford
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 35
Exhibit A
---------
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER OCTOBER 31, 2004 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 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.]<F1>
[FN]
- --------------------------
<F1> The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
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 October
26, 1994 (the "Rights Agreement"), between Anheuser-Busch Companies,
Inc., a Delaware corporation (the "Company"), and Boatmen's Trust
Company, 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 October 31, 2004 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 $195 per one one-hundredth of a
share (the "Purchase 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 October 26, 1994,
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.
<PAGE> 36
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 $.01 per Right at any time prior to
the earlier of the close of business on (i) the tenth business 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.
<PAGE> 37
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 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 _________ __, ____
ATTEST: ANHEUSER-BUSCH COMPANIES, INC.
___________________________________ By____________________________
Secretary Title:
Countersigned:
BOATMEN'S TRUST COMPANY
By________________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
<PAGE> 38
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.
Date: ________________________, ____
__________________________________
Signature
Signature Guaranteed:
<PAGE> 39
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); and
(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 subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____
__________________________________
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> 40
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: _______________, ____
----------------------------------
Signature
Signature Guaranteed:
<PAGE> 41
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); and
(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: ___________, ____ __________________________________
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> 42
EXECUTION COPY
______________________________________________________________________________
ANHEUSER-BUSCH COMPANIES, INC.
and
BOATMEN'S TRUST COMPANY
Rights Agent
______________________
Rights Agreement
Dated as of October 26, 1994
______________________________________________________________________________
<PAGE> 43
<TABLE>
Table of Contents
-----------------
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Certain Definitions 2
2. Appointment of Rights Agent 6
3. Issue of Rights Certificates 6
4. Form of Rights Certificates 8
5. Countersignature and Registration 9
6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates 10
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights 11
8. Cancellation and Destruction of Rights Certificates 14
9. Reservation and Availability of Capital Stock 15
10. Preferred Stock Record Date 17
11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights 17
12. Certificate of Adjusted Purchase Price or Number of Shares 30
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 31
14. Fractional Rights and Fractional Shares 34
15. Rights of Action 35
16. Agreement of Rights Holders 36
17. Rights Certificate Holder Not Deemed a Stockholder 37
18. Concerning the Rights Agent 37
19. Merger or Consolidation or Change of Name of Rights Agent 38
20. Duties of Rights Agent 39
21. Change of Rights Agent 42
22. Issuance of New Rights Certificates 43
23. Redemption and Termination 43
24. Notice of Certain Events 45
25. Notices 46
26. Supplements and Amendments 47
27. Successors 48
28. Determinations and Actions by the Board of Directors, etc. 48
29. Benefits of this Agreement 49
30. Severability 49
31. Governing Law 49
32. Counterparts 50
33. Descriptive Headings 50
Exhibit A -- Form of Rights Certificate A-1
</TABLE>
<PAGE> 1
ANHEUSER-BUSCH COMPANIES, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(AMENDED AND RESTATED AS OF MARCH 1, 2000)
The Deferred Compensation Plan For Non-Employee Directors, originally
effective June 24, 1981, amended and restated in is entirety effective July
24, 1981, April 2, 1987, February 22, 1989, and January 1, 1997, is hereby
amended and restated in its entirety, effective March 1, 2000.
1. Definitions
-----------
(a) "Board" - the Board of Directors of the Company.
(b) "Cash Account" - each account being administered for the benefit
of a Participant pursuant to section 5 below.
(c) "Company" - Anheuser-Busch Companies, Inc.
(d) "Compensation" - any retainer, meeting and committee fees, or any
similar fee to which a Non-Employee Director is entitled for services
performed.
(e) "Credited Shares" - the shares of the Company's common stock
which, for accounting purposes only, are to be credited to a Participant's
Share Account from time to time. At no time shall Credited Shares be
considered as actual shares of common stock and a Participant shall have no
rights as a stockholder with respect to the Credited Shares.
(f) "Deferred Amount" - Compensation deferred by a Participant under
the Plan together with all interest, dividends or other amounts credited to a
Participant's account(s) pursuant to the provisions of the Plan.
(g) "Market Value" - the mean between the high and low price per share
of the Company's common stock, as reported on the New York Stock Exchange,
for the last business day of a calendar month.
(h) "Non-Employee Director" - any duly elected or appointed member of
the Board who is not an employee of the Company or of any subsidiary of the
Company, including for this purpose any Advisory Member or any Member
Emeritus.
<PAGE> 2
(i) "Participant" - any Non-Employee Director who elects hereunder to
defer payment by the Company of any or all Compensation to which he/she may
be entitled and any Non-Employee Director entitled to a benefit under the
Plan pursuant to section 9 below.
(j) "Plan" - the Anheuser-Busch Companies, Inc. Deferred Compensation
Plan For Non-Employee Directors.
(k) "Prime Rate" - The annual prime interest rate published by The
Boatmen's National Bank of St. Louis or its successor.
(l) "Rate/Term" - one or more combinations of interest rates and time
periods which shall apply to Compensation allocated to Participants' Cash
Accounts for a calendar year pursuant to section 5 below.
(m) "Secretary" - the duly elected Secretary of the Company.
(n) "Share Account" - each account being administered for the benefit
of a Participant pursuant to section 6 below.
2. Administration
--------------
The Plan shall be administered by the Secretary, who shall have the
authority to construe and interpret the Plan, and to establish or adopt
rules, regulations, procedures and forms relating to the administration of
the Plan. The Secretary shall have no authority to add to, delete from or
modify the terms of the Plan without the prior approval of the Board. Neither
the Secretary nor any member of the Board shall be liable for any act or
determination made in good faith.
Notwithstanding the foregoing, the Secretary shall have complete power from
time to time to adopt, amend, and rescind such rules as the Secretary shall
deem necessary, appropriate, or prudent in order to comply with or avoid
liability under Section 16 of the Securities Exchange Act of 1934, as
amended, or the rules promulgated thereunder from time to time. Without
limiting the generality of such authority, the Secretary may adopt, amend,
and rescind rules which may have the effect of adding to, deleting from, or
otherwise modifying the terms of the Plan in any respect, provided only that
the Secretary in good faith determines
2
<PAGE> 3
that such rules are reasonably likely to further the objective of complying
with or lawfully avoiding liability under Section 16 or the rules thereunder.
In addition, from time to time the Secretary may (but need not) adopt, amend,
and rescind rules which relax Plan restrictions on the timing or frequency of
actions by Plan Participants if and to the extent the Secretary determines that
such restrictions no longer are necessary to conform the Plan to any applicable
legal requirements and no longer are appropriate to the prudent and convenient
administration of the Plan. Any rules adopted, amended, or rescinded by the
Secretary hereunder shall become effective at such times as the Secretary may
determine, without approval or other action by the Board of Directors of the
Company. The Secretary shall notify the Board promptly of any rules adopted,
amended, or rescinded hereunder. The Board at all times shall retain the power
to annul in whole or part any action taken by the Secretary hereunder.
3. Elections under the Plan
------------------------
The following types of election shall be available under the Plan:
(a) (1) Each Non-Employee Director who desires to participate in the
Plan for a calendar year shall execute and deliver to the Secretary before
the beginning of the calendar year an appropriate election designating the
portion of Compensation for the calendar year to be deferred.
(2) An individual who becomes a Non-Employee Director after the
beginning of a calendar year may make an initial election for the calendar
year within 30 days after the individual becomes a Non-Employee Director,
effective as of the first day of the month coincident with or next following
the date the election is filed.
(3) After the initial election, a Participant's failure to
execute and deliver such an election before the beginning of a calendar year
shall be deemed an election to continue to defer Compensation in accordance
with the election in effect for the immediately prior calendar year.
(b) (1) Coincident with the initial election provided for in section
3(a), a Participant shall execute and deliver to the Secretary an appropriate
election designating the portion of the Participant's future Compensation to
be
3
<PAGE> 4
deferred that shall be allocated to the Cash Account and the Share Account
respectively, and may make such an election from time to time thereafter with
respect to future deferrals in the same manner.
(2) A Participant may elect to transfer existing Deferred Amounts
between the Cash Account and the Share Account from time to time as provided
for in section 7.
(c) Each Participant for whom a Cash Account is maintained at any time
during a calendar year shall execute and deliver to the Secretary an
appropriate election designating the Rate/Term combinations which shall apply
to the amounts in the Participant's Cash Account as provided for in section 5
for the calendar year.
(d) (1) Coincident with the initial election provided for in section
3(a), a Participant shall execute and deliver to the Secretary an appropriate
election designating the date of commencement and form of distribution of the
Participant's Deferred Amounts authorized in section 8(b).
(2) In addition, a Participant may from time to time execute such
an election designating a later date of commencement and/or a longer payment
period for all or any portion of the Participant's existing Deferred Amounts
and/or the Participant's Compensation to be deferred in the future, provided
that no such election with respect to existing Deferred Amounts shall be
valid unless it is executed and received by the Secretary at least one year
prior to the date of commencement then on file with the Secretary and at
least one year prior to the date the Participant's service on the Board is
scheduled to end (including service as an Advisory Member or Member
Emeritus).
(e) (1) Any election under this section 3 shall be effective on and
after the first day of the month next following the month in which the
election form is received by the Secretary or such later date as may be
specified on the election form, except with respect to transfers between the
Cash Account and the Share Account, which shall be effective at the end of
the month in which the election form is received by the Secretary as provided
for in section 7(b).
(2) The receipt by the Secretary of a new election form shall
constitute a revocation of any previously filed
4
<PAGE> 5
inconsistent election, provided that a Participant shall not be able to change
the election provided for in section 3(a) before the first day of the following
calendar year and a Participant shall not be able to change the elections
provided for in section 3(b) before the later of the first day of the following
calendar year or the expiration of the fixed Term, if any, that the Participant
chose for any Deferred Amounts subject to the election, as provided for in
section 5.
(3) No election to change the amount or percentage of
Compensation a Participant elects to defer shall be retroactively effective.
4. Accounting
----------
(a) The Company shall establish on its books appropriate bookkeeping
accounts for each Participant which will accurately reflect the Deferred
Amount in each account of a Participant.
(b) The Secretary shall furnish each Participant with a statement of
the Deferred Amount in each account promptly following the end of each
calendar year.
5. Cash Account
------------
(a) Each Participant's Cash Account shall consist of all of the
Deferred Amounts credited pursuant to a specific election to defer, a valid
transfer from the Participant's Share Account, or an election by the
Participant pursuant to section 9, if any.
(b) Crediting of interest on Deferred Amounts in a Participant's Cash
Account shall be governed by this section 5.
(c) (1) Before the beginning of each calendar year, the Company shall
offer one or more Rate/Term combinations.
(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) A fixed Term elected by a Participant need not be limited to
the deferral period for the amount subject to
5
<PAGE> 6
the Term elected. For example, a Participant may elect a 10-year Term for an
amount that will become payable after 5 calendar years.
(4) In addition to any fixed Rate/Term combinations provided for
in this section 5(c), the Prime Rate shall be offered to Participants 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.
(5) All fixed Terms shall commence on a January 1 and expire on a
December 31. If a Participant executes and delivers a Rate/Term election for
a calendar year before the beginning of the calendar year, it shall become
effective as of January 1 of such calendar year. If a Participant does not
execute and deliver the appropriate election form before the beginning of a
calendar year, the Participant shall be deemed to have elected that any
amounts subject to such an election as of the beginning of the calendar year
be subject to the Prime Rate. As to any portion of a Participant's Cash
Account subject to the Prime Rate as of the beginning of a calendar year, the
Participant may make a Rate/Term election effective as of the first day of
any succeeding calendar month during the calendar year. For example: (i) if
before January 1, 1995, a Participant 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 Participant elects
the Prime Rate as of January 1, 1995 and then a combination of a 3-year Term
and a 3% Rate as of April 1, 1995, the Prime Rate shall apply to affected
Deferred Amounts from January 1, 1995 through March 31, 1995, and the 3% Rate
shall apply to affected Deferred Amounts from April 1, 1995 through December
31, 1997; and (iii) if a Participant makes no Rate/Term election for any
portion of a calendar year, the affected Deferred Amounts shall be subject to
the Prime Rate for the entire calendar year.
(d) (1) Each Participant shall elect among the Rate/Term combinations
available under section 5(c) which shall apply to the Participant's
Compensation allocated to the Participant's Cash Account for the calendar
year, to all
6
<PAGE> 7
Deferred Amounts allocated to the Participant's Cash Account 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 Participant's Cash Account 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 Participant 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.
(e) Interest shall accrue on the Deferred Amounts of a Participant
for each calendar year in accordance with the Participant's elections as
provided for in this section 5 until payment becomes due with respect to such
amounts.
6. Share Account
-------------
(a) Each Participant's Share Account shall consist of all of the
Deferred Amounts credited pursuant to a specific election to defer, a valid
transfer from the Participant's Cash Account or an election by the
Participant pursuant to section 9, if any. Any amount credited to a Share
Account in a calendar month shall be converted, as of the end of that
calendar month, into the maximum whole number of Credited Shares that the
amount so credited could have purchased at the then Market Value.
(b) As of the end of the calendar month during which the Company pays
any dividend on its common stock, either in cash or property other than its
common stock, a Share Account shall be credited with an amount equal to the
cash dividend per share or the value per share (as conclusively determined by
the Board), of the dividend in property other than its common stock, times
the Credited Shares in the Share Account on the dividend record date. The
amount so credited will be converted into the maximum whole number of
Credited Shares that the amount so credited could have purchased at the then
Market Value. If the Company pays any stock dividend, a Share Account shall
be credited, as of the end of the calendar month during which the stock
dividend is paid, with an amount equal to the stock dividend declared times
the Credited Shares in the Share Account on the dividend record date.
7
<PAGE> 8
(c) If any distribution other than a dividend is made on, or with
respect to, the Company's common stock, or in the event of a stock split,
recapitalization or other adjustment of the Company's common stock, an
appropriate adjustment shall be made to the number of Credited Shares in a
Share Account or to the cash credited to the Share Account on the same basis
as would have been made had the Credited Shares then been actually issued and
outstanding on the record date. The Board shall resolve any questions as to
the appropriateness of any such adjustment, including, but not limited to,
values and exchange ratios, and its determination shall be binding and
conclusive.
(d) All conversions into Credited Shares under subsections 6(a)
through (c) above shall be made in full shares. Amounts not so converted
shall be carried as excess cash in a Share Account and shall be added to any
additional amounts subsequently available for conversion.
7. Election to Transfer
--------------------
(a) Subject to any rules promulgated by the Secretary pursuant to
section 2, a Participant may transfer from time to time:
(1) all or any portion of any Deferred Amount from the Share Account to
the Cash Account, or
(2) all or any portion of any Deferred Amount then invested either at
the Prime Rate or for a Term that expires on the effective date of the
election to transfer from the Cash Account to the Share Account, by executing
and delivering to the Secretary the appropriate election form. A Participant
may make such an election to transfer Deferred Amounts that then remain
payable to the Participant under the Plan, including the period after
termination of service as a Non-Employee Director (including service as an
Advisory Member or Member Emeritus) and any period of payment in
installments. If a Participant elects to transfer any portion of any
Deferred Amount from the Share Account to the Cash Account, the Participant
may make a Rate/Term election with respect to the amount transferred incident
to the election to transfer.
(b) A transfer shall be effective as of the end of the calendar month
in which the election is received by the Secretary and shall be based on the
Market Value of the
8
<PAGE> 9
Credited Shares for the month during which the election is made.
(c) An election to transfer shall not affect any current elections to
defer. No transfer may change either the date distribution is to commence or
the form of distribution with respect to the Deferred Amount being
transferred.
8. Distribution
------------
(a) Except in the case of the death of a Participant, distribution
shall commence as of the first day of the calendar quarter coincident with or
next following the date specified by the Participant.
(b) Except in the case of the death of the Participant, payment of the
amount in each deferred compensation account shall be either in the form of a
lump sum or approximately equal quarterly installments over a period not to
exceed ten (10) years as selected by the Participant; provided, if payment is
made in installments and the Participant has both a Cash Account and a Share
Account subject to the distribution as of the date of payment of any
installment, the installment shall be paid pro rata from the Cash Account
--------
and the Share Account.
(c) In the event of the Participant's death prior to the date
specified for distribution of any account, or after distribution to the
Participant has commenced but before full distribution of any account has
been made, the then remaining balance in each account shall be paid in a lump
sum to the beneficiary or contingent beneficiary designated by the
Participant, or to the estate of the deceased Participant if there is no
surviving beneficiary or contingent beneficiary. In either such event the
lump sum payment shall be made as of the first day of the calendar quarter
following the Participant's date of death. A Participant may change the
beneficiary or contingent beneficiary from time to time by filing with the
Secretary a written notice of Such change; provided, however, no such notice
of change of beneficiary shall be effective unless it had been received by
the Secretary prior to the date of the Participant's death.
(d) (1) If a Change in Control (as defined in Section 8(d)(2)) shall
occur, then, notwithstanding anything to the contrary herein, within 30 days
after the Change in Control
9
<PAGE> 10
Date, each Participant shall be paid, in a single lump-sum payment, the value
of all of the Participant's accounts.
(2) For purposes of this Plan, a "Change in Control" shall occur
automatically if and when an "Acceleration Date" occurs as defined in the
Company's 1998 Incentive Stock Plan or if and when an analogous change in
control event occurs as defined in any successor to such plan, and the Change
in Control Date shall be the Acceleration Date or analogous date as defined
therein.
(3) This Section 8(d) may be deleted or amended in any way
pursuant to Section 10(a) at any time prior to a Change in Control.
Notwithstanding Section 10(a), following a Change in Control, the provisions
of this Section 8(d) 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 the Change in Control.
(4) Following a Change in Control, this Plan shall continue in
effect, notwithstanding that payment of benefits shall have been made under
Section 8(d)(1), unless and until terminated by the Company.
(5) If by reason of this Section 8(d) an excise or other special
tax ("Excise Tax") is imposed on any payment under this 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.
9. Amounts Attributable to the Non-Employee Directors' Retirement Program.
-----------------------------------------------------------------------
(a) Any Participant who was a Non-Employee Director as of January 1,
1996 (including any former Non-Employee Director then serving as an Advisory
Member) shall be eligible for a benefit under the Plan, in addition to any
other amounts due the Participant under the Plan, determined as follows:
(1) The present value as of January 1, 1996 of an annuity
commencing as of the first day of the month following the Participant's
expected retirement date, payable monthly, equal to 1/12th of the annual fee
for Non-Employee Directors in effect as of January 1, 1996, shall be
determined, applying the interest rate and mortality assumptions in use
10
<PAGE> 11
under the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan
as of January 1, 1996.
(2) Effective as of January 1, 1996, the amount so determined
shall be allocated to the Participant's Cash Account and/or Share Account
under the Plan, in such proportions as the Participant elects, and shall be
subject to the adjustments in value provided for in sections 5 and 6 of the
Plan; provided that any amount allocated to the Cash Account shall be subject
to the Prime Rate and shall not be subject to any fixed Rate/Term election
available with respect to other amounts allocated to the Cash Account until
January 1, 1997, whereupon the amount shall be subject to all provisions of
sections 5, 6 and 7 of the Plan.
(3) Effective as of January 1, 1996, the Participant shall elect
a form of payment described in section 8(b) with respect to this amount.
(4) As of the first day of the month following the date the
Participant leaves service as a Non-Employee Director (including service as
an Advisory Member or Member Emeritus), the total amount then allocated
pursuant hereto to the Participant's Cash Account and Share Account shall
become payable in the form elected by the Participant. The Participant may
not change the date of commencement of payment of the amount subject to this
section 9, but may elect a longer payment period as provided for in section
3(d)(2).
(5) In the event of a Participant's death before payment of the
amount provided for hereunder is complete, the then remaining balance of the
amount due hereunder shall be paid as provided for in section 8(c); provided:
(i) the Participant shall make a separate primary beneficiary and contingent
beneficiary designation with respect to the amount due hereunder; (ii) a
Participant may change the separate primary beneficiary or contingent
beneficiary from time to time with respect to any payment due after death
hereunder in the manner provided for generally in section 8(c); and (iii) if
there is no surviving primary beneficiary or contingent beneficiary
designated under the separate beneficiary designation provided for in this
section 9(a)(5), the amount due hereunder shall be paid in accordance with
the Participant's general beneficiary designation under section 8(c), if any,
or if none, to the Participant's estate.
11
<PAGE> 12
(b) Except as expressly provided in this section 9, the generally
applicable provisions of the Plan shall apply to amounts allocated to the
Cash Account and the Share Account in accordance with this section 9.
10. Miscellaneous
-------------
(a) The Board may amend or terminate this Plan at any time; however,
any amendment or termination of this Plan shall not affect the rights of
Participants or beneficiaries to payment, in accordance with section 8 of
this Plan, of amounts credited to Participants' accounts hereunder at the
time of such amendment or termination.
(b) This Plan does not create a trust in favor of a Participant,
his/her designated beneficiary or beneficiaries, or any other person claiming
on his/her behalf, and the obligation of the Company is solely a contractual
obligation to make payments due hereunder. In this regard, the balance in any
account shall be considered a liability of the Company and the Participant's
right thereto shall be the same as any unsecured general creditor of the
Company. Neither the Participant nor any other person shall acquire any
right, title, or interest in or to any Deferred Amount outstanding under the
Plan other than the actual payment of such Deferred Amount in accordance with
the terms of the Plan.
(c) No right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or change,
and any attempt to anticipate, alienate, sell, assign, pledge, encumber or
change the same shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities or torts
of the person entitled to such benefit. If any Participant or beneficiary
shall become bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber or change any right or benefit hereunder, then such right or
benefit shall, in the discretion of the Board, cease and terminate; and in
such event, the Company may hold or apply the same or any part thereof for
the benefit of the Participant or his/her beneficiary, his/her spouse,
children or other dependents, at any time and in such proportion as the Board
may deem proper. Any statement to the contrary notwithstanding, the Company
may apply any Deferred Amount to satisfy, in whole or in part, any
indebtedness of a Participant to the Company.
12
<PAGE> 13
(d) Construction of the Plan shall be governed by the laws of Missouri
(except with respect to choice of law).
(e) The terms of the Plan shall be binding upon the heirs, executors,
administrators, personal representatives, successors and assigns of all
parties in interest.
(f) The headings have been inserted for convenience only and shall not
affect the meaning or interpretation of the Plan.
(g) Each Participant shall submit to the Secretary his/her current
mailing address. It shall be the duty of each Participant to notify the
Secretary of any change of address. In the absence of such notice, the
Secretary shall be entitled for all purposes to rely on the last known
address of the Participant.
(h) Any amount payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipting therefor shall be
deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Company and the Board with respect thereto.
(i) Nothing in this Plan or any amendment thereto shall give a
Participant, or any beneficiary of a Participant, a right not specifically
provided therein. Nothing in this Plan or any amendment thereto shall be
construed as giving a Participant the right to be retained as a member of the
Board.
13
<PAGE> 1
ANHEUSER-BUSCH COMPANIES, INC.
NON-EMPLOYEE DIRECTOR ELECTIVE STOCK ACQUISITION PLAN
-----------------------------------------------------
(AMENDED AND RESTATED AS OF MARCH 1, 2000)
1. Definitions
-----------
(a) "Advisory Director" - any person designated as an advisory member
of the Board who is not an employee of the Company or of any Subsidiary.
(b) "Annual Meeting" - the Company's annual meeting of Stockholders in
any year.
(c) "Board" - the Board of Directors of the Company.
(d) "Change of Control Date" - The date, if any, when an "Acceleration
Date" occurs as defined in the Company's 1998 Incentive Stock Plan or an
analogous change of control event occurs as defined in any successor to such
plan.
(e) "Company" - Anheuser-Busch Companies, Inc.
(f) "Director Shares" - Shares granted pursuant to Section 6.
(g) "Issue Date" - (i) with respect to each person who continues to be
a Non-Employee Director as of December 31 in any year, the "Issue Date" shall
be the first business day of the following calendar year, and (ii) with
respect to each person who is newly elected or appointed as a Non-Employee
Director, the "Issue Date" in the calendar year of appointment shall be the
first business day following the date of such election or appointment.
(h) "Non-Employee Director" - any duly elected or appointed member of
the Board who is not an employee of the Company or of any Subsidiary and any
Advisory Director.
(i) "Plan" - the Anheuser-Busch Companies, Inc. Non-Employee Director
Elective Stock Acquisition Plan.
(j) "Retainer" - the annual retainer fee (exclusive of fees for
attending meetings of the Board or committees thereof, fees for meetings
dispensed with, committee chairmanship fees and any other fees as in effect
from time to time) which becomes payable to a Non-Employee Director for the
following calendar year.
(k) "Secretary" - the duly elected Secretary of the Company.
<PAGE> 2
(l) "Share" - a share of the Company's Common Stock which was
reacquired by the Company and is held in treasury.
(m) "Subsidiary" - an entity of which the Company (directly or through
one or more Subsidiaries) is the beneficial owner of more than 50% of the
entity's outstanding voting securities (measured on the basis of voting
power).
2. Administration
--------------
The Plan shall be administered by the Secretary who shall have the
authority to construe and interpret the Plan, and to establish or adopt
rules, regulations and forms relating to the administration of the Plan. The
Secretary shall have no authority to add to, delete from or modify the terms
of the Plan, as the Plan shall be nondiscretionary as to the eligibility of
participants and the timing and amounts of the grants. Neither the Secretary
nor any member of the Board shall be liable for any act or determination made
in good faith.
3. Purpose
-------
The Plan is intended to assist in attracting, retaining and motivating
Non-Employee Directors of outstanding ability and to promote identification
of their interests with those of the stockholders of the Company.
4. Eligibility
-----------
Subject to Section 12, all Non-Employee Directors shall be eligible.
5. Shares Subject to the Plan
--------------------------
The maximum number of Shares that may be issued under the Plan is
50,000.
6. Director Shares
---------------
(a) On or prior to the last day of the calendar year each year until no
Shares remain available under the Plan, each person who is then a
Non-Employee Director may make an election to receive up to 100% of his or her
Retainer in Shares in lieu of cash. The election shall be in writing on a
form prescribed by the Company, shall specify the percentage of the Retainer
to be paid in Shares, and shall be irrevocable.
2
<PAGE> 3
Notwithstanding the foregoing, any Advisory Director whose term in such
position is scheduled to expire at the next Annual Meeting may make the
election under this Section 6(a) only with respect to the portion of the
Retainer which is payable for the period ending on the date of such Annual
Meeting. Any Non-Employee Director who is newly elected or appointed as such
may make the election under this Section 6(a) upon the date of his or her
election or appointment as a Non-Employee Director with respect to the portion
of the Retainer which is payable for the remainder of the calendar year.
(b) The percentage of the Retainer to be paid in Shares shall not be
paid in cash, but in lieu thereof shall be paid by the transfer of such
Shares to such Non-Employee Director. On each Issue Date, each Non-Employee
Director who has elected to receive a percentage of the Retainer in Shares
pursuant to the terms of this section shall automatically and without
necessity of any action by the Company, be entitled to receive Shares for
such percentage of the Retainer pursuant to the terms and conditions of the
Plan. For purposes of the Plan, the number of Shares shall be determined by
dividing (A) the amount of the Retainer to be paid in Shares by (B) the mean
of the high and low sale prices per share of the Company's Common Stock on
the New York Stock Exchange on the Issue Date (provided that, if the Issue
Date is not a trading day on the New York Stock Exchange, then on the
preceding such trading day), rounding to the nearest whole number. If on any
Issue Date the number of Director Shares otherwise issuable to the
Non-Employee Directors shall exceed the number of Shares then remaining
available under the Plan, the available Shares shall be allocated among the
Non-Employee Directors in proportion to the number of Shares they would
otherwise be entitled to receive, and the remainder of the Retainer shall be
payable in cash.
7. Capital Adjustments
-------------------
The maximum number of Shares subject to the Plan pursuant to Section 5
shall be proportionately adjusted to reflect any dividend or other
distribution on the Company's outstanding Common Stock payable in shares of
the Company's Common Stock or any split or consolidation of the outstanding
shares of the Company's Common Stock. If the Company's outstanding Common
Stock shall, in whole or in part, be changed into or exchangeable for a
different class or classes of securities of the Corporation or securities of
another corporation, whether through recapitalization, merger, consolidation,
reorganization or otherwise, then (subject to the powers of the Board to
amend the Plan in whole or in part as provided in Section 14(a)) the Director
Shares which each Non-Employee Director is entitled to receive on any Issue
Date pursuant to Section 6 shall thereafter be paid in the class, or
proportionately in the classes, of securities into which the outstanding
shares of the Company's Common Stock shall have been converted or for which
they are exchangeable, and the maximum amount of securities issuable under
the Plan under Section 5 shall be the number of
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<PAGE> 4
securities into or for which such number of Shares would be changed or
exchangeable.
8. Rights as a Stockholder
-----------------------
Prior to the Issue Date, the Non-Employee Director shall have no rights
as a Stockholder with respect to Director Shares to be issued for the
Retainer.
9. Vesting
-------
Director Shares shall be fully vested on the Issue Date notwithstanding
any subsequent cessation of the status of the participant as a Non-Employee
Director prior to the completion of the year of service for which the
Retainer was payable.
10. Issuance of Certificates, Payment of Cash Retainers and Withholding
-------------------------------------------------------------------
(a) As promptly as practicable following each Issue Date, the Company
shall issue stock certificates registered in the name of each Non-Employee
Director entitled to receive the Director Shares representing the number of
Director Shares determined pursuant to Section 6, and shall deliver such
certificates to the Non-Employee Director or his or her beneficiary.
(b) The portion of the Retainer not paid in Director Shares shall be
payable in cash pursuant to the policies of the Company as in effect from
time to time.
(c) The Company may make such provisions as it may deem appropriate for
the withholding of any federal, state or local taxes which the Company
determines it is required to withhold.
11. Relationship to Other Compensation Plans
----------------------------------------
To the extent Non-Employee Directors elect to receive Director Shares
under the Plan, they shall not be permitted to defer the receipt thereof
under any existing deferred compensation plans or any other such plan which
the Board may adopt from time to time.
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<PAGE> 5
12. Legal Restrictions on Participation
-----------------------------------
Notwithstanding any provision herein to the contrary, in the event that
in the opinion of legal counsel to the Company it may be unlawful or create
any regulatory issue for the Company for any Non-Employee Director (due to
his or her affiliation or association with any other company or business, or
other reason) to own Shares, then such Non-Employee Director may not
participate in the Plan.
13. Compliance with the Securities Act of 1933
------------------------------------------
The Company has no obligation to register the Director Shares under the
Securities Act of 1933. Each recipient of Director Shares by accepting such
Shares acknowledges that he or she is acquiring the Shares for investment and
not with a view to distribution and in addition to any other restriction on
transfer provided hereunder, the Director Shares may not be transferred
except pursuant to the requirements of Rule 144 including the holding period
thereunder, other available exemption from registration, or an effective
registration statement.
14. Miscellaneous
-------------
(a) The Board may amend this Plan at any time provided, however, that
(i) any amendment shall not affect the rights of participants or
beneficiaries to Director Shares which have been transferred to them, (ii)
the Plan may not be amended more than once in every six months or otherwise
to the extent that such amendment would have the effect of disqualifying the
participants from administering any other stock plan of the Company for
purposes of complying with the terms of Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule), and (iii) on or following the
Change of Control Date, the Plan may not be amended to affect the rights of
any participants.
(b) No right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
and any attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void. The rights or interests under the Plan are
not subject to the claims of creditors provided, however, that the Company
may apply any Director Shares held in its custody or withhold the transfer
thereof, to satisfy, in whole or in part, any indebtedness of a participant
to the Company.
(c) Construction of the Plan shall be governed by the laws of Delaware.
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<PAGE> 6
(d) The terms of the Plan shall be binding upon the heirs, executors,
administrators, personal representatives, successors and assigns of all
parties in interest.
(e) The headings have been inserted for convenience only and shall not
affect the meaning or interpretation of the Plan.
(f) Each participant shall submit to the Secretary, his or her current
mailing address. It shall be the duty of each participant to notify the
Secretary of any change of address. In the absence of such notice, the
Secretary shall be entitled for all purposes to rely on the last address of
the participant in the Company's records.
(g) Any Director Shares to be delivered to or for the benefit of a
minor, an incompetent person or other person incapable of receipting therefor
shall be deemed delivered when delivered to such person's guardian or to the
party providing or reasonably appearing to provide for the care of such
person, and such delivery shall fully discharge the Company and the Board
with respect thereto.
(h) Nothing in this Plan or any amendment thereto shall give a
participant, or any beneficiary of a participant, a right not specifically
provided therein. Nothing in this Plan or any amendment thereto shall be
construed as giving a participant the right to be retained as a member of the
Board or otherwise in service to the Company.
(i) The Plan became effective commencing January 1, 1996; this
amendment and restatement of the Plan shall become effective commencing March
1, 2000.
6
<PAGE> 1
UK ADDENDUM TO THE
THE ANHEUSER-BUSCH COMPANIES, INC. 1998 INCENTIVE STOCK PLAN
RULES FOR INLAND REVENUE APPROVED GRANTS FOR
ELIGIBLE PERSONS IN THE UNITED KINGDOM
Adopted by the Company on 23 November 1999
Approved by the Board of the Inland Revenue on:
Inland Revenue reference no: X20382/RC
PRICEWATERHOUSECOOPERS
PLUMTREE COURT
LONDON EC4A 4HT
<PAGE> 2
UK ADDENDUM TO THE
THE ANHEUSER-BUSCH COMPANIES, INC. 1998 INCENTIVE STOCK PLAN
RULES FOR INLAND REVENUE APPROVED GRANTS FOR
ELIGIBLE PERSONS IN THE UNITED KINGDOM
SECTION 1. OVERVIEW
(a) This Addendum to the Anheuser-Busch Companies, Inc. 1998 Incentive Stock
Plan ("the Plan") sets out the rules of The Anheuser-Busch Companies,
Inc. 1998 Incentive Stock Plan Inland Revenue Approved Sub-Plan for the
United Kingdom ("the Sub-Plan"). The Sub-Plan is intended to be approved
by the Board of the Inland Revenue under Schedule 9 to ICTA 1988.
(b) Anheuser-Busch Companies, Inc. ("the Company") has established the Sub-
Plan under Section 14 of the Plan. The rules of the Plan, in their
present form and as amended from time to time, shall, with the
modifications set out in this UK Addendum, form the rules of the Sub-
Plan. The Sub-Plan shall form part of the Plan and not a separate and
independent plan. In the event of any conflict between the rules of the
Plan and this UK Addendum, the UK Addendum shall prevail.
(c) Notwithstanding Section 2 (ii) of the Plan, no Awards of cash may be
made either under this Sub-Plan or in lieu of delivering shares of Stock
on exercise of any UK Approved Option granted under this Sub-Plan.
(d) The purpose of the Sub-Plan is to enable the grant to, and subsequent
exercise by, employees and directors in the United Kingdom, on a tax
favoured basis, of options to acquire shares in the Company under the
Plan.
SECTION 2. MAXIMUM NUMBER OF SHARES
(a) For the avoidance of doubt, shares of Stock which may be issued pursuant
to Awards under the Plan shall include shares of Stock placed under an
Approved UK Option granted under the Sub-Plan for the purposes of
Section 2 of the Plan.
(b) The shares of Stock pursuant to an Award of UK Approved Options granted
under the Sub-Plan shall form part of the Ordinary Share Capital of the
Company and shall at all times comply with the requirements of
paragraphs 10 to 14 of Schedule 9 to ICTA 1988.
SECTION 3. ELIGIBILITY
(a) Notwithstanding Section 3 of the Plan, a director of the Company or a
Subsidiary or an Affiliate will not be eligible to receive UK Approved
Options unless he is contracted to work at least 25 hours per week for
the Company and or any of its Subsidiaries
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<PAGE> 3
(exclusive of meal breaks).
(b) The companies participating in the Sub-Plan shall be the Company and any
company Controlled by the Company which has been nominated by the
Company to participate in the Sub-Plan.
SECTION 4. GENERAL PROVISIONS RELATING TO AWARDS
(a) An option granted under the Sub-Plan shall be granted under and subject
to the rules of the Plan as modified by this UK Addendum.
(b) Any terms, restrictions or conditions imposed upon the grant of a UK
Approved Option by the Committee under Section 4(a) of the Plan shall
be:
* objective;
* such that, once satisfied, the exercise of the UK Approved Option is
not subject to the discretion of any person; and
* stated on the Date of Grant.
(c) Notwithstanding Section 4(b) of the Plan, Stock Appreciation Rights may
not be granted as alternatives to UK Approved Options granted under this
Sub-Plan.
(d) An Award Document issued in respect of a UK Approved Option granted
under the Sub-Plan must state all provisions relating to the vesting or
exercise of that UK Approved Option after termination of employment and
all provisions relating to the circumstances under which a termination
is deemed to occur.
(e) If under Section 4(d) of the Plan, a provision is inserted into an Award
Document issued in respect of a UK Approved Option granted under the
Sub-Plan permitting a Recipient to designate the person who may exercise
an Award after the Recipient's death, such provision must state that the
UK Approved Option may be exercised by such designated person at any
time during the twelve month period following the Recipient's death and
only if the exercise occurs within ten years from the Date of Grant, and
if not so exercised, the UK Approved Option shall lapse immediately.
(f) A UK Approved Option shall be personal to the Eligible Person to whom it
is granted and, subject to Section 4(d) of the Plan, shall not be
capable of being transferred, charged or otherwise alienated and shall
lapse immediately if the Recipient purports to transfer, charge or
otherwise alienate the UK Approved Option.
(g) Section 4(g) of the Plan is disapplied for the purpose of the Sub-Plan.
(h) If an event occurs as a result of which the Committee considers that a
performance target or other condition imposed on the exercise of a UK
Approved Option is no longer appropriate, the Committee may amend an
Award Document in respect of that UK Approved Option by substituting,
varying or waiving under Section 4(h) of the
2
<PAGE> 4
Plan the performance target or condition, provided that any such
substitution, variation or waiver shall:
* be reasonable in the circumstances;
* produce a fairer measure of performance and be neither materially
more nor less difficult to satisfy; and
* be approved beforehand by the Board of Inland Revenue.
(i) Subject to Rule 4(h) of this Sub-Plan, no other amendments may be made
Under Section 4(h) of the Plan to an Award Document issued in respect
of a UK Approved Option granted under the Sub-Plan.
SECTION 5. OPTIONS AND SARS
(a) The amount payable per share of Stock on the exercise of a UK Approved
Option shall not be less than the Fair Market Value of a share of Stock
on the Date of Grant and shall be stated on the Date of Grant.
(b) Notwithstanding Section 5(a) of the Plan, Stock Appreciation Rights may
not be granted as alternatives to UK Approved Options granted under this
Sub-Plan.
(c) A UK Approved Option may not be granted earlier than the Approval Date
and a UK Approved Option may not be granted to an individual who is not
an Eligible Person at the Date of Grant. No UK Approved Option shall be
granted to an Eligible Person at a time when the Eligible Person has, or
has had within the preceding twelve (12) months, a Material Interest in
a Close Company which is (i) the Company or (ii) a company which has
control of the Company.
(d) A UK Approved Option may not be granted to an Eligible Person if the
result of granting the UK Approved Option would be that the aggregate
Fair Market Value of the shares subject to all outstanding options
granted to him under the Sub-Plan or any other share option scheme
established by the Company or an Associated Company and approved by the
Board of the Inland Revenue under Schedule 9 to ICTA 1988 (other than a
savings related share option scheme) would exceed sterling 30,000 or
such other limit as may from time to time be specified in paragraph 28
of Schedule 9 to ICTA 1988. For this purpose, the United Kingdom
sterling equivalent of the market value of a share on any day shall be
determined by taking the highest buying price of the bid/offer spread
for that day as shown in the Financial Times.
(e) An Award Document issued in respect of a UK Approved Option granted
under the Sub-Plan shall state:
- that it is issued in respect of a UK Approved Option;
3
<PAGE> 5
- the Date of Grant of the UK Approved Option;
- the number of shares of Stock subject to the UK Approved Option;
- the option price under the UK Approved Option;
- any performance target or other condition imposed on the exercise of
the UK Approved Option under Section 4(a) of the Plan; and
- the date(s) on which the UK Approved Option will ordinarily become
exercisable and the provisions determined by the Committee in
relation to the termination of the Recipient's employment under
Section 4(c) of the Plan.
(f) An Award Document issued in respect of a UK Approved Option shall
expressly state that it is issued in respect of a UK Approved Option. An
option which is not so identified shall not constitute a UK Approved
Option.
(g) A UK Approved Option may not be exercised if the Recipient then has, or
has had within the preceding twelve months, a Material Interest in a
Close Company which is the Company or which is a company which has
Control of the Company or which is a member of a Consortium which owns
the Company.
SECTION 6. LIMITED RIGHTS
The provisions contained at Section 6 of the Plan shall not form part of, and
no such rights may be granted under, the Sub-Plan.
SECTION 7. STOCK ISSUANCE, PAYMENT AND WITHHOLDING
(a) The amount due on the exercise of a UK Approved Option shall be paid in
cash or by cheque or banker's draft and may be paid out of funds
provided to the Recipient on loan by a bank, broker or other person.
Notwithstanding Section 7(a) of the Plan, the amount may not be paid by
the transfer to the Company of shares of Stock or any other shares or
securities. The date of exercise of a UK Approved Option shall be the
date on which the Company receives the amount due on the exercise of the
UK Approved Option.
(b) The Company shall, as soon as reasonably practicable and in any event
not later than thirty days after the date of exercise of a UK Approved
Option, issue or transfer to the Recipient, or procure the issue or
transfer to the Recipient of, the number of shares of Stock specified in
the notice of exercise and shall deliver to the Recipient, or procure
the delivery to the Recipient of, a certificate in respect of such
shares of Stock together with, in the case of the partial exercise of a
UK Approved Option, an Award Document in respect of, or the original
Award Document endorsed to show, the unexercised part of the UK Approved
Option, subject only to compliance by the Recipient with the rules of
the Sub-Plan and to any delay necessary to complete or obtain
4
<PAGE> 6
- the listing of the shares of Stock on any stock exchange on which
shares of Stock are then listed;
- such registration or other qualification of the shares of Stock
under any applicable law, rule or regulation as the Company
determines is necessary or desirable; or
- the making or provision for the payment or withholding of any
taxes required to be withheld in accordance with any applicable
law in respect of the exercise of the UK Approved Option or the
receipt of the shares of Stock.
(c) All shares of Stock issued on the exercise of a UK Approved Option
shall, as to any voting, dividend, transfer and other rights, including
those arising on a liquidation of the Company, rank equally in all
respects and as one class with the shares of Stock in issue at the date
of such exercise save as regards any rights attaching to such shares of
Stock by reference to a record date prior to the date of such exercise.
SECTION 8. FORFEITURES
(a) Notwithstanding Section 8 of the Plan, a forfeiture may only occur in
the event of a termination of employment and in any event is subject to
the provisions of the Plan as modified by this UK Addendum and the terms
of the Award Document issued in respect of the UK Approved Option.
(b) Where, under the provisions of the Plan as modified by this UK Addendum
and the terms of the Award Document issued in respect of the UK Approved
Option, a forfeiture is required, except in the case where employment
is terminated as a result of redundancy (within the meaning of the
Employment Rights Act 1996) the Committee retain the discretion to
instead permit exercise of the UK Approved Option within the period of
ninety days from the date of termination of employment.
(c) Notwithstanding Section 8 of the Plan, the term "forfeiture" shall not
include the recapture of Stock issued or other economic benefits derived
from the exercise of a UK Approved Option.
SECTION 9. ADJUSTMENTS AND ACQUISITIONS
(a) Notwithstanding Section 9(a) of the Plan, no adjustment may be made to a
UK Approved Option unless approval has been given for such adjustment by
the Board of the Inland Revenue.
(b) The following words at Section 9(a) of the Plan
"Alternatively to (i) and (iii), if there is an Adjustment Event and the
Committee deems it appropriate, it may provide for cash payments to
holders of outstanding Awards"
5
<PAGE> 7
are disapplied for the purposes of this Sub-Plan.
(c) Section 9 of the Plan is replaced with the following provisions 9(d),
(e), (f) and (g) below for the purposes of the Sub-Plan:
"9(d)(i) EXCHANGE OF OPTIONS
If a company ("Acquiring Company") obtains Control of the Company as a
result of making:
1. a general offer to acquire the whole of the issued ordinary
share capital of the Company which is made on a condition such
that if it is satisfied the person making the offer will have
Control of the Company; or
2. a general offer to acquire all the shares in the Company of the
same class as the shares of Stock
a Recipient may, at any time during the period set out in Section
9(d)(ii) below by agreement with the Acquiring Company, release his or
her UK Approved Option in whole or in part in consideration of the grant
to him of a new option ("New Option") which is equivalent to the UK
Approved Option but which relates to shares ("New Shares") in:
3. the Acquiring Company;
4. a company which has Control of the Acquiring Company; or
5. a company which either is, or has Control of, a company which is
a member of a Consortium which owns either the Acquiring Company
or a company having Control of the Acquiring Company.
(ii) PERIOD ALLOWED FOR EXCHANGE OF OPTIONS
The period referred to in Section 9(d)(i) above is the period
of six months beginning with the time when the person making the
offer has obtained Control of the Company and any condition subject
to which the offer is made has been satisfied.
(e) Meaning of "equivalent"
The New Option shall not be regarded for the purpose of this Section 9
as equivalent to the UK Approved Option unless
(i) the New Shares satisfy the conditions in paragraphs 10 to 14 of
Schedule 9 to ICTA 1988; and
6
<PAGE> 8
(ii) save for any performance target or other condition imposed on the
exercise of the UK Approved Option, the New Option will be
exercisable in the same manner as the UK Approved Option and
subject to the provisions of the Sub-Plan as it had effect
immediately before the release of the UK Approved Option; and
(iii) the total market value, immediately before the release of the UK
Approved Option, of the shares of Stock which were subject to the
UK Approved Option is as nearly as may be equal to the total market
value, immediately after the grant of the New Option, of the New
Shares (market value being determined for this purpose in
accordance with Part VIII of the Taxation of Chargeable Gains Act
1992); and
(iv) the total amount payable by the Recipient for the acquisition of
the New Shares under the New Option is as nearly as may be equal to
the total amount that would have been payable by the Recipient for
the acquisition of the shares of Stock under the UK Approved
Option.
(f) Date of grant of New Option
The date of grant of the New Option shall be deemed to be the same as
the Date of Grant of the UK Approved Option.
(g) Application of Sub-Plan to New Option
In the application of the Sub-Plan to the New Option, where appropriate,
references to "Company" and "shares of Stock" shall be read as if they
were references to the company to whose shares the New Option relates
and the New Shares, respectively, save that in the definition of
"Committee" the reference to "Company" shall be read as if it were a
reference to Anheuser-Busch Companies Inc.
SECTION 10. ACCELERATION AND VESTING
Section 10 of the Plan applies as written to the Sub-Plan.
SECTION 11. ADMINISTRATION
Section 11 of the Plan applies as written to the Sub-Plan.
SECTION 12. AMENDMENT, TERMINATION AND SHAREHOLDER APPROVAL
(a) Notwithstanding section 12(a) and (b) of the Plan, no amendment of the
Sub-Plan shall take effect until it has been approved by the Board of
the Inland Revenue.
(b) No Awards of UK Approved Options may be granted under this Sub-Plan at
any time whilst it does not retain the approval of the Board of the
Inland Revenue.
7
<PAGE> 9
SECTION 13. DEFINITIONS
(a) In this Sub-Plan:
(i) the definition of "AWARD" in the Plan is extended to include the
grant of UK Approved Options under this Sub-Plan;
(ii) the definition of "AFFILIATE" is extended to include the words
"... equity interest (other than a Subsidiary) WHICH IS ALSO A
COMPANY UNDER THE CONTROL OF THE COMPANY";
(iii) the definition of "FAIR MARKET VALUE" in the Plan is replaced
with the definition:
"notwithstanding Section 13(n) of the Plan, FAIR MARKET VALUE
means:
(a) in the case of a UK Approved Option granted under the Sub-Plan:
(i) if at the relevant time the Stock is listed on the
New York Stock Exchange the average of the highest and
lowest selling prices per share of Stock reported on the
New York Stock Exchange Composite Tape or similar
quotation service for such date;
(ii) if paragraph (i) does not apply, the market value of a
share of Stock as determined in accordance with Part
VIII of the Taxation of Chargeable Gains Act 1992 and
agreed in advance with the Inland Revenue Shares
Valuation Division on the Date of Grant of the UK
Approved Option or such earlier date or dates as may be
agreed with the Board of the Inland Revenue;
(b) in the case of an option granted under any other share option scheme, the
market value of an ordinary share in the capital of the company
determined under the rules of such scheme for the purpose of the grant of
the option":
(iv) The definition of "OPTION" in the Plan is extended to include a UK
Approved Option;
(v) The definition of "STOCK" in the Plan is extended to include
the words "and means save as provided in paragraph 16.1, a
share in the Company satisfying paragraphs 10 to 14 inclusive
of Schedule 9 to ICTA 1988";
(vi) The definition of "SUBSIDIARY" in the Plan is extended to include
the words "which is under the Control of the Company".
The following definitions also apply for the purposes of the Sub-Plan:
(i) "ACQUIRING COMPANY" means a company which obtains Control of the
Company in the circumstances referred to in Section 9 of this Sub-
Plan;
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<PAGE> 10
(ii) "APPROVAL DATE" means the date on which the Sub-Plan is approved by
the Board of the Inland Revenue under Schedule 9 to ICTA 1988;
(iii) "ASSOCIATED COMPANY" means an associated company as defined in
Section 416 of ICTA 1988.
(iv) "CLOSE COMPANY" means a "close company" as defined in Section 414
of ICTA 1988.
(v) "CONSORTIUM" means the meaning given to that word by Section 187(7)
of ICTA 1988;
(vi) "CONTROL" means "control" as defined in Section 840 of ICTA 1988.
(vii) "DATE OF GRANT" means the date on which a UK Approved Option is
granted to an Eligible Person determined in accordance with Section
4 of the Plan;
(viii) "ELIGIBLE EMPLOYEE" means an Optionee who is employed by any of the
Company, a Subsidiary or Affiliate.
(ix) "ICTA 1988" means the Income and Corporation Taxes Act 1988 of the
United Kingdom.
(x) "MATERIAL INTEREST" means a "material interest" as defined in
Section 187(3) of ICTA 1988.
(xi) "NEW OPTION" means an option granted by way of exchange under
Section 9(d)(i) of the Sub-Plan;
(xii) "NEW SHARES" means the shares subject to a New Option referred to
in Section 9(d)(i) of the Sub-Plan;
(xiii) "ORDINARY SHARE CAPITAL" means the meaning given to that expression
by Section 832(1) of ICTA 1988; and
(xiv) "UK APPROVED OPTION" means a subsisting right to acquire shares of
Stock granted under the Sub-Plan.
(c) In this UK Addendum, unless the context otherwise requires:
(i) words and expressions not defined above have the same meanings as
are given to them in the Plan;
(ii) the rule headings are inserted for ease of reference only and do
not affect their interpretation;
9
<PAGE> 11
(iii) a reference to a rule is a reference to a rule in this UK
Addendum;
(iv) the singular includes the plural and vice-versa and the masculine
includes the feminine; and
(v) a reference to a statutory provision is a reference to a United
Kingdom statutory provision and includes any statutory
modification, amendment or re-enactment thereof.
SECTION 14. MISCELLANEOUS
Section 14 of the Plan applies as written to the Sub-Plan.
10
<PAGE> 1
ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN
AMENDED AND RESTATED AS OF MARCH 1, 2000
Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"),
established this Excess Benefit Plan, originally effective as of January 1,
1984, to provide supplemental retirement benefits to certain employees whose
retirement benefits may be adversely affected by the limitations of Section
415 of the Internal Revenue Code. 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. The Plan has been amended and restated from time to
time. The Company hereby amends and restates the Plan as of March 1, 2000.
The provisions of this restated Plan shall apply to all eligible individuals
whose termination of employment occurs on or after March 1, 2000.
1. Definitions Applicable to this Excess Benefit Plan. All capitalized
---------------------------------------------------
terms used in this Plan shall 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 applicable with respect to the particular form or
forms of payment under the Basic Plan, disregarding interest and mortality
assumptions grandfathered as of December 31, 1999 with respect to single sum
and installment payments.
(b) "Basic Plan" means the Supplement for the Anheuser-Busch
Salaried Employees Pension Plan maintained as part of the Anheuser-Busch
Companies Pension Plan as now in effect or as hereafter amended.
(c) "Committee" means the same group of persons appointed to
administer the Basic Plan.
(d) "Company" means Anheuser-Busch Companies, Inc., a Delaware
corporation, and any corporation(s) into which or with which it may be
liquidated, merged or consolidated.
(e) "Participant" means an individual who is eligible to participate
in this Plan as described in Section 2.
(f) "Participating Employer" as used in this Plan means a
Participating Employer in the Basic Plan which has adopted this Plan.
1
<PAGE> 2
(g) "Plan" means this Anheuser-Busch Companies, Inc. Excess Benefit
Plan Amended and Restated as of March 1, 2000 as thereafter amended from time
to time.
(h) "Subsidiary" means any business entity in which the Company has
an equity interest of at least fifty percent.
2. Eligibility to Participate. Any individual 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 the Actuarial
Equivalent of:
(a) The retirement benefit a Participant would be entitled to
receive under the Basic Plan, under the actual method of payment elected
under such plan, if Section 415 were inapplicable, less
(b) The retirement benefit actually payable to the Participant under
the Basic Plan.
No Participant shall be vested in benefits under this Plan until the
Participant has (a) terminated employment, (b) attained age 55 or been
determined to be totally and permanently disabled under the Basic Plan, (c)
vested in his benefit under the Basic Plan, and (d) satisfied all other
requirements of this Plan for commencement of benefits.
4. Special Rule for Non-Deductible Amounts. Any amount otherwise
----------------------------------------
payable under the Plan in a calendar 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
calendar year as the Company determines that the amount has ceased to be so
non-deductible. In the case of any inconsistency between this Section 4 and
any other provision of the Plan, this Section 4 shall govern, unless Section
20 applies.
5. Pre-Retirement Death Benefits. There will be no pre-retirement death
------------------------------
benefit under this Plan.
6. Payment Method. The retirement benefit determined under Section 3
---------------
shall be payable under the basic method of payment under the Basic Plan.
However,
2
<PAGE> 3
a Participant may elect, subject to approval of the Committee, to have his
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 amount determined under
Section 3. 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. Notwithstanding the foregoing, effective for any Participant whose
employment terminates on or after January 1, 1995, payment shall be made in
the form of a single lump sum unless the Participant shall elect, on forms
provided by the Committee, at least one calendar year prior to termination of
employment, to receive payment under the basic method or some other available
method. Except as otherwise specifically provided in this Plan, retirement
benefits hereunder shall commence as of the same date benefits commence under
the Basic Plan.
7. 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 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.
8. Concerning Payment.
-------------------
(a) Except as otherwise provided in this Section 8, 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 8. Each
Participant shall specifically designate, by name, on forms provided by the
Committee, the beneficiary(ies) to whom any such amounts shall be paid.
Except as provided in paragraph (c), 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 Committee. The
filing of a new form shall automatically revoke any forms previously filed
with the Committee. A beneficiary designation form not properly filed with
the Committee prior to the death of the Participant shall have no validity
under the Plan.
3
<PAGE> 4
(b) Except as provided in paragraph (c), 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 Committee.
(c) If a Participant has selected a joint and survivor annuity
method of payment and the contingent annuitant dies before payments begin,
the selection shall be revoked, but if the contingent annuitant dies after
payments begin, the selection of this method of payment shall not be affected
and no new contingent annuitant may be named.
(d) If no beneficiary designation is on file with the Committee 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.
(e) In determining any question concerning a Participant's
beneficiary, the latest designation filed with the Committee shall control
and intervening changes in circumstances shall be ignored; provided, if a
Participant's spouse is designated as beneficiary but thereafter is divorced
from the Participant, such designation shall become invalid effective as of
the date of divorce unless the Participant files a beneficiary designation
form with the Committee after the date of divorce confirming the former
spouse as the Participant's beneficiary.
(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 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 8.
9. 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 Committee in its sole discretion,
payment thereof shall be made in one (or any combination) of the following
ways, as the Committee shall determine in its sole discretion:
4
<PAGE> 5
(i) Directly to said minor or other person;
(ii) To a custodian for said minor or other person (whether
designated by the Committee or any other person) under the Missouri Transfers
to Minors Law, the Missouri Personal Custodian Law or a similar law of any
other jurisdiction;
(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 Committee shall not be required to see to the application of any payment
so made, and payment to the person determined by the Committee shall fully
discharge the Participating Employers and this Plan from any further
accountability or responsibility with respect to the amount so paid.
10. 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 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.
11. 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 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.
12. 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 Committee 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 Committee may determine.
5
<PAGE> 6
13. Administration.
---------------
(a) The Committee shall administer the Plan in accordance with its
terms and shall have all powers necessary to carry out the provisions of the
Plan. The Committee 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 Committee deems proper
in its discretion. Any interpretation or construction placed upon any term
or provision of the Plan by the Committee, any decisions and determinations
of the Committee 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 (ii) the
time, method and amounts of payments payable under the Plan, and any other
action or determination or decision whatsoever taken or made by the Committee
shall be final, conclusive and binding upon all persons concerned.
(b) The procedure provided for in this Section 13 shall be the sole,
exclusive and mandatory procedure for resolving any dispute under this Plan;
provided, that if a Participant wishes to make a valid legal challenge to the
Committee's determination and he has entered into an agreement with the
Company to arbitrate disputes arising from his employment with the Company,
such legal challenge shall be resolved pursuant to the arbitration procedures
in that agreement and the Participant's burden of proof in any arbitration
shall be the same as if the dispute were tried in a court proceeding.
(c) Notwithstanding the foregoing, upon a Change in Control as
defined in Section 20, Section (d) above shall not apply.
14. 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.
15. 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 beneficiary or beneficiaries to receive a
benefit hereunder is expressly conditioned upon the Participant neither (i)
having ceased to be employed by the Company or any Subsidiary under
circumstances or conditions inimical or
6
<PAGE> 7
contrary to the best interests of the Company or any Subsidiary, nor (ii)
thereafter engaging in any activity which in the Committee's judgment is
inimical or contrary to the best interests of the Company or any Subsidiary.
(b) Should a 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 Committee shall thereupon investigate the
alleged violation and shall consider, under such rules of procedure as the
Committee shall deem reasonable, such evidence and testimony as the
Participating Employer and the Participant or other person or persons
receiving or otherwise entitled to receive payment may wish to submit in
support or refutation of the alleged violation. The decision of the
Committee shall be final and conclusive. If the 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
Committee concludes that there has not been a violation, the amounts withheld
or suspended shall become payable as though no proceedings had been
instituted nor any payment withheld or suspended, 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 a Participating Employer may otherwise have under
any employment contract with a Participant or at law or in equity, to prevent
the disclosure of confidential information or to recover damages for the
disclosure thereof or to prevent a Participant from engaging in competition
with a Participating Employer or to recover damages therefor.
(e) The Board (or the Executive Committee at any time the Board of
Directors is not in session) may revoke this Section at any time, whereupon
no benefit that would otherwise become payable under this Plan shall ever be
subject to forfeiture or revocation for any reason, including (but not
limited to) any subsequent
7
<PAGE> 8
amendment to this Plan which reinstates the provisions of this Section or
imposes similar conditions on a Participant's right to receive benefits
hereunder.
(f) If the provisions of this Section are invoked at any time after
payments have already been made, the Participating Employer shall have the
right to a refund of all monies theretofore paid. If the Participating
Employer shall find it necessary to file suit to recover any amount
hereunder, it shall be entitled to recover its reasonable attorney's fees and
costs.
16. Amendment. The Board of Directors of the Company or any duly
----------
authorized officer 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 or future date. Any amendments to the Basic Plan
shall automatically amend the provisions of this Plan where they would so
apply.
17. Termination. The Board of Directors of the Company or any duly
------------
authorized individual shall have 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) the Company being legally
adjudicated a bankrupt; (c) the appointment of a receiver of trustee in
bankruptcy with respect to the Company's assets and business if such
appointment is not set aside within 90 days thereafter; or (d) the making by
the Company 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, determined under Section 3,
but based only on the Participant's benefit accrued under the Basic Plan
prior to the date of termination and payable as otherwise provided herein.
18. Participating Employer. Any Participating Employer in the Basic Plan
-----------------------
may become a Participating Employer in this Plan by submitting to the Committee
a resolution of its board of directors adopting this Plan. The adoption of
this Plan by a Participating Employer shall constitute an automatic delegation
by it to the Company's Board of Directors 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, determined under Section 3, but based only on the
Participant's benefit accrued under the Basic Plan prior to the date of
termination and payable as otherwise provided herein.
19. Successor Participating Employer. In the event of the dissolution,
---------------------------------
merger, consolidation or reorganization of a Participating Employer, the
successor
8
<PAGE> 9
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 18 with the benefits determined as of the date of dissolution, merger,
consolidation or reorganization.
20. Change in Control.
------------------
(a) If a Change in Control (as defined in Section 20(b)) shall
occur, then, notwithstanding anything to the contrary herein, a Participant's
benefit under the Plan as of the Change in Control Date shall be fully vested
and non-forfeitable. Within 30 days after the Change in Control Date, the
Participant shall be paid, in a single lump-sum payment, the Actuarial
Equivalent of his benefits determined under Section 3 as if the Participant
had terminated employment and commenced receiving benefits immediately.
(b) For purposes of this Plan, a "Change in Control" shall occur
automatically if and when an "Acceleration Date" occurs as defined in the
Company's 1998 Incentive Stock Plan or if and when an analogous change in
control event occurs as defined in any successor to such plan, and the Change
in Control Date shall be the Acceleration Date or analogous date as defined
therein.
(c) This Section 20 may be deleted or amended in any way pursuant to
Section 16 at any time prior to a Change in Control. Notwithstanding
Sections 16 and 17, following a Change in Control, the provisions of this
Section 20 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 the Change in Control.
(d) Following a Change in Control, this Plan shall continue in
effect, notwithstanding that payment of benefits shall have been made under
Section 20(a), unless and until terminated by the Company.
(e) If a Change in Control occurs, Section 15 shall no longer apply
to any individual whose activities are not under investigation by the
Committee on the Change in Control Date.
(f) If by reason of this Section an excise or other special tax
("Excise Tax") is imposed on any payment under this 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.
9
<PAGE> 10
21. Set Off and Withholding.
------------------------
(a) Any amount then due and payable by the Company or any other
Participating Employer to any Participant or the beneficiary of any
Participant under this Plan may be offset by any amounts owed to the Company
or any Subsidiary by the Participant and/or the 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.
22. Miscellaneous.
--------------
(a) In any instance in which the 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 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
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 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) 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 (except with respect to choice of law), and in Courts situated in
that State.
IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this
Amended and Restated Plan to be executed by its officers thereunto duly
authorized, this 9th day of March, 2000, effective as of March 1, 2000.
ANHEUSER-BUSCH COMPANIES, INC.
By /s/ W. Randolph Baker
----------------------------
W. Randolph Baker
Chief Financial Officer
10
<PAGE> 11
ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN
AMENDED AND RESTATED AS OF MARCH 1, 2000
11
<PAGE> 12
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C>
1. Definitions Applicable to this Excess Benefit Plan 1
2. Eligibility to Participate 2
3. Benefits Under this Plan 2
4. Special Rule for Non-Deductible Amounts 2
5. Pre-Retirement Death Benefits 2
6. Payment Method 2
7. Obligation to Pay Benefits Hereunder 3
8. Concerning Payment 3
9. Facility of Payment 4
10. Payees Presumed Competent 5
11. Notice of Address; Lost Payees 5
12. No Liability for Participant's Debts 5
13. Administration 5
14. Negation of Employment Contract 6
15. Forfeiture for Activity Contrary to a Participating Employer's
Best Interests 6
16. Amendment 7
17. Termination 8
18. Participating Employer 8
19. Successor Participating Employer 8
20. Change in Control 8
21. Set Off and Withholding 9
22. Miscellaneous 9
</TABLE>
<PAGE> 1
ANHEUSER-BUSCH COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED AS OF MARCH 1, 2000
ANHEUSER-BUSCH COMPANIES, INC., a Delaware corporation, established this
Supplemental Executive Retirement Plan, originally effective as of January 1,
1984. The Plan has been amended from time to time and the Company hereby
amends and restates the Plan. The provisions of this restated Plan shall
apply to eligible employees whose termination of employment with the Company
or any other Participating Employer occurs on or after March 1, 2000. The
Plan is intended to be a nonqualified, unfunded plan to provide supplemental
retirement benefits to a select group of management and highly compensated
employees, as described in Section 201(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA").
1. Definitions. The capitalized terms used in this Plan shall have
------------
the meanings herein set out:
(a) "Accrued Benefit" means at any given time the benefit
calculated in accordance with the formula in Section 3, using the
Participant's Eligible Earnings and Credited Service as of the date the
calculation is being made. The benefit so calculated shall be the benefit
that would commence under the basic method of payment on the Participant's
Normal Retirement Date.
(b) "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 applied with respect to the particular form or forms
of payment under the Basic Plan, disregarding the interest and mortality
assumptions grandfathered as of December 31, 1999 with respect to single sum
and installment payments.
(c) "Basic Plan" means the Supplement for the Anheuser-Busch
Salaried Employees Pension Plan maintained as part of the Anheuser-Busch
Companies Pension Plan as now in effect or as hereafter amended.
(d) "Board" means the board of directors of the Company.
(e) Intentionally blank.
(f) "Committee" means the Committee designated to administer
this Plan, as described in Section 20.
(g) "Company" means Anheuser-Busch Companies, Inc., a Delaware
corporation, and any corporation(s) into which or with which it may be
liquidated, merged or consolidated.
<PAGE> 2
(h) "Credited Service" For all purposes, a Participant's
Credited Service under this Plan shall be the same as his Credited Service
under the Basic Plan. This generally means an individual's years and
completed months of salaried employment with a Participating Employer after
attainment of age 21. Credited Service shall not exceed 30 years.
(i) "Eligible Earnings" means, for any calendar year, the sum of
the employee's annual base salary as of January 1 of such year plus the
bonus earned during the prior calendar year. For purposes of computing
benefits under this Plan, the Eligible Earnings to be used shall be the
highest of the Eligible Earnings in the calendar year of termination or any
of the four preceding calendar years. Eligible Earnings shall recognize any
compensation deferred under the Executive Deferred Compensation Plan and
treat such compensation as if it were not deferred.
(j) "Eligible Employee" means a salaried employee of a
Participating Employer who is an active participant currently accruing
benefits in the Basic Plan and who satisfies or in the past has satisfied one
or more of the following requirements:
i) He is a member of the Company's Strategy Committee;
ii) He has a salary band of I or above, or the equivalent
thereof as determined by the Committee, and has, for the current calendar
year, Eligible Earnings of at least $140,000 (indexed as described below) or
such other amount as the Committee shall determine from time to time; or
iii) He is an officer of the Company or Anheuser-Busch,
Inc., a Missouri corporation, excluding an assistant officer.
The $140,000 figure shall be indexed as of January 1 of each year commencing
January 1, 1994, in accordance with the Company's merit budget increase
applicable for such year.
(k) "Excess Benefit Plan" means the Anheuser-Busch Companies,
Inc. Excess Benefit Plan, Amended and Restated as of March 1, 2000, and as
thereafter amended, or any other "excess plan" as described in Section 3(36)
of ERISA, maintained by a Participating Employer and as in effect from time
to time.
(l) "Normal Retirement Date" means the first day of the month
coincident with or next following the date on which the Participant attains
his sixty-fifth (65th) birthday.
(m) "Participant" means an Eligible Employee who is
participating in this Plan in accordance with Section 2.
(n) "Participating Employer" means the Company and any other
member of the controlled group of corporations of which the Company is a
member
-2-
<PAGE> 3
which is a Participating Employer in the Basic Plan and which has adopted
this Plan in the manner described in Section 18.
(o) "Plan" means this Anheuser-Busch Companies, Inc.
Supplemental Executive Retirement Plan, Amended and Restated as of March 1,
2000, and as thereafter amended.
(p) "Primary Social Security Benefit" means, for retirements on
or after the Normal Retirement Date, the estimated primary insurance amount
that would commence immediately under the Federal Social Security Act in
effect on the retirement date assuming that the Participant's earning's for
Social Security purposes are equal to the benefit base as determined under
Section 230 of the Federal Social Security Act from the date the Participant
attained age 21 until his retirement date.
For purposes of determining the Accrued Benefit prior to a Participant's
Normal Retirement Date, the Primary Social Security Benefit means:
(i) An amount determined as described above assuming that
the Participant retires on his Normal Retirement Date and that the Social
Security Act and benefit base remain unchanged in the future, multiplied by
(ii) The ratio of the Participant's Credited Service as of
the date of determination to the lesser of thirty (30) years or the
Participant's Credited Service had he remained an active Participant until
his Normal Retirement Date.
(q) "Subsidiary" means any business entity in which the Company
has an equity interest of at least fifty percent.
Miscellaneous Rules of Construction. Masculine pronouns include the
- ------------------------------------
feminine, the singular includes the plural, and the plural includes the
singular, as the context or application demands.
2. Participation. Each Eligible Employee shall commence
--------------
participation in this Plan as of the first day of the month coincident with
or next following the date he first becomes an Eligible Employee. An
individual who is an Eligible Employee solely under subparagraph (ii) of
Section 1(j) shall be deemed to have first satisfied the band and
compensation requirements of such provision on January 1 of the first
calendar year for which such requirements are satisfied. Except as provided
in Section 18, once an individual becomes a Participant, he shall continue to
participate until termination of employment with a Participating Employer
even if such individual no longer satisfies the band and compensation
requirements to remain an Eligible Employee. Any Eligible Employee on
October 1, 1993 who was not a Participant in this Plan prior to its
restatement effective October 1, 1993 shall first participate as of October
1, 1993.
-3-
<PAGE> 4
3. Benefit on or after Normal Retirement Date. A Participant who
-------------------------------------------
ceases to be employed by all members of the Company's controlled group of
corporations on or after his Normal Retirement Date shall receive a monthly
benefit, payable under the basic method of payment described in Section 10,
and commencing on the first day of the month coinciding with or immediately
following his last date of employment, in an amount which is one-twelfth of
the following:
(a) For Strategy Committee members, one and two-thirds percent
of Eligible Earnings times Credited Service; for all other Participants, one
and one-half percent of Eligible Earnings times Credited Service; less
----
(b) The Participant's annual retirement benefit payable at
Normal Retirement Date (or, if applicable, postponed retirement date) under
the Basic Plan, under the basic method of payment described in such plan;
less also
- ---------
(c) Any other benefits from any excess benefit plan or other
retirement plan or arrangement maintained or sponsored by the Company or any
Subsidiary, other than a qualified or nonqualified 401(k) plan or a voluntary
nonqualified deferred compensation plan. The reduction under this paragraph
shall be the annual benefit under such other plan or plans, payable at Normal
Retirement Date (or, if applicable, postponed retirement date), expressed as
if payable under the basic method of payment described in such plan;
provided, however, that if such basic method is not a form of single life
annuity, then expressed as if payable solely for the lifetime of the
Participant on an Actuarial Equivalent basis; less also
---------
(d) The Participant's annual Primary Social Security Benefit.
(e) In no event shall a Participant's benefits calculated
hereunder be less than the difference between (a) the benefit actually
payable under the Basic Plan, and (b) the benefit that would have been
payable under the Basic Plan without regard to the limitation imposed by
Section 401(a)(17) of the Internal Revenue Code (both amounts to be
determined under the basic method of payment). This minimum benefit shall be
separately calculated with respect to all Participants, including those whose
benefits exceed this minimum, and shall be treated as a separate obligation
payable from a separate plan solely for the purpose of determining which, if
any, portion of a Participant's benefits is subject to income tax in the
state where the Participant resided when the benefit was earned.
4. Benefit on Early Retirement. The following benefits are available
----------------------------
for Participants who retire prior to Normal Retirement Date:
(a) A Participant who ceases to be employed by all members of
the Company's controlled group of corporations prior to his Normal Retirement
Date but after reaching age 62 and completing 30 years of Credited Service
shall be entitled to receive a retirement benefit equal to his Accrued
Benefit, but commencing on the
-4-
<PAGE> 5
first day of the month coinciding with or immediately following his last date
of employment.
(b) A Participant who ceases to be employed by all members of
the Company's controlled group of corporations after reaching age 55 and who
has at least five years of Credited Service but who is not eligible to
receive a benefit under paragraph (a) above may, unless disapproved by the
Company's Chief Executive Officer (or, in the case of the Chief Executive
Officer, the Board of Directors), be granted a benefit equal to his Accrued
Benefit reduced in accordance with the reduction applicable to early
retirement benefits under the Basic Plan. Such benefit shall commence as of
the first day of the month coincident with or next following his last date of
employment.
(c) There shall be no benefits payable from this Plan for a
Participant who ceases employment prior to the attainment of age 55, except
as provided in Sections 5, 6 and 13.
5. Pre-Retirement Death Benefit.
-----------------------------
(a) If a Participant dies while employed by a Participating
Employer, and after otherwise satisfying the requirements of Sections 3, 4 or
6 to receive a retirement benefit, a death benefit may be paid. The death
benefit, when combined with certain life insurance proceeds as described
below, is intended to place the Participant in approximately the same
position (after payment of income taxes) as he would have been in had he
retired on the date of his death.
The amount of the death benefit, if any, payable from this Plan
shall be computed as follows:
(i) the After-Tax single lump sum Actuarial Equivalent of
his Accrued Benefit under this plan plus the After-Tax single lump sum value
of any benefits that would have been payable under any Excess Benefit Plan if
the Participant had retired (rather than died) on his date of death, minus
-----
(ii) the single lump sum proceeds of any life insurance
policy insuring the life of the Participant, whether group, individual, term,
universal or any other type, available through the Company or any Subsidiary,
regardless of whether the premiums therefor are paid by the Participant or
the Company. For purposes hereof, each Participant shall be deemed to have
elected to participate in all such life insurance programs available through
the Company or any Subsidiary, whether or not such Participant actually so
participated on the date of his death. Any insurance policy proceeds
directly attributable to supplemental contributions made by the Participant
with respect to any such policy shall not be taken into account for this
purpose.
-5-
<PAGE> 6
(iii) The amount so obtained shall then be grossed up for
income tax purposes by dividing such amount by one minus the tax rate
determined under paragraph (b).
(b) For purposes of this Section 5, the term "After-Tax" shall
mean the amount remaining after subtraction of approximate federal, state and
local income and employment taxes expected to be paid on the amount in
question. The Company's Tax Controller, or other officer with similar
responsibilities, shall determine "After-Tax" amounts, in his discretion,
using such presumed tax rates as he shall deem reasonable and appropriate
under the circumstances of the individual involved.
(c) Any amount payable under this Section 5 shall be paid in a
single lump sum to the Beneficiary determined in accordance with Section 14.
6. Disability Benefit. A Participant whose employment terminates
-------------------
because of disability prior to becoming eligible for benefits under Section 3
or 4 shall be entitled to the Actuarial Equivalent of his Accrued Benefit.
Disability shall be established, as determined by the Committee, if the
Participant is unable for a period reasonably expected to exceed six months
to perform the duties of the position held prior to the incident or the onset
of the illness resulting in the disability.
7. Intentionally blank.
8. Forfeiture for Activity Contrary to the Company's Best Interests.
-----------------------------------------------------------------
(a) Notwithstanding any provision of this Plan to the contrary,
the right of a Participant and his beneficiary or beneficiaries to receive a
benefit hereunder is expressly conditioned upon the Participant neither (i)
having ceased to be employed by the Company or any Subsidiary under
circumstances or conditions inimical or contrary to the best interests of the
Company or any Subsidiary, nor (ii) thereafter engaging in any activity which
in the Committee's judgment is inimical or contrary to the best interests of
the Company or any Subsidiary.
(b) Should a 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 Committee shall thereupon investigate the
alleged violation and shall consider, under such rules of procedure as the
Committee shall deem reasonable, such evidence and testimony as the
Participating Employer and the Participant or other person or persons
receiving or otherwise entitled to receive payment may wish to submit in
support or refutation of the alleged violation. The decision of the
Committee shall be final and conclusive. If the 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
Committee concludes that there has not been a violation, the amounts withheld
or suspended shall become payable as though no proceedings had been instituted
nor any payment withheld or suspended,
-6-
<PAGE> 7
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 a Participating Employer may otherwise have under
any employment contract with a Participant or at law or in equity, to prevent
the disclosure of confidential information or to recover damages for the
disclosure thereof or to prevent a Participant from engaging in competition
with a Participating Employer or to recover damages therefor.
(e) The Board (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.
(f) If the provisions of this Section are invoked at any time
after payments have already been made, the Participating Employer shall have
the right to a refund of all monies theretofore paid. If the Participating
Employer shall find it necessary to file suit to recover any amount
hereunder, it shall be entitled to recover its reasonable attorney's fees and
costs.
9. Intentionally blank.
10. Payment Methods. The basic method of payment for Participants
----------------
retiring on or after January 1, 1995 shall be monthly payments for life,
beginning on the first day of the month coincident or next following the
Participant's retirement date, with the last payment being for the month in
which the Participant's death occurs, but with 120 monthly payments
guaranteed. Notwithstanding the foregoing, payment shall be made in a single
lump sum unless the Participant gives written notice to the Committee, at
least one year prior to the date benefits are to commence, that he elects to
receive benefits under either the basic method of payment described above or
one of the following optional methods which shall be the Actuarial Equivalent
of the basic method of payment:
-7-
<PAGE> 8
(a) A two-thirds joint and survivor annuity with such contingent
annuitant as the Participant may designate. If a Participant has selected
this method of payment and the contingent annuitant dies before payments
begin, the selection shall be revoked, but if the contingent annuitant dies
after payments begin, the selection of this method of payment shall not be
affected and no new contingent annuitant may be named; or
(b) Level installments over a five-year period.
A Participant may elect an optional method of payment under this Plan which
is different from the method of payment elected under either the Basic Plan
or the Excess Benefit Plan.
11. Obligation to Pay Benefits Hereunder. No trust fund, escrow
-------------------------------------
account or other segregation of assets shall be established or made by any
Participating Employer to guarantee, secure or assure the payment of any
benefit hereunder. The obligation of each Participating Employer to pay
benefits pursuant to this Plan shall constitute only a general obligation of
the Participating Employer to the Participants and other payees hereunder in
accordance with the terms hereof. Payment of benefits by a Participating
Employer hereunder shall be made only from the general funds of the
Participating Employer and no Participant or other potential payee of any
amount hereunder shall have any interest in any particular asset of any
Participating Employer by reason of the existence of this Plan, and the
amounts payable hereunder shall be subject in all respects to claims of
general creditors of the respective Participating Employers until actually
paid over to the person(s) entitled to receive the same.
12. Special Rule for Non-Deductible Amounts. Any amount otherwise
----------------------------------------
payable under the Plan in a calendar 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
calendar year as the Company determines that the amount has ceased to be so
non-deductible. In the case of any inconsistency between this Section 12 and
any other provision of the Plan, this Section 12 shall govern, except in the
case of Section 13 becoming applicable.
13. Change in Control.
------------------
(a) If a Change in Control (as defined in Section 13(b)) shall
occur, then, notwithstanding anything to the contrary herein, a Participant's
Accrued Benefit under the Plan as of the Change in Control Date shall be
fully vested and non-forfeitable. Within 30 days after the Change in Control
Date, the Participant shall be paid, in a single lump-sum payment, the
Actuarial Equivalent of such Accrued Benefit as of the date of payment.
Notwithstanding the foregoing, if, on the Change in Control date, a
Participant otherwise satisfied the eligibility requirements for early or
normal retirement benefits under Sections 3 or 4, such Participant's benefit
shall
-8-
<PAGE> 9
be paid as if he actually retired on the Change in Control Date. The Chief
Executive Officer shall be deemed to have granted any necessary approvals.
(b) For purposes of this Plan, a "Change in Control" shall occur
automatically if and when an "Acceleration Date" occurs as defined in the
Company's 1998 Incentive Stock Plan or if and when an analogous change in
control event occurs as defined in any successor to such plan, and the Change
in Control Date shall be the Acceleration Date or analogous date as defined
therein.
(c) This Section 13 may be deleted or amended in any way
pursuant to Section 22 at any time prior to a Change in Control.
Notwithstanding Section 22, following a Change in Control, the provisions of
this Section 13 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 the Change in Control.
(d) Following a Change in Control, this Plan shall continue in
effect, notwithstanding that payment of benefits shall have been made under
Section 13(a), unless and until terminated by the Company.
(e) If a Change in Control occurs, Section 8 shall no longer
apply to any individual whose activities are not under investigation by the
Committee on the Change in Control Date.
(f) If by reason of this Section an excise or other special tax
("Excise Tax") is imposed on any payment under this 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.
14. Concerning Payment; Beneficiaries.
----------------------------------
(a) Except as otherwise provided in this Section, 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. Each
Participant shall specifically designate, by name, on forms provided by the
Committee, 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 Committee. The filing of a new form shall
automatically revoke any forms previously filed with the Committee. A
beneficiary designation form not properly filed with the Committee prior to
the death of the Participant shall have no validity under the Plan.
(b) Except as provided in Section 10, 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
-9-
<PAGE> 10
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 Committee.
(c) If no beneficiary designation is on file with the Committee
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 Committee shall control
and intervening changes in circumstances shall be ignored; provided, if a
Participant's spouse is designated as beneficiary but thereafter is divorced
from the Participant, such designation shall become invalid as of the date of
divorce unless the Participant files a beneficiary designation form with the
Committee after the date of divorce confirming designation of such former
spouse as beneficiary.
(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 14.
15. 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 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.
16. 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 Committee in its sole
discretion, payment thereof shall be made in one (or any combination) of the
following ways, as the Committee 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;
-10-
<PAGE> 11
(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 Committee shall not be required to see to the application of any payment
so made, and payment to the person determined by the Committee shall fully
discharge the plan and the Participating Employer from any further
accountability or responsibility with respect to the amount so paid.
17. 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 Committee is
unable to locate any person, or the estate of such person, after a reasonable
attempt to locate such person has been made, within two years after an amount
becomes payable hereunder, the right and interest of such payee in and to the
amount payable shall terminate on the last day of such two-year period.
18. Participating Employer. Any Participating Employer in the Basic
-----------------------
Plan may become a Participating Employer in this Plan by submitting to the
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 and to the Committee to administer this Plan.
Benefits payable under this Plan for a Participant whose employment
terminates from a Participating Employer shall be solely the obligation of
that Participating Employer. A Participating Employer may withdraw from the
Plan by action of its board of directors. If such a withdrawal shall occur,
no benefit shall be payable under this Plan to any Participant who has not
otherwise satisfied the eligibility requirements of Sections 3, 4 or 6, as of
the date of withdrawal. Notwithstanding the foregoing, any benefits in pay
status as of the date of withdrawal shall continue to be paid in full in
accordance with the terms hereof.
19. No Liability for Payee'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 any 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 Committee 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 spouse, children
or other dependents, or any of them, as the Committee may determine.
-11-
<PAGE> 12
20. Administration. This Plan shall be administered by a Committee
---------------
composed of the Company's Chief Executive Officer, Chief Financial Officer
and Corporate Secretary. The Committee shall administer the Plan in
accordance with its terms and shall have all powers necessary to carry out
the provisions of the Plan. The Committee 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 Committee deems proper in its discretion. Any interpretation or
construction placed upon any term or provision of the Plan by the Committee,
any decisions and determinations of the Committee 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 Earnings 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 Committee 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.
21. 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 any Participating Employer to
discharge a Participant at any time with or without cause; (c) to give any
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
employment voluntarily whenever the Participant chooses.
22. Modification, Amendment, or Termination. Except as provided for
----------------------------------------
in Section 13, the Company has 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 or future date. Such amendment shall be made in
accordance with applicable corporate procedures then in effect for similar
matters. The Company also reserves the right to terminate this Plan, in
whole or in part, voluntarily as of any specified current or future date.
This Plan shall be automatically terminated upon a termination of the Basic
Plan, a dissolution of the Company (but not upon a merger, consolidation,
reorganization or recapitalization of the Company unless the surviving
corporation therein specifically terminates this Plan); upon the Company
being legally adjudicated a bankrupt; upon the appointment of a receiver or
trustee in bankruptcy with respect to the Company's assets and business if
such appointment is not set aside within 90 days thereafter; or upon the
making by the Company of an assignment for the benefit of creditors. Upon
termination of this Plan, no additional employee shall become eligible to
participate herein, and no additional benefits shall be accrued hereunder.
Notwithstanding the termination of this Plan, no Participant affected thereby
shall be deprived of the right to receive his Accrued Benefit at the time and
in the manner provided by this Plan.
-12-
<PAGE> 13
23. Set Off and Withholding.
------------------------
(a) Any amount then due and payable by the Company or any
Participating Employer to any Participant or the beneficiary of any
Participant under this Plan may be offset by any amounts owed to the Company
or any Subsidiary by the Participant and/or the 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.
24. Claims Procedures.
------------------
(a) The Committee 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 Committee.
(ii) Any decision by the Committee denying a claim in whole
or in part shall be stated in writing by the Committee and delivered or
mailed to the claimant within ninety (90) days after receipt of the claim by
the Committee 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 Committee 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 Committee 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,
all written in a manner calculated to be understood by the claimant. If the
Committee 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 duly authorized representative may request a review by the Committee
of the decision upon written application to the Committee within sixty (60)
days after notification of the decision. The claimant or his duly authorized
representative may
-13-
<PAGE> 14
review pertinent documents and submit issues and comments in writing. The
Committee 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 Committee 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 Committee 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 Committee may adopt such rules as it deems necessary,
desirable, or appropriate to carry out its duties under this Section 24.
Any action or determination or decision whatsoever taken or made by the
Committee under this Section 24 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 24 shall be the
sole, exclusive and mandatory procedure for resolving any dispute under this
Plan; provided, that if a Participant wishes to make a valid legal challenge
to the Committee's determination and he has entered into an agreement with
the Company to arbitrate disputes arising from his employment with the
Company, such legal challenge shall be resolved pursuant to the arbitration
procedures in that agreement and the Participant's burden of proof in any
arbitration shall be the same as if the dispute were tried in a court
proceeding.
(e) Notwithstanding the foregoing, upon a Change in Control as
defined in Section 13, Section (d) above shall not apply.
25. Miscellaneous.
--------------
(a) In any instance in which the 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 any Participating Employer (such
as to eliminate small account balances 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 payment, the amount of
which shall be the Actuarial Equivalent of the payment in question.
(b) In the event of the death of a Participant or any
beneficiary, the Committee need not make any payment provided for by this
Plan until it shall have
-14-
<PAGE> 15
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 Employers and the Committee shall be absolutely protected
in relying upon any finding or statement of facts believed to be true, and on
any written instrument believed to have been signed by the proper party.
(d) 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 (other than choice of law), and in Courts situated in
that State.
IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this
Amended and Restated Plan to be executed by its officers thereunto duly
authorized, this 9th day of March, 2000, effective as of March 1, 2000.
ANHEUSER-BUSCH COMPANIES, INC.
By /s/ W. Randolph Baker
------------------------------
W. Randolph Baker
Chief Financial Officer
-15-
<PAGE> 16
ANHEUSER-BUSCH COMPANIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED AS OF MARCH 1, 2000
<PAGE> 17
<TABLE>
TABLE OF CONTENTS
<S> <C>
1. Definitions 1
2. Participation 3
3. Benefit on or After Normal Retirement Date 3
4. Benefit on Early Retirement 4
5. Pre-Retirement Death Benefit 5
6. Disability Benefit 6
7. Intentionally Blank 6
8. Forfeiture for Activity Contrary to the Company's Best Interests 6
9. Intentionally Blank 7
10. Payment Methods 7
11. Obligation to Pay Benefits Hereunder 7
12. Special Rule for Non-Deductible Amounts 8
13. Change in Control 8
14. Concerning Payment; Beneficiaries 9
15. Payees Presumed Competent 10
16. Facility of Payment 10
17. Notice of Address; Lost Payees 10
18. Participating Employer 10
19. No Liability for Payee's Debts 11
20. Administration 11
21. Negation of Employment Contract 11
22. Modification, Amendment, or Termination 12
23. Set Off and Withholding 12
24. Claims Procedure 12
25. Miscellaneous 14
</TABLE>
<PAGE> 1
ANHEUSER-BUSCH
EXECUTIVE DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED AS OF MARCH 1, 2000)
Preamble
--------
Anheuser-Busch Companies, Inc. (the "Company") adopted the Anheuser-Busch
Executive Deferred Compensation Plan (the "Plan") for the purpose of
providing deferred compensation to a select group of management and highly
compensated employees, effective as of January 1, 1994. The Company reserved
to itself the right to amend the Plan. The Plan has been amended from time
to time. The Company deems it necessary and desirable to amend and restate
the Plan in its entirety as hereinafter set forth, effective March 1, 2000.
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: The original Effective Date was January 1, 1994.
--------------
The Effective Date of this amendment and restatement of the Plan is
March 1, 2000.
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.
1
<PAGE> 2
(b) Leased employees.
(c) Non-resident aliens.
(d) Collective bargaining unit members.
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 elections in writing on a form provided
by the Company and delivered to the Company not later than the
Company may direct.
(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
2
<PAGE> 3
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 Sec. 3.04, an 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. The maximum portion
of each installment that can be deferred after the
change shall be determined by: (i) adding (a) the
-
Participant's actual Base Salary for the period before
the effective date of the change, and (b) the
-
Participant's Base Salary rate per pay period on the
effective date of the change multiplied by the number
of pay periods remaining in the Year on the effective
date of the change; (ii) subtracting from the total
(a) $250,000 As Adjusted, and (b) the total amount
- -
deferred during the Year before the effective date of
the change; and (iii) dividing the remainder by the
number of pay periods remaining in the Year as of the
effective date of the change.
(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 Secs. 3.01(e),
3.01(f) and 3.02 or acceleration as provided for in
Secs. 5.01(b), 5.05, 5.06 and 5.07.
3
<PAGE> 4
(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 Sec. 4.01.
(d) Whether payment of amounts deferred for the Year and
interest accrued thereon shall be made in a single sum, in
five (5) installments, or in ten (10) installments subject
to acceleration as provided for in Secs. 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 begin as of the
first day of the calendar month following the termination or
the January 1 following the termination.
(f) Except as provided for in this Sec. 3.01(f), all elections
pursuant to this Sec. 3.01 shall be irrevocable.
Notwithstanding anything, a Participant may elect a longer
deferral period (not to exceed the period ending on
termination of employment as provided for in Sec. 3.01(b))or
a longer period for payment of installments for amounts
previously deferred under the Plan under Sec. 3.01(d) or the
later commencement date permitted in Sec. 3.01(e), provided
that such an election shall be of no force or effect unless
the Participant provides the Company with written notice of
the change at least one year prior to the date payment would
begin in the absence of such an election or termination of
the Participant's employment with all Related Employers,
whichever occurs first.
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 Sec. 3.02 and any other provision
of the Plan, this Sec. 3.02 shall govern, except in the case of Sec. 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 Sec. 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
4
<PAGE> 5
(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 Sec. 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.
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.
5
<PAGE> 6
(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 and interest
accrued thereon as to which the previous Terms expired on
December 31 of the prior Year. The Participant may make
separate elections regarding the Rate/Term combinations for
amounts the Participant defers for the Year and amounts
attributable to prior deferrals and 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 Sec. 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
Sec. 3.01(d) or (f), interest shall accrue on any balance thereof remaining to
be paid in installments from time to time in accordance with the
Participant's elections from time to time as provided for in Sec. 4.01(e)
until payment is complete; provided, in the absence of an election by a
Participant in accordance with the foregoing, the Participant shall be deemed
to have elected the Rate in effect for the longest time period available as
of the due date of the election.
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 Sec. 4.04(b).
6
<PAGE> 7
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 Sec. 3.01(b) or (f).
(b) Notwithstanding Sec. 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 Sec. 3.01(e) or (f).
5.02. Form of Payment.
---------------
(a) If a Participant elects payment of any amount in a single
sum pursuant to Sec. 3.01(d), such single sum amount shall
be due and payable as of the date determined pursuant to
Sec. 5.01.
(b) If a Participant elects payment of any amount in five (5) or
ten (10) installments pursuant to Sec. 3.01(d) or (f), the
initial installment shall be paid as of the first day of the
calendar month following termination of the Participant's
employment with all Related Employers or as of the January 1
following the termination, as elected by the Participant
pursuant to Sec. 3.01(e) or (f), and the remaining four (4)
or nine (9) installments shall be paid as of January 1 of
the next four (4) or nine (9) calendar years.
(c) Notwithstanding Sec. 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.
7
<PAGE> 8
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, with respect to a deferred amount that is
payable in five (5) installments, 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 accelerated on
application of the Participant or beneficiary on account of
and subject to reasonable proof of unforeseeable emergency
as provided for in this Sec. 5.05.
(b) For purposes of this Sec. 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
8
<PAGE> 9
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 Sec. 5.05 shall be made by an
Administrative Committee appointed pursuant to Sec. 6.01(c).
(e) Notwithstanding any other provision of this Sec. 5.05,
authorization of distribution on account of hardship under
the Anheuser-Busch Deferred Income Stock Purchase and
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 Sec. 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 automatically if and when an "Acceleration Date"
occurs as defined
9
<PAGE> 10
in the Company's 1998 Incentive Stock Plan or if and when an
analogous change in control event occurs as defined in any
successor to such plan, and the Change in Control Date shall
be the Acceleration Date or analogous date as defined
therein.
(c) This Sec. 5.06 may be deleted or amended in any way pursuant
to Article VII at any time prior to a Change in Control.
Notwithstanding Article VII, following a Change in Control,
the provisions of this Sec. 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 the 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 Sec. 5.06(a).
(e) If by reason of this Sec. 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 Secs. 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 Sec. 3.01 and all interest then accrued thereon.
5.08. Payments After Death.
--------------------
(a) Except as otherwise provided in this Sec. 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 Sec. 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.
10
<PAGE> 11
(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; provided, if a Participant's spouse is
designated as beneficiary but thereafter is divorced from
the Participant, such designation shall become invalid as of
the date of divorce unless the Participant files a
beneficiary designation form with the Company after the date
of divorce confirming designation of such former spouse as
beneficiary.
(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 Sec. 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.
11
<PAGE> 12
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.
(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.
12
<PAGE> 13
(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 Sec. 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 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
13
<PAGE> 14
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 Sec. 6.02. All rules, decisions and determinations of
the Company under this Sec. 6.02 shall be uniformly and
consistently applied. Any action or determination or
decision whatsoever taken or made by the Company under this
Sec. 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 Sec. 6.02 shall be the
sole, exclusive and mandatory procedure for resolving any
dispute under this Plan; provided, that if a Participant
wishes to make a valid legal challenge to the Company's
determination and he has entered into an agreement with the
Company to arbitrate disputes arising from his employment
with the Company, such legal challenge shall be resolved
pursuant to the arbitration procedures in that agreement and
the Participant's burden of proof in any arbitration shall
be the same as if the dispute were tried in a court
proceeding.
(e) Notwithstanding the foregoing, upon a Change in Control as
defined in Sec. 5.06, Section (d) shall not apply.
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.
(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.
14
<PAGE> 15
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.
(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.
15
<PAGE> 16
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, 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 Sec. 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.
16
<PAGE> 17
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;
(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.
17
<PAGE> 18
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 (other than choice of law) 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 amended
and restated Plan this 9th day of March, 2000, effective as of the 1st day of
March, 2000.
ANHEUSER-BUSCH COMPANIES, INC.
By /s/ W. Randolph Baker
--------------------------
W. Randolph Baker
Chief Financial Officer
18
<PAGE> 19
ANHEUSER-BUSCH
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated as of March 1, 2000
<PAGE> 20
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
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
Related Employer 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 5
IV. ACCRUAL OF INTEREST 5
4.01. Participant Elections 5
4.02. Accrual of Interest during Deferral Period 6
4.03. Accrual of Interest on Installment Payments 6
4.04. If Payment Is Delayed 6
4.05. If Payment Is Accelerated 6
V. PAYMENTS TO PARTICIPANTS 7
5.01. Time Payment Begins 7
5.02. Form of Payment 7
5.03. Set Off and Withholding 8
5.04. Determination of Installment Amounts 8
5.05. Acceleration of Payment for Unforeseeable Emergency 8
5.06. Change in Control 9
5.07. General Right to Accelerate Payment 10
5.08. Payments After Death 10
5.09. All Payments to be Made by the Company 11
i
<PAGE> 21
VI. ADMINISTRATION 12
6.01. Administrative Duties of the Company 12
6.02. Claims Procedures 12
6.03. Books and Records 14
6.04. Notices 15
VII. AMENDMENT AND TERMINATION 15
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 16
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 17
9.09. Plan Provisions Binding 18
9.10. Rules of Interpretation 18
9.11. Missouri Law Controls 18
9.12. Counterparts 18
</TABLE>
ii
<PAGE> 1
ANHEUSER-BUSCH
401(k) RESTORATION PLAN
Amended and Restated as of March 1, 2000
<PAGE> 2
ANHEUSER-BUSCH
401(k) RESTORATION PLAN
-----------------------
(Amended and Restated as of March 1, 2000)
ARTICLE I
RESTATEMENT OF PLAN
-------------------
1.1. Action By Company. Effective as of January 1, 1994,
-----------------
Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"),
established the Anheuser-Busch 401(k) Restoration Plan (the "Plan"). The
Company reserved to itself the right to amend the Plan and has amended the
Plan. The Company deems it necessary and desirable to amend and restate the
Plan in its entirety as set forth herein, effective March 1, 2000.
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." The original Effective Date of the Plan was
--------------
January 1, 1994. The Effective Date of this amendment and restatement of the
Plan is March 1, 2000.
1
<PAGE> 3
2.6. "Election Date." A date determined by the Company not later
-------------
than which any election under the Plan must be made.
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> 4
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 reduction.
(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 for the same period as the suspension period
provided for in the
3
<PAGE> 5
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
<PAGE> 6
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 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
<PAGE> 7
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 combination of Investment Funds he or she has selected
in accordance with Section 7.1.
6
<PAGE> 8
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 Companies or as of the January 1 following the
termination, as elected by the Participant.
7
<PAGE> 9
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.
(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
8
<PAGE> 10
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 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
9
<PAGE> 11
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 Sec. 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 automatically if and when an "Acceleration Date" occurs as defined in
the Company's 1998 Incentive Stock Plan or if and when an analogous change in
control event occurs as defined in any successor to such plan, and the Change
in Control Date shall be the Acceleration Date or analogous date as defined
therein.
(c) This Sec. 9.7 may be deleted or amended in any way
pursuant to Article XII at any time prior to a Change in Control.
Notwithstanding Article XII, following a Change in Control, the provisions of
this Sec. 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 Sec. 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.
10
<PAGE> 12
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 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; provided, if a
Participant's spouse is designated as Beneficiary but thereafter is divorced
from the Participant, such designation shall become invalid as of the date of
divorce unless the Participant files a Beneficiary designation form with the
Company after the date of divorce confirming designation of such former
spouse as Beneficiary.
11
<PAGE> 13
(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 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 that Section 9.7 is effective.
9.12. Special Rule for Reporting Persons. Notwithstanding any other
----------------------------------
provision of the Plan, including without limitation Sections 9.6, 9.7 and
9.8, no amount shall be distributed from a Reporting Person's HCSF Sub-Account
until the affected Participant either ceases to be a Reporting Person or ceases
to be an Employee, whichever occurs first.
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)
12
<PAGE> 14
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.
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.
13
<PAGE> 15
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:
(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
14
<PAGE> 16
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 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; provided, that if a Participant wishes to make a valid legal
challenge to the Company's determination and he has entered into an agreement
with the Company to arbitrate disputes arising from his employment with the
Company, such legal challenge shall be resolved pursuant to the arbitration
procedures in that agreement and the Participant's burden of proof in any
arbitration shall be the same as if the dispute were tried in a court
proceeding.
(e) Notwithstanding the foregoing, upon a Change in Control
as defined in Section 9.7, Section (d) above shall not apply.
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.
15
<PAGE> 17
(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.
(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 amendment that sets a Match Rate or Supplemental
Contribution Rate under the Plan that is different from those applied under
the Regular 401(k) Plan from time to time 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.
16
<PAGE> 18
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.
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
17
<PAGE> 19
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 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 (other than choice of law) and in Courts
situated in that State.
18
<PAGE> 20
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 9th
day of March, 2000, effective as of the 1st day of March, 2000.
ANHEUSER-BUSCH COMPANIES, INC.
BY: /s/ W. Randolph Baker
-------------------------------------
W. Randolph Baker
Chief Financial Officer
19
<PAGE> 21
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
ARTICLE I
RESTATEMENT OF PLAN 1
1.1. Action By Company 1
1.2. Purpose of the Plan 1
ARTICLE II
DEFINITIONS 1
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 2
2.7. Eligible Employee 2
2.8. 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
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
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 5
i
<PAGE> 22
ARTICLE V
COMPANY CONTRIBUTIONS 5
ARTICLE VI
ACCOUNTS 5
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 6
7.1. Election of Hypothetical Investments 6
7.2. Crediting of Investment Returns 6
ARTICLE VIII
VESTING 7
8.1. Personal Salary Deferral Contributions 7
8.2. Company Contributions 7
ARTICLE IX
PAYMENT OF BENEFITS 7
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 10
9.9. Payments After Death 11
9.10. All Payments to be Made by the Company 12
9.11. Special Rule for Non-deductible Amounts 12
9.12. Special Rule for Reporting Persons 12
ARTICLE X
PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY 12
10.1. Adoption 12
10.2. Withdrawal 12
10.3. Succession 13
ii
<PAGE> 23
ARTICLE XI
ADMINISTRATION AND CLAIMS PROCEDURES 13
11.1. Administrative Duties of the Company 13
11.2. Claims Procedures 14
11.3. Books and Records 15
11.4. Notices 15
ARTICLE XII
AMENDMENT AND TERMINATION 16
ARTICLE XIII
MISCELLANEOUS 17
13.1. Company's Obligations Unsecured 17
13.2. No Alienation 17
13.3. No Waiver of Rights 17
13.4. Severability 17
13.5. Legal Expenses 17
13.6. Presumption of Competence 17
13.7. Facility of Payment 18
13.8. No Guarantee of Employment or Compensation 18
13.9. Plan Provisions Binding 18
13.10. Rules of Interpretation 18
13.11. Missouri Law Controls 18
13.12. Reporting Persons 19
13.13. Counterparts 19
</TABLE>
iii
<PAGE> 1
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> 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 Company as 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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
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> 2
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
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> 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> 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> 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
</TABLE>
iv
<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> 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> 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> 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> 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> 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> 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
thereof, 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> 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> 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> 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> 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 shareholders, 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> 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> 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> 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> 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> 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 through-
out 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> 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> 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> 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> 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 Treas-
ury and the aggregate amount of which claimed by the
Ministry to be due does not exceed 3,500,000 Mexican
Pesos in any year;
(c) There are no liens for Taxes upon the
assets of any of the Taxpayers;
(d) The Taxpayers have complied in all
material respects with all applicable laws, rules and
regulations relating to the payment and withholding of
Taxes pursuant to all applicable tax provisions concern-
ing tax withholding or similar provisions and have,
within the time and in the manner prescribed by law, paid
over to the proper governmental authorities all amounts
required to be so withheld and paid over under all appli-
cable laws;
(e) (i) Except for the tax years 1988
through 1992, the statute of limitations for the assess-
ment of all Taxes under the Mexican income tax and the
United States federal income tax laws have expired for
all applicable returns of the Taxpayers or an audit of
those returns has been completed by the appropriate
taxing authorities for all periods ending on or before
the Closing Date, (ii) no deficiency for any Taxes has
been proposed, asserted or assessed which has not been
finally resolved, (iii) neither the Controlling Share-
holders nor the Taxpayers know of any facts that are
likely to result in any assertion or assessment of a Tax
with respect to any past taxable period, and (iv) no
taxing authority has successfully asserted any issue
concerning the liability of the Taxpayers for Taxes that
by application of similar principles could result in any
23
<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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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
<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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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> 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
<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> 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> 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> 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> 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> 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> 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
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 I 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 meanings 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
FOURTH AMENDMENT TO THE ANHEUSER-BUSCH
DEFERRED INCOME STOCK PURCHASE & SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996
Effective as of April 1, 1996, Anheuser-Busch Companies, Inc. (the "Company")
amended and restated the Anheuser-Busch Deferred Income Stock Purchase and
Savings Plan ("the Plan") and has subsequently amended the Plan three times.
The Company reserved the right to further amend the Plan from time to time
and hereby amends the Plan effective April 1, 1999 unless expressly noted
otherwise as follows:
1. Effective July 1, 1999, Section 2.17 is amended to read as follows:
2.17 "Employee". An individual classified as a direct employee on the
-----------
books and records of a Participating Employer and employed in any
capacity other than
(a) A person employed outside the United States or Puerto Rico,
except that persons who are employed outside the United
States whose Base Pay is paid through the United States
salaried payroll shall be considered "Employees" unless
excluded from participation in the Plan by individual
agreement, requirements of law or practical impediment as
determined by the Committee.
(b) A person employed in a branch operation of Wholesaler Equity
Development Corporation; or
(c) A person employed by a Participating Employer to replace
a collective bargaining unit employee during a work
stoppage, even if such person was a former Employee or
Participant.
An individual who is not classified as a direct employee on the
books and records of a Participating Employer, but who for some
other purpose is found or deemed to be an employee, shall not be
an "Employee" for purposes of this Plan notwithstanding such
finding or determination.
2. Section 2.26 is amended effective October 1, 1998, by adding a
subsection (j) as follows:
(j) In determining the Hours of Service of any individual employed by
Anheuser-Busch, Inc. as of October 1, 1998, hours of service with M&R
Advertising Warehouse, Inc. shall be considered Hours of Service in
accordance with this Section. This provision shall be effective for
purposes of both Article III and Article XI.
<PAGE> 2
3. Sections 6.1, 6.2 and 6.3 of the Plan are amended to read in their
entirety as follows:
6.1 Required Contributions. (a) Each Participating Employer shall
-----------------------
contribute, as its share of Company Matching Contributions, for
each Plan Year (or portion thereof) of its participation in this
Plan, either directly or indirectly by way of (i) release of
available Unallocated Shares having an equivalent value, or (ii)
the access or use of any funds held in the ESOP Loan Payment
Accumulation Account, the "formula amount", less the aggregate
amount of forfeitures attributable to Participants employed by it.
The "formula amount" is that amount determined by multiplying (i)
the total amount of matched Personal Contributions actually
deferred or withheld during such period from the Base Pay of all
Participants employed by such Participating Employer, by (ii) the
contribution rate in effect for such period.
(b) Each Participating Employer shall also contribute, directly
or indirectly by way of (i) release of available Unallocated
Shares having an equivalent value, or (ii) the access or use
of any funds held in the ESOP Loan Payment Accumulation
Account, for each Plan Year (or portion thereof) of its
participation in this Plan, its proportionate share of any
Supplemental Contribution for any Plan Year. Supplemental
Contributions shall be determined by the Committee under
Section 6.3. Supplemental Contributions shall equal the
greater of the Adjusted Tentative Supplement Contribution or
the value of all shares required to be, but not yet released
from this Plan's ESOP Loan Suspense Account for a Plan Year.
Section 6.3 describes the method for calculating the
Supplemental Contribution.
(c) If so directed by the Company from time to time, each
Participating Employer shall also contribute for each Plan
Year (or portion thereof) of its participation in this Plan,
either directly or indirectly by access or use of any funds
held in the ESOP Loan Payment Accumulation Account, its
proportionate share of the amount, if any, by which
dividends transferred to the ESOP Loan Payment Accumulation
Account for such year exceeds the value of Shares available
for release from the ESOP Loan Suspense Account in
connection with such transfer.
(d) If so directed by the Company from time to time, each
Participating Employer shall make its proportionate share of
any additional contributions determined by the Company, in
its absolute discretion.
2
<PAGE> 3
(e) For purposes of Sections 6.1 and 6.3, the value of such
Shares released from the ESOP Loan Suspense Account shall be
the Closing Price on the last trading day prior to the date
of release or such other date as may be determined by the
Committee for this purpose.
6.2 Contribution Rate for Company Matching Contributions. The
-----------------------------------------------------
contribution rate for Company Matching Contributions is a decimal
fraction, expressed to two places, determined by the Committee
prior to the beginning of each Plan Year, which shall not change
during a Plan Year. Such contribution rate shall be established
by adding .10 to the quotient resulting from dividing (a) by (b)
where (a) is the Income from Continuing Operations as shown in the
Consolidated Statement of Income in the Company's annual report
for the Company Year most recently ended, and (b) is the
"Employee-Related Costs" taken from "Management's Discussion and
Analysis of Operations and Financial Condition" in the Company's
annual report for such Company Year, but shall never be less than
.3333 nor more than 1.0.
6.3 Determination of Supplemental Contribution. (a) As soon as
-------------------------------------------
practicable on or after the last Processing Period of each Plan
Year, the Committee shall determine the amount of the Supplemental
Contribution, if any, for such Plan Year. The Supplemental
Contribution for this Plan shall be an amount equal to the greater
of (a) or (b) where (a) is the Adjusted Tentative Supplemental
Contribution and (b) is the value of all shares required to be,
but not yet released from the ESOP Loan Suspense Account for the
Plan Year. Such value shall be determined using the Closing Price
as of the last trading day of the last Processing Period of the
Plan Year.
The Tentative Supplemental Contribution shall be computed as
follows: first, the average Closing Price of Shares released from
the ESOP Loan Suspense Account for the Plan Year for this Plan and
each Related Plan shall be determined. Second, the ESOP Share
Cost of such released Shares shall be increased by (i) five
percent (5%) for the first Plan Year, and (ii) ten percent (10%)
compounded annually for each full Plan Year which has elapsed
since the ESOP Loan proceeds were received by the Trustee, or for
any Plan Year, such other percentage as may be determined by the
Committee from time to time. (For partial years, a proportional
part of the applicable percentage increase shall be used based on
the number of full months in the Plan Year during which the ESOP
Loan is outstanding). The ESOP Share Cost so increased shall be
referred to as the Hurdle ESOP Share Price for such Plan Year. If
the average Closing Price of the shares released from the ESOP
Loan Suspense Account for the Plan Year is equal to or less than
the Hurdle ESOP Share Price for the Plan Year, there shall be no
Tentative
3
<PAGE> 4
Supplemental Contribution for such Year. If such average Closing
Price is greater than the Hurdle ESOP Share Price for the Plan
Year, the difference shall be computed and multiplied by the
number of Shares actually released from the ESOP Loan Suspense
Account for this Plan and each Related Plan during the Plan Year.
The figure so obtained shall be apportioned among this plan and
the Related Plans based on the ratio that the aggregate formula
amount (as defined in Section 6.1(a)) of each plan attributable to
those Participants eligible to have a Supplemental Contribution
allocated to their Accounts for such Plan Year bears to the
combined aggregate formula amount of all plans attributable to
those Participants eligible to have a Supplemental Contribution
allocated to their Accounts for such Plan Year, and the portion
allocated to this Plan shall be this Plan's Tentative Supplemental
Contribution for the Plan Year. If there is more than one ESOP
Loan outstanding for any Plan Year, the Tentative Supplemental
Contribution shall be the sum of the amounts computed under this
Section with respect to the Shares in the separate ESOP Loan
Suspense Accounts. This Plan's Tentative Supplemental
Contribution shall then be reduced by the amount of this Plan's
"Carryover Amount", if any, for the Plan Year. The resulting
amount shall be this Plan's Adjusted Tentative Supplemental
Contribution.
(b) For purposes of this Section, the "Carryover Amount" shall
be equal to the excess, if any, of (i) the total
Supplemental Contributions of this Plan for all prior Plan
Years (without regard to forfeitures) over (ii) the total
Tentative Supplemental Contributions of this Plan for all
prior Plan Years (without regard to forfeitures).
(c) For purposes of this Section, the "ESOP Share Cost" shall
be the average price at which the Trustee acquires Shares
with the proceeds of an ESOP Loan. For each ESOP Loan
entered into by the Trustee there shall be a separate ESOP
Share Cost which shall be uniform for each Share acquired
with the proceeds of such loan.
4. Section 6.5 of the Plan is amended to read in its entirety as follows:
6.5. Allocation to Participants' Accounts. (a) Company Matching
-------------------------------------
Contributions shall be allocated to the Accounts of Participants
as of the end of each Processing Period in accordance with the
contribution rate in effect for the Plan Year in which such
Processing Period falls. Thus, if the contribution rate for a
Plan Year is .3500, each Participant shall have allocated to such
Participant's Account from the Company Matching Contributions for
any Processing Period of such Plan Year an amount equal to
thirty-five percent of such Participant's matched Personal
Contributions actually withheld during such Processing Period.
4
<PAGE> 5
(b) Supplemental Contributions for each Participant shall be
determined as of the end of the last Processing Period of
each Plan Year in accordance with the ratio that the sum of
the individual Participant's Company Matching Contributions
allocated (and not then forfeited) for such Plan Year bears
to the total Company Matching Contributions allocated (and
not then forfeited) for such Plan Year. In order to receive
a Supplemental Contribution allocation for a Plan Year, a
Participant (or the Participant's Beneficiary) must have an
existing Account balance in the Plan as of the last day of
the last Processing Period of such Plan Year. Supplemental
Contributions shall be allocated to eligible Participant
Accounts when the contributions are delivered to the Trustee
in accordance with Section 6.4. Notwithstanding anything to
the contrary in this Plan, no Supplemental Contribution
shall be allocated to the Account of an alternate payee
under a qualified domestic relations order (as described in
Section 414(p) of the Code) unless otherwise specifically
required under such order.
5. Section 8.4 of the Plan is amended to read in its entirety as follows:
8.4 Release from ESOP Loan Suspense Account. Each year a number of
----------------------------------------
Shares shall be released from the ESOP Loan Suspense Account.
Such number shall be determined as follows: the number of Shares
held in the ESOP Loan Suspense Account at the beginning of the
applicable Plan Year shall be multiplied by a fraction, the
numerator of which shall be the amount of principal and interest
due under the loan amortization payment schedule for the current
Plan Year, and the denominator shall be the numerator plus the
principal and interest to be paid on the loan amortization payment
schedule for all future Plan Years. Unless otherwise determined
by the Committee, a substantially equal number of Shares shall be
released from the ESOP Loan Suspense Account for each calendar
quarter during the Plan Year. Such Shares shall be deemed
acquired by the Company Stock Fund at the Closing Price on the
last trading day prior to the date of release or such other date
as may be determined by the Committee for this purpose. In
connection with such releases, it is intended that the Trustee
will transfer funds to the ESOP Loan Payment Accumulation Account
for each Processing Period equal to the total value of Shares
released from the ESOP Loan Suspense Account for such Processing
Period but only to the extent necessary to accumulate sufficient
funds for ESOP loan repayment, unless otherwise determined by the
Committee. Such transferred funds shall represent Company
Contributions, Personal Contributions and dividends that are
required to be invested in the Company Stock Fund and allocated to
the Accounts of Participants.
5
<PAGE> 6
6. Section 15.1 of the Plan is amended by deleting subsection (k) and
renaming the remaining subsections (k), (l) and (m).
IN WITNESS WHEREOF, the Company has executed this Amendment effective as
stated herein.
Anheuser-Busch Companies, Inc.
By: /s/ William L. Rammes
-------------------------------
William L. Rammes
Vice-President-Human Resources
6
<PAGE> 1
FIFTH AMENDMENT TO THE ANHEUSER-BUSCH
DEFERRED INCOME STOCK PURCHASE AND SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996
Effective as of April 1, 1996, Anheuser-Busch Companies, Inc. (the "Company")
amended and restated the Anheuser-Busch Deferred Income Stock Purchase and
Savings Plan (the "Plan") and has subsequently amended the Plan four times.
The Company reserved the right to further amend the Plan from time to time
and hereby amends the Plan effective April 1, 1997, unless expressly noted
otherwise, as follows:
1. Effective April 1, 1999, subsection (d) of Section 2.5 of the
Plan is amended to read in its entirety as follows:
(d) Other Items Excluded from Base Pay For All
------------------------------------------
Participants. Base Pay does not include any bonus, pay in lieu of
-------------
vacation, service allowance, severance pay, premium pay for shift or
other specialized work, Company Matching, Supplemental, Incentive or
Transitional Contributions to this Plan, Company contributions to any
other pension, retirement, group insurance, health and welfare or
similar plan, cash payments pursuant to a plan designed to comply with
Section 125 of the Code, any other so-called "fringe benefits," any
income attributable to the award or exercise of a stock option or the
premature disposition of stock option stock, any other amount which does
not constitute "compensation" within the meaning of Section 415 of the
Code, any type of remuneration not otherwise described in this Section,
or any expense allowance or reimbursements of expenses paid on behalf of
a Participant (even if subsequently not allowed as such and treated as
additional compensation for federal income tax purposes). Base Pay does
not include any vacation pay which becomes payable on account of
termination of employment nor does it include payments for any unused
sick day, whether before or after termination of employment.
2. Section 2.25 of the Plan is amended to read in its entirety as
follows:
2.25 "Highly Compensated Employee". (a) The term Highly
------------------------------
Compensated Employee includes Highly Compensated Employees who are
active and certain former Highly Compensated Employees as described
in this Section.
(b) An active Highly Compensated Employee includes any
individual who performs service for any of the Employing Companies
during the determination year and who: (i) received compensation from
the Employing Companies in excess of $80,000 (as adjusted pursuant to
Section 415(d) of the Code) during the look-back year; or (ii) was a
5-percent owner, as defined in Section 24.1(f), at any time during the
look-back year or the determination year.
(c) For purposes of this Section, (i) the determination
year shall be the Plan Year; (ii) the look-back year shall be the
twelve-month period immediately
<PAGE> 2
preceding the determination year; and (iii) compensation shall mean
compensation as defined in Section 414(q)(4) of the Code and regulations
thereunder.
(d) A former Highly Compensated Employee includes any
individual who separated from service with an Employing Company (or was
deemed to have separated) prior to the determination year, performs no
service for an Employing Company during the determination year, and was
an active Highly Compensated Employee for either the separation year or
any determination year ending on or after the employee's 55th birthday.
(e) The determination of who is a Highly Compensated
Employee, including the determinations of any 5-percent owner and the
compensation that is considered, will be made in accordance with Section
414(q) of the Code and applicable Treasury Regulations.
3. Section 2.30 of the Plan is amended to read in its entirety as
follows:
2.30 "Non-Highly Compensated Employee". An Employee who is not
----------------------------------
a Highly Compensated Employee.
4. Effective April 1, 1998, Section 2.43 of the Plan is amended to
read in its entirety as follows:
2.43 "Taxable Compensation". The amount of compensation
-----------------------
determined under the provisions of Section 414(s) of the Code and
regulations thereunder. In no event shall an Employee's Taxable
Compensation exceed the amount specified in Section 401(a)(17) of the
Code as adjusted for any applicable increases in the cost of living.
5. Effective April 1, 1999, Article II of the Plan is amended by
adding to the end of such Article the following new Sections 2.47, 2.48,
2.49, 2.50, 2.51 and 2.52:
2.47. "ABI". Anheuser-Busch, Incorporated, a corporation
------
organized and existing under the laws of the State of Missouri, and any
successor corporation which assumes this Plan and agrees to be bound by
the terms and provisions hereof as a Participating Employer.
2.48. "Incentive Contribution Base Pay". Subject to Section
----------------------------------
2.5(e), Base Pay as defined in Section 2.5(a), (c) and (d) plus Impact
Selling incentives paid by ABI.
2.49. "Incentive Contributions". The amounts contributed to this
--------------------------
Plan by ABI pursuant to Section 6.1(f).
2.50. "Transitional Contributions". The amounts contributed to
-----------------------------
this Plan by ABI pursuant to Section 6.1(g).
- 2 -
<PAGE> 3
2.51. "Wholesale Employees". Employees paid on an hourly basis
----------------------
who are employed by ABI at a Wholesale Operation; provided, however,
that an Employee who is a Participant in the Retirement Plan for Certain
Hourly Employees of Anheuser-Busch, Incorporated, as defined therein,
shall not be a Wholesale Employee. Wholesale Employees who receive an
allocation of an Incentive Contribution shall be treated as Participants
in this Plan regardless of whether they have otherwise elected to
participate in this Plan. Wholesale Employees who do not receive an
allocation of any Incentive Contribution for any reason whatsoever shall
not be treated as Participants in this Plan unless they otherwise
participate.
2.52. "Wholesale Operation". A wholesale operation of ABI which
----------------------
has implemented an incentive program under which Incentive Contributions
are to be made to this Plan.
6. Effective October 13, 1996, Article IV of the Plan is amended by
adding to the end of such Article the following new Section 4.4:
4.4. Matched Contributions for Periods of Military Service. Any
------------------------------------------------------
Eligible Employee who is reemployed after a period of military service
while entitled to re-employment rights under Federal law shall be
permitted to make the matched Personal Contributions described in
Sections 4.1 and 4.2 with respect to the period of the Eligible
Employee's military service during the period which begins on the
Eligible Employee's date of reemployment with a Participating Employer
and ends upon the earlier of (i) the period equal to three times the
Eligible Employee's period of military service, and (ii) five years.
The maximum amount of matched Personal Contributions that the Eligible
Employee can make during this period shall be the maximum amount of
matched Personal Contributions that the Eligible Employee would have
been permitted to make to the Plan during the period of military service
if the Eligible Employee had continued to be employed by a Participating
Employer during such period and received Base Pay during such period
equal to the Base Pay the Eligible Employee would have received during
the period of military service had the Eligible Employee worked for a
Participating Employer during such period. If the Base Pay the Eligible
Employee would have received during the period was not reasonably
certain, the Eligible Employee's average Base Pay from the Employing
Companies during the 12-month period immediately preceding the period of
military service shall be deemed to be such Base Pay.
7. Effective January 1, 2000, subsection (b) of Section 5.5 of the
Plan is amended to read in its entirety as follows:
(b) The term "Eligible Rollover Contribution" means any
part of a distribution which meets the requirements of Section 402(c)(4)
or Section 408(d)(3)(A)(ii) of the Code and which is transferred to this
Plan from the Retirement Plan for Certain Hourly Employees of the
Wholesale Operation Division of Anheuser-Busch, Incorporated by a
Wholesale Employee in an elective transfer, within the meaning
- 3 -
<PAGE> 4
of Treasury Regulations Section 1.411(d)-4, Q&A-3(b), as a result of the
termination of such plan.
8. Effective October 13, 1996, Article V of the Plan is amended by
adding to the end of such Article the following new Section 5.6:
5.6. Unmatched Contributions for Periods of Military Service.
--------------------------------------------------------
Any Eligible Employee who is reemployed after a period of military
service while entitled to re-employment rights under Federal law shall
be permitted to make the unmatched Personal Contributions described in
Sections 5.2 and 5.3 with respect to the period of the Eligible
Employee's military service during the period which begins on the
Eligible Employee's date of reemployment with a Participating Employer
and ends upon the earlier of (i) the period equal to three times the
Eligible Employee's period of military service, and (ii) five years.
The maximum amount of unmatched Personal Contributions that the Eligible
Employee can make during this period shall be the maximum amount of
unmatched Personal Contributions that the Eligible Employee would have
been permitted to make to the Plan during the period of military service
if the Eligible Employee had continued to be employed by a Participating
Employer during such period and received Base Pay during such period
equal to the Base Pay the Eligible Employee would have received during
the period of military service had the Eligible Employee worked for a
Participating Employer during such period. If the Base Pay the Eligible
Employee would have received during the period was not reasonably
certain, the Eligible Employee's average Base Pay from the Employing
Companies during the 12 month period immediately preceding the period of
military service shall be deemed to be such Base Pay.
9. Effective April 1, 1999, Section 6.1 of the Plan is amended by
adding to the end of such Section the following new subsections (f) and (g):
(f) In addition to any other contribution required under
this Section, except as otherwise provided in Section 6.4, ABI shall
also contribute for each Plan Year of its participation in this Plan an
Incentive Contribution on behalf of Wholesale Employees at each
Wholesale Operation, regardless of whether they are Participants or
Eligible Employees, who are Employees on the last day of the Company
Year ending in such Plan Year, or who ceased to be an Employee during
such Company Year because of death or total and presumably permanent
disability (as determined pursuant to Section 12.4) or after attainment
of age 60. The amount, if any, of the Incentive Contribution for each
Plan Year with respect to each Wholesale Operation shall be established
by ABI in its sole discretion.
(g) In addition to any other contribution required under
this Section, ABI shall also contribute for the Plan Year ending March
31, 2000 a Transitional Contribution on behalf of those Wholesale
Employees designated on Exhibit A. The amount of the Transitional
Contribution for each such Wholesale Employee shall be established by
ABI in its sole discretion.
- 4 -
<PAGE> 5
10. Effective April 1, 1999, Section 6.4 of the Plan is amended to
read in its entirety as follows:
6.4. Payment and Payment Date. Each Participating Employer's
-------------------------
Company Matching, Supplemental, Incentive, Transitional and any other
type of contribution for the Plan Year, to the extent actually required
to be contributed under Section 6.1, shall be delivered to the Trustee
as and when determined by the Committee but not later than 180 days
after the end of such Plan Year. Notwithstanding the foregoing, the
amount of any Incentive Contribution allocable to the Account of a
Wholesale Employee who is not an Eligible Employee at the time the
Incentive Contribution is delivered to the Trustee pursuant to this
Section 6.4 shall not be so delivered until such time, if any, as such
Wholesale Employee becomes an Eligible Employee. If a Wholesale
Employee ceases to be an Employee of any Employing Company prior to
becoming an Eligible Employee, the amount of any Incentive Contribution
otherwise allocable to such Wholesale Employee's Account shall not be
contributed to the Plan. Any delivery under this Section 6.4 shall be
either in cash or in Shares (from authorized but unissued Shares or out
of Shares held in the Company's treasury), or a combination of both, and
if delivered wholly or partially in Shares, such Shares shall be valued
at the Closing Price on the date of delivery or on the last business day
prior to the date of delivery as determined by the Committee on a
uniform and consistent basis.
11. Effective April 1, 1999, Section 6.5 of the Plan is amended by
adding to the end of such Section the following new subsections (c) and (d):
(c) Incentive Contributions for each Wholesale Employee
described in Section 6.1(f) for a Plan Year shall be allocated in one of
the following ways depending on the incentive program then in effect at
the applicable Wholesale Operation: (i) in accordance with the ratio
that the Incentive Compensation Base Pay for such Company Year of each
such Wholesale Employee at the applicable Wholesale Operation bears to
the total Incentive Compensation Base Pay of all such Wholesale
Employees at the applicable Wholesale Operation; (ii) per capita; or
(iii) such other method published at the applicable Wholesale Operation.
Incentive Contributions shall be allocated to eligible Participant
Accounts when the contributions are delivered to the Trustee in
accordance with Section 6.4.
(d) The Transitional Contribution for each Wholesale
Employee designated on Exhibit A shall be allocated solely to the
Account of each such Wholesale Employee.
12. Effective October 13, 1996, Article VI of the Plan is amended by
adding to the end of such Article the following new Section 6.6:
6.6 Company Contributions for Periods of Military Service.
------------------------------------------------------
(a) If any Eligible Employee who is reemployed after a period of
military service while entitled to re-employment rights under Federal
law makes the Before-Tax Matched Contributions or After-Tax Matched
Contributions described in Sections 4.1 and 4.2 for that period, the
- 5 -
<PAGE> 6
Participating Employer shall make those Company Matching and
Supplemental Contributions on behalf of the Eligible Employee as would
have been made had the Eligible Employee's contributions actually been
made during the period of military service.
(b) If any Eligible Employee is reemployed after a period
of military service while entitled to re-employment rights under Federal
law, the Participating Employer shall make any other contributions
required under Section 6.1 on behalf of the Eligible Employee for each
partial and full Plan Year in the Eligible Employee's period of military
service for which the Eligible Employee did not receive a contribution.
Such contributions shall be equal to the amount of contributions which
would have been made had the Eligible Employee continued to be employed
by a Participating Employer during such period of military service and
shall be determined as though the Eligible Employee received
Compensation equal to the amount the Eligible Employee would have
received if the Eligible Employee were not in military service. If the
Base Pay the Eligible Employee would have received during the period was
not reasonably certain, the Eligible Employee's average Base Pay from
the Employing Companies during the 12 month period immediately preceding
the period of military service shall be deemed to be such Base Pay.
13. Effective January 1, 1997, subsection (b) of Section 7.2 of the
Plan is amended to read in its entirety as follows:
(b) If the Committee is notified, pursuant to Section
402(g)(2) of the Code and prior to April 15, that a Participant has made
elective deferrals (within the meaning of Section 402(g)(3) of the Code
and regulations thereunder) in the immediately preceding calendar year
under two or more plans which, in the aggregate, would exceed the
limitations of subsection (a), a portion of such excess deferrals, as
directed by the Participant, shall be handled in accordance with
subsection (c) of this Section.
14. Effective January 1, 1997, subsection (c) of Section 7.2 of the
Plan is amended by adding at the end of such subsection the following new
sentence:
A Highly Compensated Employee shall forfeit any Company Matching
Contributions which were contributed on account of any Before-Tax
Matched Contributions that are refunded under this Section, even if such
Company Matching Contributions are vested.
15. Subsection (b) of Section 7.3 of the Plan is amended by adding at
the end of such subsection the following new sentence:
A Highly Compensated Employee shall forfeit any Company Matching
Contributions which were contributed on account of any Before-Tax
Matched Contributions that are refunded under this Section, even if such
Company Matching Contributions are vested.
16. Subsection (e) of Section 7.3 of the Plan is amended to read in
its entirety as follows:
- 6 -
<PAGE> 7
(e) The determination of the amount of excess Before-Tax
Contributions for each Highly Compensated Employee under subsection (b)
shall be made in a two step process. First, the aggregate amount of
excess Before-Tax Contributions shall be calculated. This shall be done
by reducing the actual deferral ratios of those Highly Compensated
Employees with the highest actual deferral ratios to the extent
necessary but not below the next highest level of actual deferral ratios
of Highly Compensated Employees. This process shall be repeated, to the
extent necessary, until the actual Before-Tax Contribution rate for the
Highly Compensated group satisfies one of the tests set forth in
subsection (b). The aggregate amount of excess Before-Tax Contributions
shall be calculated by multiplying the actual deferral ratio reduction
for each Highly Compensated Employee by the Highly Compensated
Employee's Taxable Compensation for the Plan Year and adding the product
of each such multiplication. Second, the aggregate amount of excess
Before-Tax Contributions to be refunded shall be allocated by reducing
the Before-Tax Contributions of those Highly Compensated Employees with
the highest amount of Before-Tax Contributions to the extent necessary
but not below the next highest amount of Before-Tax Contributions of
Highly Compensated Employees. This process shall be repeated, to the
extent necessary, until all excess Before-Tax Contributions to be
refunded shall be allocated among the Highly Compensated Employees.
17. Section 7.3 of the Plan is amended by deleting subsection (g).
18. Subsection (h) of Section 7.3 of the Plan is amended to read in
its entirety as follows:
(h) In determining the actual Before-Tax Contribution
rate for any Highly Compensated Employee, salary deferral contributions
under each plan maintained by an Employing Company shall be aggregated.
19. Effective April 1, 1999, Section 7.3 of the Plan is amended by
adding to the end of such Section the following new subsection (i):
(i) If Code Section 410(b)(4)(B) is applied in determining
whether the Plan satisfies Code Section 410(b) by excluding from
consideration Eligible Employees who have not met the minimum age
requirement of Code Section 410(a)(1)(A)(i), all Non-Highly Compensated
Employees who have not met such minimum age requirement may be excluded
from consideration for purposes of satisfying the tests in subsection
(b).
20. Paragraph (bb) of subsection (b) of Section 7.3 of the Plan is
amended by adding at the end of such paragraph the following new sentence:
A Highly Compensated Employee shall forfeit any Company Matching
Contributions which were contributed on account of any After-Tax Matched
Contributions that are refunded under this Section, even if such Company
Matching Contributions are vested.
- 7 -
<PAGE> 8
21. Subsection (g) of Section 7.4 of the Plan is amended to read in
its entirety as follows:
(g) The determination of the amount of excess After-Tax
Contributions for each Highly Compensated Employee under subsection (b)
shall be made in a two step process. First, the aggregate amount of
excess After-Tax Contributions shall be calculated. This shall be done
by reducing the actual contribution percentages of those Highly
Compensated Employees with the highest actual contribution percentages
to the extent necessary but not below the next highest level of actual
contribution percentages of Highly Compensated Employees. This process
shall be repeated, to the extent necessary, until the actual After-Tax
Contribution rate for the Highly Compensated group satisfies one of the
tests set forth in subsection (b). The aggregate amount of excess
After-Tax Contributions shall be calculated by multiplying the actual
contribution percentage reduction for each Highly Compensated Employee
by the Highly Compensated Employee's Taxable Compensation for the Plan
Year and adding the product of each such multiplication. Second, the
aggregate amount of excess After-Tax Contributions to be refunded shall
be allocated by reducing the After-Tax Contributions of those Highly
Compensated Employees with the highest amount of After-Tax Contributions
to the extent necessary but not below the next highest amount of
After-Tax Contributions of Highly Compensated Employees. This process
shall be repeated, to the extent necessary, until all excess After-Tax
Contributions to be refunded shall be allocated among the Highly
Compensated Employees.
22. Subsection (j) of Section 7.4 of the Plan is amended to read in
its entirety as follows:
(j) In determining the actual After-Tax Contribution rate
for any Highly Compensated Employee, employee and matching contributions
under each plan maintained by an Employing Company shall be aggregated.
23. Effective April 1, 1999, Section 7.4 of the Plan is amended by
adding to the end of such Section the following new subsection (k):
(k) If Code Section 410(b)(4)(B) is applied in determining
whether the Plan satisfies Code Section 410(b) by excluding from
consideration Eligible Employees who have not met the minimum age
requirement of Code Section 410(a)(1)(A)(i), all Non-Highly Compensated
Employees who have not met such minimum age requirement may be excluded
from consideration for purposes of satisfying the tests in subsection
(b).
24. Effective April 1, 1999, Section 8.1 of the Plan is amended to
read in its entirety as follows:
8.1. Terms of ESOP Loan. The Trustee will be specifically
-------------------
empowered to borrow funds (including a borrowing from the Company or any
other of the Employing Companies) to acquire Shares or repay a prior
ESOP Loan, subject to the conditions set forth in this Section 8.1. The
terms of each ESOP Loan must, at the time the loan is made, be at least
as favorable to the Trust as the terms of a comparable loan resulting
- 8 -
<PAGE> 9
from arm's length negotiations between independent parties. Each ESOP
Loan shall be for a specific term, shall bear a reasonable rate of
interest, and shall be without recourse against the Trust or the
Participants' Accounts, except that an ESOP Loan may be guaranteed by
the Company and may be secured by a pledge of the Shares acquired with
the proceeds of the ESOP Loan (or acquired with the proceeds of a prior
ESOP Loan which is being refinanced). No other Trust assets may be
pledged as collateral for an ESOP Loan, and no lender shall have
recourse against Trust assets other than (a) collateral given for the
ESOP Loan, (b) amounts held under the ESOP Loan Payment Accumulation
Account (other than Company Matching, Supplemental, Incentive or
Transitional Contributions of Shares), and (c) earnings attributable to
such collateral. An ESOP Loan shall not be payable on demand except in
the event of default. In the event of default, the value of Plan assets
transferred in satisfaction of the ESOP Loan shall not exceed the amount
of the default plus any applicable prepayment or similar penalties or
premiums. If the lender is a disqualified person within the meaning of
Code Section 4975(e)(2), the ESOP Loan must provide for a transfer of
Trust assets on default only upon and to the extent of the failure of
the Trust to meet the payment schedule of the ESOP loan. Payments of
principal and/or interest on any ESOP Loan shall be made by the Trustee
in accordance with Section 8.7. The Committee shall direct the Trustee
to enter into any loan transaction approved by the Board and conforming
with the provisions hereof.
25. Effective April 1, 1999, Section 8.7 of the Plan is amended to
read in its entirety as follows:
8.7. ESOP Loan Payments. The Trustee shall, from time to time,
-------------------
transfer sufficient funds to the ESOP Loan Payment Accumulation Account
or ESOP Loan Suspense Account to provide funds for ESOP Loan payments
required for the Plan Year. Such transfers (including the transfers
described in Section 8.4) and the corresponding ESOP loan payments,
shall be treated as derived from the following sources in the following
order to the extent of assets available from such sources at the time of
transfer:
(a) First, if directed by the Committee, proceeds from
the sale, exchange, or disposition of Shares or other assets held in the
ESOP Loan Suspense Account and earnings thereon;
(b) Second, from dividends on Shares in accordance with
Section 8.6 and, to the extent permitted under applicable law, earnings
thereon;
(c) Third, from Company Contributions under Section 6.1(d)
and earnings thereon;
(d) Fourth, from Company Matching Contributions and
earnings thereon;
(e) Fifth, from Supplemental Contributions and earnings
thereon;
(f) Sixth, from Incentive Contributions and earnings
thereon;
(g) Seventh, from Transitional Contributions and earnings
thereon; and
(h) Eighth, from Before-Tax Personal Contributions made by
Participants and earnings thereon.
- 9 -
<PAGE> 10
This provision shall not be construed to preclude the transfer of
funds out of the ESOP Loan Payment Accumulation Account or ESOP Loan
Suspense Account for other Plan purposes, provided that no such transfer
shall alter the order of priority established by this provision.
Further, any funds remaining in the ESOP Loan Payment Accumulation
Account or ESOP Loan Suspense Account at the end of the Plan Year and
not applied to ESOP loan repayment shall be used as otherwise provided
in this Plan.
26. Effective April 1, 1999, Article IX of the Plan is amended by
adding to the end of such Article the following new Section 9.19:
9.19. Investment of the Incentive and Transitional Contributions
----------------------------------------------------------
Part of an Account. Incentive and Transitional Contributions for each
-------------------
Plan Year allocated to the Account of a Wholesale Employee shall
initially be invested in accordance with the then current method of
investment of such Wholesale Employee's Before-Tax Matched
Contributions. If no Before-Tax Matched Contributions are then being
made by such Wholesale Employee, such Incentive and Transitional
Contributions shall initially be invested in accordance with the then
current method of investment of such Wholesale Employee's After-Tax
Matched Contributions. If no After-Tax Matched Contributions are then
being made by such Wholesale Employee, the one-half of such Incentive
and Transitional Contributions which are not invested in the Company
Stock Fund shall be invested in the Short-Term Fixed Income Fund. Once
Incentive and Transitional Contributions have been initially invested in
accordance with the foregoing, they may be immediately reinvested in any
Investment Fund other than the Earthgrains Stock Fund. There shall be
no requirement that any portion of any Incentive or Transitional
Contributions remain invested in the Company Stock Fund.
27. Effective April 1, 1999, Section 11.2 of the Plan is amended to
read in its entirety as follows:
11.2. Company Matching, Supplemental, Incentive and Transitional
----------------------------------------------------------
Contributions. The portion of a Participant's Account which is
--------------
attributable to Company Matching, Supplemental, Incentive and
Transitional Contributions for any Plan Year (including earnings
thereon) shall vest and become non-forfeitable when such Participant
completes two years of Vesting Service.
28. Effective April 1, 1999, Subsection (i) of Section 11.3 of the
Plan is amended to read in its entirety as follows:
(i) If a Participant has a Period of Severance and is
thereafter re-employed, all years of Vesting Service prior to the Period
of Severance shall be taken into account in determining the
Participant's vested interest in the Company Matching, Supplemental,
Incentive and Transitional Contributions portion of the Participant's
Account, as accumulated prior to such severance. The foregoing sentence
shall not apply to any Participant whose entire account balance is not
vested on the Participant's Severance from Service Date and who incurs a
Period of Severance exceeding five years. During the period when any
unvested amount is being held pending a determination of whether a
Period of Severance exceeding five years occurs, the Participant's
interest in
- 10 -
<PAGE> 11
such amount shall be immediately terminated subject to reinstatement if
the Participant is re-employed by an Employing Company prior to
incurring a five-year Period of Severance. If the amount does not
subsequently vest, it shall be treated as a forfeiture. Any amount
reinstated hereunder shall be the fair market value of the forfeited
amount on the date of forfeiture, without any interest or other addition
thereto for the period prior to reinstatement. Forfeitures shall be
applied to reduce the Company's Contributions to this Plan.
29. Effective April 1, 1999, Section 11.4 of the Plan is amended to
read in its entirety as follows:
11.4. Change in Control of the Company. Notwithstanding the
---------------------------------
foregoing provisions of this Article XI, in the event of a "Change in
Control of the Company" (as defined herein), the nonvested portion of a
Participant's Account which is attributable to Company Matching,
Supplemental, Incentive and Transitional Contributions for any Plan Year
or part thereof (including earnings thereon) shall immediately vest and
become nonforfeitable. The portion of the Participant's Account which
shall vest and become nonforfeitable under this Section shall be
determined as of the end of the month during which the Change in Control
of the Company occurs. For purposes hereof, a "Change in Control of the
Company" 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. This Section shall not apply
to any Participant who is not employed by an Employing Company at the
time the Change in Control of the Company occurs.
30. Effective April 1, 1999, Section 12.1 of the Plan is amended to
read in its entirety as follows:
12.1. Distributions Upon Termination of Employment. A Participant
---------------------------------------------
who ceases to be an Employee of any Employing Company because of death,
total and presumably permanent disability, entry into active duty with
any branch of the military services of the United States, or who has
been laid off for a period exceeding twelve consecutive months, or who
has attained the age of 60 years at the time the Participant ceases to
be an Employee, or who has completed two years of Vesting Service or is
otherwise vested under the provisions of Article XI, shall receive (or
if not then living, the Participant's Beneficiary shall receive), at the
time provided in Section 12.2 hereof, in a single distribution, the
Participant's entire Account. A cessation of employment with all
Employing Companies for any reason or at any time described in the
preceding sentence is referred to as a "vested termination." A
Participant who ceases to be an Employee of any Employing Company under
any other circumstances shall receive (or if the Participant is not
living at the time of distribution the Participant's Beneficiary shall
receive), at the time provided in Section 12.2 hereof, in a single
distribution, the portions of the Participant's Account attributable to
Personal Contributions. Such Participant shall forfeit the portion of
the Participant's Account which is attributable to Company
- 11 -
<PAGE> 12
Matching, Supplemental, Incentive and Transitional Contributions in
accordance with Section 11.3(i).
31. Effective January 1, 1997, the second paragraph of subsection (a)
of Section 12.2 of the Plan is amended to read in its entirety as follows:
Notwithstanding anything to the contrary herein, distributions
under this Plan shall commence not later than April 1 following the
calendar year in which occurs (x) in the case of a Participant who is a
5-percent owner, as defined in Section 24.1(f), with respect to the Plan
Year ending in the calendar year in which the Participant attains age
70-1/2, the Participant attains age 70-1/2, and (y) in the case of a
Participant who is not a 5-percent owner with respect to the Plan Year
ending in the calendar year in which the Participant attains age 70-1/2,
the later of the date the Participant attains age 70-1/2 and the date on
which the Participant ceases to be an Employee of any Employing Company;
provided, however, that a Participant who attained age 70-1/2 prior to
1996 and who was not a 5-percent owner with respect to the Plan Year
ending in the calendar year in which the Participant attained age 70-1/2
may elect in accordance with procedures established by the Committee to
stop distributions until a date not later than April 1 following the
calendar year in which the Participant ceases to be an Employee of any
Employing Company.
32. Effective April 1, 1998, subsections (b) and (c) of Section 12.2
of the Plan are amended by changing the references to "$3,500" therein to
"$5,000."
33. Effective March 22, 1999, subsection (c) of Section 12.2 of the
Plan is amended to read in its entirety as follows:
(c) Notwithstanding any other provision of the Plan, if
a Participant's vested Account balance exceeds $5,000, amounts payable
to such Participant shall not be distributed before the Participant
attains age 62 without the consent of the Participant. The
Participant's consent to distribution must be made in accordance with
procedures promulgated by the Committee after the Participant receives a
notice as described in subsection (d) below and must be made within the
90-day period ending on the last day of the Processing Period as of
which the amount of the distribution is determined and made.
34. Effective April 1, 1999, subsection (e) of Section 12.2 of the
Plan is amended to read in its entirety as follows:
(e) Any Participant not consenting to a distribution
hereunder shall become an inactive Participant, but notwithstanding any
provision of this Plan to the contrary, such Participant shall have only
the following rights under this Plan:
(i) the right to receive a distribution of all
(but not less than all) of the vested portion of the Participant's
Account as of the end of any Processing Period permitted under this
Section;
- 12 -
<PAGE> 13
(ii) the right to make changes in the investments
of the Participant's Account in accordance with Article IX;
(iii) the right to vote and tender Share Equivalents
held in the Participant's Account in accordance with Sections 9.15 and
9.16, respectively;
(iv) the right to change the Participant's
designated Beneficiary or Beneficiaries from time to time in accordance
with Section 16.1;
(v) the right to have Supplemental and
Transitional Contributions allocated to the Participant's Account for
the Plan Year in which the Participant's termination occurred;
(vi) the right to have Incentive Contributions
allocated to the Participant's Account for the Plan Year in which ended
the Company Year in which the Participant's termination because of death
or total and presumably permanent disability (as determined pursuant to
Section 12.4) or after attainment of age 60 occurred; and
(vii) any other right required by law to be given
to an inactive Participant with an undistributed vested account in a
defined contribution plan qualified under Section 401(a) of the Code.
35. Effective January 1, 2000, subsection (b) of Section 12.3 of the
Plan is amended to read in its entirety as follows:
(b) An eligible rollover distribution is any distribution
of all or any portion of a Participant's Account, except that an
eligible rollover distribution does not include any distribution
required under Section 401(a)(9) of the Code, the portion of any
distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
Shares) and any hardship distribution described in Section
401(k)(2)(B)(i)(IV) of the Code.
36. Effective April 1, 1999, Subsection (b) of Section 13.1 of the
Plan is amended to read in its entirety as follows:
(b) In addition to the rights set forth in subsection (a),
any Participant may withdraw any part of the Participant's Account which
is attributable to
(i) Company Matching Contributions attributable to
Personal Before-Tax Contributions made before April 1, 1994, which have
been in the Participant's Account for at least two full Plan Years after
the contributions were made, and
(ii) after a Participant has attained age 59-1/2,
(A) Before-Tax Matched Contributions which
have been in the Participant's Account for at least one full Plan
Year after the contributions were made,
(B) Before-Tax Unmatched Contributions,
- 13 -
<PAGE> 14
(C) Incentive Contributions,
(D) Transitional Contributions, and
(E) Company Matching Contributions which
have been in the Participant's Account for at least one full Plan
Year after the contributions were made.
Withdrawals under this subsection (b) shall be deemed made in the
order listed above.
37. Effective August 6, 1997, Section 20.1 of the Plan is amended by
adding to the end of such Section the following new paragraph:
Notwithstanding the above, effective with respect to judgments,
orders and decrees issued on or after August 5, 1997, and settlement
agreements entered on or after August 5, 1997, a Participant's benefit
will be offset against any amount he or she is ordered or required to
pay to the Plan pursuant to an order or requirement which arises under a
judgment of conviction for a crime involving the Plan, under a civil
judgment entered by a court in an action involving a fiduciary breach,
or pursuant to a settlement agreement between the Participant and the
Department of Labor or the Pension Benefit Guaranty Corporation. Any
such offset shall be made pursuant to Section 206(d) of ERISA.
38. Effective April 1, 1999, Subsection (d) of Section 23.1 of the
Plan is amended in its entirety to read as follows:
(d) For purposes of this Section, "annual addition" shall
mean the sum of the Before-Tax Contributions, After-Tax Contributions,
Company Matching, Supplemental, Incentive and Transitional Contributions
allocated to the account of a Participant for the limitation year. The
terms compensation, defined benefit plan fraction and defined
contribution plan fraction shall have the meanings provided in Section
415 of the Code. Section 415 of the Code, as in effect from time to
time, and regulations promulgated thereunder, are incorporated herein by
reference.
39. Effective April 1, 1999, Subsection (a) of Section 24.2 of the
Plan is amended in its entirety to read as follows:
(a) Notwithstanding any provisions herein to the contrary,
no Key Employee may have allocated to the Key Employee's Account for
such Plan Year Before-Tax, Company Matching, Supplemental, Incentive or
Transitional Contributions which, expressed as a percentage of the Key
Employee's Compensation, exceed the Company Matching, Supplemental,
Incentive and Transitional Contribution also expressed as a percentage
of Compensation, of that Non-Key Eligible Employee whose Company
Matching, Supplemental, Incentive and Transitional Contribution is the
lowest percentage. The percentage calculations required by this
subsection shall be made treating all defined contribution plans of the
Company included in the aggregation group
- 14 -
<PAGE> 15
of plans as if they were a single plan, and any reduction in Before-Tax,
Company Matching, Supplemental, Incentive and Transitional Contributions
required by this provision shall be effected out of Before-Tax, Company
Matching, Supplemental, Incentive and Transitional Contributions to this
Plan first, before being allocated to any other plan. If the
Before-Tax, Company Matching, Supplemental, Incentive and Transitional
Contributions which would otherwise be allocated to a Key Employee are
reduced by operation of this provision, excess Personal Contributions
shall be refunded to the Participant without penalty, to the end that
the Participant's Personal Contributions for the Plan Year in question
do not exceed the amount the Key Employee would have contributed in
order to receive only the recalculated Company Matching and Supplemental
Contribution amount;
40. Effective April 1, 1999, Subsection (b) of Section 25.1 of the
Plan is amended in its entirety to read as follows:
(b) Notwithstanding the foregoing or any other contrary
provision herein contained, any erroneous Company Matching,
Supplemental, Incentive or Transitional Contribution which is made by a
mistake of fact may be returned to the Participating Employer which made
such contribution if the mistake of fact is discovered and the return of
such contribution is completed within one year after the payment of such
contribution to the Plan. Furthermore, if after the Internal Revenue
Service rules that the Plan and Trust are qualified and exempt, as
contemplated by subsection (a) above, any deduction for any Company
Contribution hereto is denied as not allowable under Section 404(a)(3)
of the Code, then such contribution, to the extent of such disallowed
deduction, may be returned to the Participating Employer which made such
contribution within one year after the disallowance of such deduction.
Each and every Company contribution made pursuant to this Plan is
contingent upon the allowance of a deduction for such contribution under
Section 404 of the Code.
41. Effective October 13, 1996, Article XXV of the Plan is amended by
adding to the end of such Article the following new Section 25.16:
25.16 Qualified Military Service. Notwithstanding any provision
---------------------------
of this Plan to the contrary, contributions, benefits and service credit
with respect to qualified military service will be provided in
accordance with Code Section 414(u).
IN WITNESS WHEREOF, the Company has executed this Amendment by and through
its authorized agent this 13th day of December, 1999, effective as stated
herein.
ANHEUSER-BUSCH COMPANIES, INC.
By /s/ William L. Rammes
---------------------------------
William L. Rammes
Vice President-Human Resources
- 15 -
<PAGE> 16
FIFTH AMENDMENT TO THE ANUEUSER-BUSCH
DEFERRED INCOME STOCK PURCHASE AND SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996
EXHIBIT A
WHOLESALE EMPLOYEES DESIGNATED PURSUANT TO SECTION 6.1(g)
Castro, Jose
Davis, William R.
Dutra, Tony J.
Mendoza, David B.
Montibeller, John
Retzlaff, Laurie
Spurgeon, David B.
Tirado, Jr., Joseph P.
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings
to fixed charges, on a consolidated basis, for the periods
indicated:
<TABLE>
<CAPTION>
Year Ended December 31
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1999 1998 1997 1996 1995 1994
- - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C> <C> <C> <C> <C>
6.9X 6.8X 7.3X 8.1X<F1/> 6.6X<F2/> 7.7X
For purposes of this ratio, earnings have been calculated by
adding to income before income taxes the distributed earnings of
investees accounted for under the equity method and the amount of
fixed charges. Fixed charges consist of interest on all
indebtedness, amortization of debt discounts and that portion of
rental expense deemed to represent interest.
<FN>
<F1/> The ratio for 1996 includes the gain from the sale of the St.
Louis Cardinals Major League Baseball Club, which increased income
before income taxes by $54.7 million. Excluding this one-time gain,
the ratio would have been 7.9X.
<F2/> The ratio for 1995 includes the impact of the Tampa Brewery
shutdown and the reduction of beer wholesaler inventories.
Excluding these non-recurring items, the ratio would have been
7.6X.
</TABLE>
<PAGE> 1
ANHEUSER [LOGO] BUSCH
COMPANIES
[PHOTO]
A d d i n g t o l i f e ' s e n j o y m e n t
CONTENTS
Management's Discussion and Analysis
of Operations and Financial Condition 26
Responsibility for Financial Statements 39
Report of Independent Accountants 39
Consolidated Balance Sheet 40
Consolidated Statement of Income 41
Consolidated Statement of Changes
in Shareholders Equity 42
Consolidated Statement of Cash Flows 43
Notes To Consolidated
Financial Statements 44
Financial Summary--Operations 56
Financial Summary--Balance Sheet
and Other Information 58
F I N A N C I A L R E V I E W 1999
1999 Annual Report 25
--
<PAGE> 2
[PHOTO]
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. for the three-year period ended December
31, 1999. This discussion should be read in conjunction with the Consolidated
Financial Statements and Notes to the Consolidated Financial Statements
included in this annual report.
This discussion contains certain statements regarding the company's
expectations concerning its operations, earnings and prospects. These
statements are forward-looking statements that involve significant risks and
uncertainties, and accordingly, no assurances can be given that such
expectations will be correct. These expectations are based upon many
assumptions that the company believes to be reasonable, but such assumptions
may ultimately prove to be inaccurate or incomplete, in whole or in part.
Important factors that could cause actual results to differ from the
expectations stated in this discussion include, among others, changes in the
pricing environment for the company's products; changes in domestic demand
for malt beverage products; changes in consumer preference for the company's
malt beverage products; regulatory or legislative changes; changes in raw
materials prices; changes in interest rates; changes in foreign currency
exchange rates; changes in attendance and consumer spending for the company's
theme park operations; changes in demand for aluminum beverage containers;
changes in the company's international beer business or in the beer business
of the company's international equity partner; and the effect of stock market
conditions on the company's share repurchase program.
OBJECTIVES
Anheuser-Busch remains focused on three major objectives in order to
enhance shareholder value:
* Increasing per barrel profitability which, when combined with continued
market share growth, will provide solid long-term earnings per share
growth.
* Profitable expansion of international beer operations by building the
Budweiser brand worldwide and making selected investments in leading
brewers in key international beer growth markets. The company has made
significant marketing investments to build Budweiser brand recognition
outside the United States and operates overseas breweries in China and the
United Kingdom. The company also has a significant equity position in
Grupo Modelo, Mexico's largest brewer and producer of the Corona brand.
* Continued support of profit growth in packaging and entertainment
operations. Packaging operations provide significant efficiencies, cost
savings and quality assurance for domestic beer operations, while
entertainment operations enhance the company's corporate image by
showcasing its heritage, values and commitment to quality and social
responsibility to 19 million visitors annually as well as adding their
profit contribution.
26 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 3
OPERATIONS
In the fourth quarter 1997, the company expensed all previously capitalized
and unamortized business re-engineering costs associated with the development
and installation of computer software, in accordance with the change in
accounting practice mandated by EITF No. 97-13. The total write-off of $10
million after-tax ($.02 per share) is shown as a separate "cumulative effect
of accounting change" line item in the income statement, and had no impact on
the company's results from operations.
Due to the write-off having no impact on the company's results from
operations, this discussion excludes the impact of the cumulative effect of
accounting change adjustment.
COMPARISON OF OPERATING RESULTS
Key financial comparisons from operations are summarized in the following
tables.
<TABLE>
COMPARISON OF OPERATING RESULTS ($ in millions, except per share)
<CAPTION>
1999 1998 1999 VS. 1998
<S> <C> <C> <C> <C>
Gross sales $13,723 $13,208 $515 3.9%
Excise taxes $2,019 $1,962 $57 2.9%
Net sales $11,704 $11,246 $458 4.1%
Operating income $2,302 $2,125 $177 8.3%
Equity income, net of tax $158 $85 $73 85.2%
Net income $1,402 $1,233 $169 13.7%
Diluted earnings per share $2.94 $2.53 $.41 16.2%
- ----------------------------------------------------------------------------
<CAPTION>
1998 1997 <F1> 1998 VS. 1997
<S> <C> <C> <C> <C>
Gross sales $13,208 $12,832 $376 2.9%
Excise taxes $1,962 $1,766 $196 11.1%
Net sales $11,246 $11,066 $180 1.6%
Operating income $2,125 $2,053 $72 3.5%
Equity income, net of tax $85 $50 $35 68.7%
Net income $1,233 $1,179 $54 4.6%
Diluted earnings per share $2.53 $2.36 $.17 7.2%
- ----------------------------------------------------------------------------
<FN>
<F1> Net income and diluted earnings per share exclude the impact of the
adjustment for the cumulative effect of adopting EITF No. 97-13.
- ----------------------------------------------------------------------------
<CAPTION>
1997<F1> 1996<F2> 1997 VS. 1996
<S> <C> <C> <C> <C>
Gross sales $12,832 $12,622 $210 1.7%
Excise taxes $1,766 $1,738 $28 1.6%
Net sales $11,066 $10,884 $182 1.7%
Operating income $2,053 $2,029 $24 1.2%
Equity income, net of tax $50 -- $50 <FN/M>
Net income $1,179 $1,123 $56 5.0%
Diluted earnings per share $2.36 $2.21 $.15 6.8%
- ----------------------------------------------------------------------------
<FN>
<FN/M> - Not Meaningful
<F1> Net income and diluted earnings per share exclude the impact of the
adjustment for the cumulative effect of adopting EITF No. 97-13.
<F2> Normalized results exclude the $54.7 million gain from the sale of the
St. Louis Cardinals baseball club.
</TABLE>
BEER VOLUME SALES
Total worldwide beer sales volume results are summarized in the following
table:
<TABLE>
WORLDWIDE BEER SALES VOLUME (millions of barrels)
<CAPTION>
1999 1998 CHANGE
<S> <C> <C> <C>
Domestic 95.7 92.7 3.2%
International 7.2 7.1 1.2%
------------------------------------
Worldwide A-B brands 102.9 99.8 3.1%
International equity partner brands 15.1 11.2 34.7%
------------------------------------
Total brands 118.0 111.0 6.3%
====================================
- -------------------------------------------------------------------------------
<CAPTION>
1998 1997 CHANGE
<S> <C> <C> <C>
Domestic 92.7 89.6 3.5%
International 7.1 7.0 0.6%
------------------------------------
Worldwide A-B brands 99.8 96.6 3.3%
International equity partner brands 11.2 6.8 64.9%
------------------------------------
Total brands 111.0 103.4 7.3%
====================================
- -------------------------------------------------------------------------------
<CAPTION>
1997 1996 CHANGE
<S> <C> <C> <C>
Domestic 89.6 88.9 0.7%
International 7.0 6.2 13.4%
------------------------------------
Worldwide A-B brands 96.6 95.1 1.6%
International equity partner brands 6.8 4.0 70.7%
------------------------------------
Total brands 103.4 99.1 4.3%
====================================
- -------------------------------------------------------------------------------
</TABLE>
WORLDWIDE BEER VOLUME
Worldwide beer volume is comprised of domestic volume and international
volume of Anheuser-Busch brands. Domestic volume represents Anheuser-Busch
brands produced and shipped within the United States. International volume
represents exports from the company's U.S. breweries to markets around the
world, plus Anheuser-Busch brands produced overseas by company-operated
breweries in China and the United Kingdom and under various license and
contract brewing agreements. Budweiser and other Anheuser-Busch beer brands
are sold in more than 80 countries worldwide. Total brands sales volume
includes the company's pro rata share of volume in international equity
partner Grupo Modelo combined with worldwide Anheuser-Busch brand volume.
Total brands for all years shown also includes Anheuser-Busch's equity share
of Antarctica beer volume. The company sold its equity investment back to
Antarctica in July 1999 in accordance with its investment agreement. See Note
2 for additional discussion.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 27
--
<PAGE> 4
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
SALES -- 1999 VS. 1998
Led by record domestic beer sales volume and successful revenue enhancement
strategies, Anheuser-Busch achieved record gross sales of $13.7 billion and
record net sales of $11.7 billion in 1999. Gross sales increased over 1998 by
$515 million, or 3.9% and net sales increased over 1998 by $458 million, or
4.1%. The sales increases are primarily due to higher domestic beer volume
and revenue per barrel. The difference between gross and net sales for 1999
represents beer excise taxes of $2.02 billion.
Domestic revenue per barrel grew 3% in 1999 compared to last year,
reflecting the company's focus on enhancing domestic beer profitability. In
the fourth quarter 1999, the company implemented price increases in 72% of
the country on selected brands and packages representing approximately 43% of
its volume.
Domestic beer shipments to wholesalers grew to an all-time high of 95.7
million barrels in 1999, an increase of 3.0 million barrels or 3.2% over
1998. Each of the company's core brand families contributed to this record
achievement. Bud Light continued its outstanding sales performance, with its
eighth consecutive year of double-digit growth. Wholesaler sales-to-retailers
grew 3.3% for full year 1999.
Sales-to-retailers for the fourth quarter 1999 increased 3.1% vs. the
fourth quarter 1998. This high level of retail demand exceeded the 2.1%
increase in fourth quarter shipments by Anheuser-Busch to its wholesalers,
reducing wholesaler inventories to levels below last year, further enhancing
product freshness and system economics.
The company believes the combination of outstanding domestic beer industry
fundamentals, the highest quality and freshest beer in the industry, and
exceptional marketing and sales execution provide a positive outlook for
achieving Anheuser-Busch's double-digit earnings per share growth objective
in 2000.
In February 2000, the company implemented selected price increases and
additional discount reductions on approximately 20% of its volume. These
revenue enhancement actions have again been tailored to specific markets,
brands and packages.
Worldwide Anheuser-Busch beer brand shipments grew to a record 102.9
million barrels for the full year 1999, up 3.1% compared to last year. This
marks the first time in brewing industry history one company has sold over
100 million barrels of its beer in a single year.
Total brands sales volume was 118.0 million barrels, up 6.3%, for the full
year 1999.
The company's domestic market share (excluding exports) for the full year
1999 was 47.5%, an increase of 0.7 percentage points over 1998 market share
of 46.8%. Including exports, the company's share of U.S. shipments was 47.3%
for the full year vs. 46.6% for 1998. Domestic market share and share of U.S.
shipments are determined based on industry sales estimates provided by the
Beer Institute. The company's market share is higher than previously reported
reflecting the Beer Institute's recent revisions to industry sales estimates.
Anheuser-Busch has led the U.S. brewing industry in sales volume and market
share since 1957.
SALES<F*>
(GRAPH)
International beer volume (excluding Modelo) was up 1.2% for the full year
1999 compared to 1998, to 7.2 million barrels. The increase was due primarily
to gains in the Americas, Ireland and Continental Europe, partially offset by
continued weakness in Asia, principally in Japan, and lower sales in the
United Kingdom.
28 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 5
In August 1999, the company recalled twist-off bottles in several European
countries as a quality assurance measure. The recall stemmed from problems
with the bottle manufacturing process. There were no quality issues with the
beer itself. The company incurred total pretax costs of approximately $6
million for the bottle recall.
In July 1999, Anheuser-Busch sold its equity interest in Brazilian brewer
Antarctica back to Antarctica. In September 1999, Anheuser-Busch and
Antarctica announced a joint decision not to apply to CADE, Brazil's
antitrust commission, for continued production of Budweiser by Antarctica.
Instead, Anheuser-Busch entered into a distribution agreement with Expand
Group in December 1999 for the exporting of Budweiser to Brazil beginning in
January 2000. The pretax cost of discontinuing Budweiser production in Brazil
was approximately $6 million.
Effective January 2000, the company converted its Japan joint venture
operation into an exclusive license agreement with its local partner Kirin,
for the production and selling of Budweiser in Japan. The new agreement with
Kirin is designed to create new opportunities for Budweiser's growth and to
improve profitability by giving the brand full access to Kirin's national
wholesaler distribution and integrated selling systems. The one-time cost of
converting to the license agreement was approximately $9 million and is
included in 1999 results.
SALES -- 1998 VS. 1997
Anheuser-Busch achieved gross sales of $13.2 billion and net sales of $11.2
billion in 1998. These results represent a gross sales increase over 1997 of
$376 million, or 2.9%, and a net sales increase over 1997 of $180 million, or
1.6%. The increases were primarily due to higher domestic beer volume. For
1998, sales and excise taxes include the impact of accounting for Stag
Brewery operations in the United Kingdom on a consolidated basis vs. equity
accounting in 1997. Beer excise taxes for 1998 totaled $1.96 billion.
Worldwide volume for Anheuser-Busch beer brands was up 3.3% for 1998,
compared to the prior year. Total volume was up 7.6 million barrels, or 7.3%,
for the year. International equity partner brands reflects the company's 37%
ownership interest in Grupo Modelo brands for the first nine months of 1998
and 50.2% for the fourth quarter, compared to a combination of 17.7%
ownership interest for the first five months of 1997 and 37% thereafter.
Anheuser-Busch's strategy to reduce domestic price discounting, initiated
at the beginning of 1998, was successful. This strategy was designed to
increase revenues, reduce the spread between front-line and discounted prices
to consumers, and protect the company's brand equities. In October 1998, the
company initiated a revenue enhancement strategy of selective price increases
and additional discount reductions. As a result of these and other actions,
domestic revenue per barrel was up nearly 3% in the fourth quarter 1998
compared to the same period in 1997, and was level for the full year compared
to 1997.
Anheuser-Busch domestic beer shipments grew 3.5% during 1998, reflecting
strong retail demand. Overall, sales-to-retailers were up 4% for 1998.
Combined Bud and Bud Light sales-to-retailers increased 3.4% for 1998
compared to 1997. This growth was led by Bud Light, which had its seventh
consecutive double-digit growth year.
The company's domestic market share (excluding exports) for 1998 was 46.8%,
an increase of 1.0 market share point over 1997 market share of 45.8%.
Including exports, the company's share of U.S. shipments was 46.6% vs. 45.5%
for 1997.
International Anheuser-Busch brand volume (excluding Modelo) was up 0.6% in
1998 compared to 1997. Strong Budweiser sales performances in the United
Kingdom, Ireland, Continental Europe and Canada were mostly offset by sales
declines in Asia.
In Japan, Anheuser-Busch performance was impacted by lower industry sales
due to an economic recession and the introduction of a tax-advantaged
"happoshu" beer category. Anheuser-Busch introduced its own happoshu beer and
significantly restructured its sales force. The restructuring resulted in a
pretax charge of about $9 million, or $.01 per share after-tax, in the fourth
quarter 1998.
In June 1998, the company restructured its alliance with Labatt Brewing
Company and granted Labatt perpetual rights to brew and sell the Budweiser
and Bud Light brands in Canada. In return, Labatt significantly increased
marketing support behind the two brands which provides Anheuser-Busch with a
greater share of associated profits. Budweiser is currently the
third-largest-selling beer in Canada.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 29
--
<PAGE> 6
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
SALES -- 1997 VS. 1996
Gross sales were $12.8 billion and net sales were $11.1 billion in 1997,
representing increases of $210 million and $182 million, respectively, or
1.7%, compared to 1996. The difference between gross and net sales for 1997
represents $1.77 billion of beer excise taxes.
The primary factors responsible for the sales increases were higher
domestic and international beer sales volume, partially offset by increased
price discounting in the domestic beer market, and increased sales from the
company's theme park operations. Theme park operations experienced an
attendance increase of approximately 7% in 1997 vs. 1996 and also attained
higher in-park per capita revenues.
The increase in domestic volume during 1997 was driven by Bud Light, which
was up approximately 10%, and improved Budweiser trends. Total Bud Family
sales-to-retailers were up almost 2% in 1997 compared to 1996.
Anheuser-Busch's domestic market share (excluding exports) for 1997 was
45.8%, compared to 45.7% in 1996. Anheuser-Busch's share of shipments
(including exports) for 1997 was 45.5%, level compared with 1996 share.
Operating performance for 1997 was significantly impacted by aggressive
price discounting initiated by competition, which began in the first quarter
and became progressively deeper throughout the year. Anheuser-Busch responded
with comparable levels of discounting to keep its brands price-competitive
and protect its market share, and the pricing environment stabilized by the
end of the year.
Volume trends were favorable for the company's core premium brands in 1997
as consumers traded up to premium and higher-priced brands. Bud Light
continued its double-digit growth. The company's quality initiatives,
including a freshness advertising campaign and renewed focus on
Anheuser-Busch's heritage of quality and excellence, enhanced the company's
quality perception among consumers.
Total international beer volume growth was strong for 1997, led by combined
Budweiser sales volume increases in China and the United Kingdom of 44% for
the full year. Significant gains in volume produced overseas in 1997 were
partially offset by reduced exports from the company's U.S. facilities due in
part to discontinuing Kirin Ice shipments to Japan and lower shipments of
Michelob Classic Dark to Taiwan.
Total international volume, excluding equity partner volume, was up 13.4%
for the year. Budweiser volume outside the United States was up 18.3% for
1997 vs. 1996.
COST OF PRODUCTS AND SERVICES
The company continuously strives to drive operating costs out of its
system. Brewery modernizations have yielded long-term savings through reduced
beer packaging and shipping costs and reduced maintenance and equipment
replacement costs. The company's focused production methods and wholesaler
support centers concentrate small-volume brand and package production at
three breweries to create production efficiencies, reduce costs and enhance
responsiveness to changing consumer brand/package preferences. Also, the
company works with its network of wholesalers to reduce distribution costs
through better systemwide coordination.
Cost of products and services was $7.25 billion in 1999, an increase of $92
million, or 1.3%, vs. 1998. The increase in the cost of products and services
in 1999 is primarily due to costs associated with higher domestic beer volume
and higher costs at the company's packaging operations.
Gross profit as a percentage of net sales for 1999 was 38.0%, an increase
of 1.7 percentage points vs. 1998, primarily reflecting increased domestic
revenue per barrel due to the company's focus on increasing beer profit
margins.
Cost of products and services was $7.16 billion in 1998, an increase of $66
million, or 0.9%, compared to 1997. The change in the cost of products and
services in 1998 is primarily due to increased beer volume, the change in the
method of accounting for the Stag Brewery operation (consolidation in 1998
vs. equity accounting in 1997) and improved brewery operating efficiencies.
In 1997, before the Stag Brewing Company Ltd. was 100% owned by
Anheuser-Busch, the company accounted for its 50% share of operations under
the equity method, with excise taxes paid on beer sold included in the cost of
beer purchased from Stag. In 1998, under full consolidation accounting, excise
taxes are shown as a deduction from gross sales.
Gross profit as a percentage of net sales was 36.3% for 1998, an increase
of 0.4 percentage points vs. 1997, primarily reflecting productivity
improvements.
Cost of products and services in 1997 was $7.10 billion, an increase of
1.9% compared to 1996. The increase in cost of products and services in 1997
is attributable to slightly higher materials costs plus costs associated with
increased beer sales volume and theme park attendance. Gross profit as a
percentage of net sales was 35.9% for 1997, a decrease of 0.1 percentage
points compared to 36.0% for 1996, due to slightly lower revenue per barrel
in 1997.
30 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 7
MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES
Marketing, distribution and administrative expenses for 1999 were $2.15
billion compared with $1.96 billion for 1998, an increase of $189 million, or
9.7%. The increase is primarily attributable to higher domestic marketing and
sales promotion spending in support of the Bud Family, increased spending on
consumer awareness and education programs and higher general and
administrative costs.
Marketing, distribution and administrative expenses for 1998 increased $42
million, or 2.2%, compared to 1997 expenses of $1.92 billion. The increase is
primarily due to higher domestic and international marketing expense in
support of premium brands, primarily the Bud Family, partially offset by
reduced general and administrative costs.
Marketing, distribution and administrative expenses for 1997 were up $26
million, or 1.4%, compared with $1.89 billion for 1996. The increase for 1997
is principally due to marketing costs related to the company's international
beer activity, costs related to increased theme park attendance and increased
administrative expenses, partially offset by lower promotional spending
compared to 1996 when the Summer Olympic Games were held in Atlanta.
OPERATING INCOME
Operating income represents the measure of the company's financial
performance before net interest cost, other nonoperating items and equity
income. Operating income for 1999 was $2.30 billion, an increase of $177
million, or 8.3%, compared to 1998. The increase in operating income for the
year is primarily due to strong domestic beer performance driven by higher
domestic beer sales volume and revenue per barrel.
Theme park operating results were up slightly from 1998, excluding costs
associated with the start-up of the Discovery Cove park in Orlando, which
will open in summer 2000.
Performance of the company's packaging operations was level with the prior
year.
Net income for Anheuser-Busch's international beer segment was up 59% in
1999 due to Modelo's strong performance and Anheuser-Busch's increased
ownership levels. However, international beer operating results, which
exclude Modelo, declined for the year to a loss of $19.9 million, including
one-time costs associated with the termination of the Budweiser production
joint venture in Brazil, the impact of a bottle recall in Europe and the
conversion of the company's Japan joint venture operation into an exclusive
license agreement.
Operating income for 1998 was $2.13 billion, an increase of $72 million, or
3.5%, over 1997. The increase in operating income for 1998 was primarily due
to higher domestic beer sales volume and higher operating results from can
manufacturing and entertainment, partially offset by weaker results from
international beer operations.
OPERATING INCOME
(GRAPH)
Packaging operating income improved in 1998 vs. the prior year, due to
higher soft drink can volume and reduced costs. Despite weakness in Florida
tourism, entertainment operations had a slight improvement in operating
income compared to 1997, due to higher in-park spending. International beer
operating income declined vs. 1997 primarily due to weakness in Japan.
Operating income for 1997 was $2.05 billion, an increase of $24 million, or
1.2%, compared to 1996. The increase was primarily due to increased beer
sales volume, continued brewery operating efficiencies and improved
performance by the company's theme park operations. Domestic revenue per
barrel for 1997 was down slightly vs. the 1996 level.
Entertainment operations had strong attendance and profitability and
contributed $115 million in operating income in 1997. International beer
profitability was down in 1997 compared to 1996, primarily due to continued
significant marketing expenditures for Budweiser. Packaging operations
contributed $121 million in operating profits in 1997, down slightly when
compared with 1996 performance.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 31
--
<PAGE> 8
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
NET INTEREST COST
Net interest cost (interest expense less interest income) was $303.5
million for 1999, $285.7 million for 1998 and $253.3 million for 1997,
representing increases of 6.2%, 12.8% and 13.4%, respectively, compared to
prior years. These increases reflect higher average outstanding debt balances
during the years. See the Liquidity and Cash Flows section of this discussion
for additional information.
INTEREST CAPITALIZED
Interest capitalized for 1999 decreased $7.8 million, to $18.2 million,
compared to 1998. Interest capitalized declined $16.1 million in 1998, to
$26.0 million, while interest capitalized increased $6.6 million, to $42.1
million, in 1997 compared to 1996. Capitalized interest amounts fluctuate
depending on construction-in-progress balances which change due to capital
spending and the timing of project completions. Interest capitalized declined
in 1999 and 1998 as the company completed its long-term brewery modernization
projects.
OTHER INCOME/EXPENSE, NET
Other income/expense, net includes numerous items of a nonoperating nature
that do not have a material impact on the company's consolidated results of
operations, either individually or in total. The company had net other
expense of $9.4 million in 1999, $13.0 million in 1998 and $9.3 million in
1997.
EQUITY INCOME, NET
The company began recognizing its pro rata equity interest in the net
earnings of Grupo Modelo under the equity method of accounting in 1997.
Equity income, net of tax, increased $72.5 million, to $157.5 million in
1999. The increase in equity income is due to Modelo's strong underlying
operating performance, and Anheuser-Busch's 50.2% equity stake in Modelo
throughout 1999, compared to 37% ownership for the first nine months and
50.2% for the last quarter 1998. Additionally, equity income for 1998 was
adversely impacted by Mexican peso depreciation and hyperinflation
accounting. Hyperinflation accounting ceased January 1, 1999.
The company recognized equity income, net of tax, of $85.0 million during
1998, compared to $50.3 million in 1997. The increase in equity income in
1998 was due to the company's larger equity stake in Modelo and the strong
underlying sales volume and operating results for Modelo, partially offset by
hyperinflation accounting.
For 1998, equity income percentages compare with 17.7% ownership for the
first five months of 1997 and a 37% ownership interest thereafter.
NET INCOME
NET INCOME/DIVIDENDS
(GRAPH)
Net income was $1.40 billion in 1999, an increase of $169 million, or
13.7%, vs. 1998. Net income was $1.23 billion for 1998, an increase of $54
million, or 4.6%, compared to 1997 net income (before accounting change) of
$1.18 billion, which increased 5.0% vs. net income (excluding the gain on the
sale of the St. Louis Cardinals) for 1996.
The company's effective tax rate was 38.0% in 1999 and 1998 and 38.4% in
1997. The decline in 1998 was principally due to lower state and foreign
taxes and lower nondeductible costs.
32 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 9
DILUTED EARNINGS PER SHARE
Diluted earnings per share were $2.94 for 1999, an increase of 16.2% vs.
1998 diluted earnings per share. The 16.2% earnings per share growth in 1999
was the highest growth rate of the 1990s.
Diluted earnings per share for 1998 were $2.53, an increase of $.17, or
7.2%, compared to 1997 diluted earnings per share (before accounting change)
of $2.36, which had increased 6.8% compared to 1996 (excluding the Cardinals
gain). Diluted earnings per share benefit from the company's ongoing share
repurchase program. The company repurchased almost 19 million common shares
in 1999. See Note 7 for additional information regarding share repurchases.
DILUTED EARNINGS
PER SHARE
(GRAPH)
EMPLOYEE-RELATED COSTS
Employee-related costs totaled $1.88 billion in 1999, an increase of $40
million, or 2.2%, vs. 1998 costs of $1.84 billion. Employee-related costs
during 1998 increased $46 million, or 2.6%, vs. 1997 costs of $1.79 billion.
The changes in employee-related costs reflect normal increases in salaries,
wages and benefit levels, partially offset by lower combined pension and
retiree medical expenses.
Salaries and wages comprise the majority of employee-related costs and
totaled $1.54 billion in 1999, an increase of $22 million, or 1.4% vs. 1998.
Salaries and wages totaled $1.52 billion in 1998, an increase of $40 million,
or 2.7%, compared to $1.48 billion paid in 1997. The remainder of
employee-related costs consists of pension, life insurance, and health care
benefits and payroll taxes.
EMPLOYEE-RELATED
COSTS
(GRAPH)
Full-time employees numbered 23,645, 24,344 and 24,326 at December 31,
1999, 1998 and 1997, respectively.
TAXES
The company is significantly impacted by federal, state and local taxes,
including beer excise taxes. Taxes applicable to 1999 operations (not
including the many indirect taxes included in materials and services
purchased) totaled $3.0 billion, an increase of $114 million, or 3.9%, vs.
1998 total taxes of $2.89 billion, and highlight the burden of taxation on
the company and the brewing industry in general. Taxes in 1998 increased 8.1%
compared to 1997 total taxes of $2.67 billion, which decreased $8 million, or
0.3%, compared to 1996.
The increases in taxes in 1999 and 1998 are primarily due to higher excise
taxes on increased beer volume. Taxes for 1998 also reflect the full
accounting consolidation of Stag operations compared to 1997. The decrease in
1997 compared to 1996 is primarily attributable to reduced income taxes due
to lower pretax income and a lower effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The company's primary sources of liquidity are cash provided from
operations and financing activities. Principal uses of cash are capital
expenditures, business investments, share repurchases and dividends.
Information on the company's consolidated cash flows (categorized by
operating activities, financing activities and investing activities) for the
years 1999, 1998 and 1997 is presented in the Consolidated Statement of Cash
Flows and Note 11.
OPERATING CASH FLOW
(GRAPH)
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 33
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<PAGE> 10
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
OPERATING CASH FLOW
Anheuser-Busch's strong financial profile allows it to pursue its growth
strategies while providing substantial direct returns to shareholders.
Accordingly, the company has established well-defined priorities for its
operating cash flow:
* Reinvest in core businesses to achieve profitable growth. To enhance
shareholder value, the company will continue to make investments to improve
efficiency and capacity in its existing operations, and make selected
investments in international brewers.
* Make substantial cash payments directly to shareholders through consistent
dividend growth and the repurchase of common shares each year. The company
has paid cash dividends each of the last 66 years, and has repurchased
approximately 3% of outstanding shares annually for the last 10 years.
There was a working capital deficit of $(386.6) million at December 31,
1999, compared to a working capital deficit of $(89.9) million at December
31, 1998 and working capital of $83.2 million at December 31, 1997.
CAPITAL EXPENDITURES
During the next five years, the company will continue capital expenditure
programs designed to take advantage of growth and productivity improvement
opportunities for its beer, packaging and entertainment operations. The
company has a formal and intensive review procedure for the authorization of
capital expenditures. The most important measure of acceptability of a
capital project is its projected discounted cash flow return on investment.
Cash flow from operating activities is projected to exceed the company's
funding requirements for anticipated capital expenditures. However, the
combination of capital spending, dividend payments and share repurchases,
plus possible additional investments in international brewers, may require
external financing. The nature, extent and timing of external financing will
vary depending upon the company's evaluation of existing market conditions
and other economic factors.
Total capital expenditures in 1999 amounted to $865.3 million, an increase
of $47.8 million, or 5.8%, compared to 1998 capital spending of $817.5
million. Capital expenditures over the past five years totaled $4.9 billion.
The company expects capital expenditures in 2000 of approximately $1.0
billion and anticipates capital expenditures during the five-year period 2000
- - 2004 approximating $4 billion.
CAPITAL EXPENDITURES/
DEPRECIATION & AMORTIZATION
(GRAPH)
SHARE REPURCHASE
See Note 7 for a discussion of share repurchase activity.
DIVIDENDS
Cash dividends paid to common shareholders were $544.7 million in 1999 and
$521.0 million in 1998. Dividends on common stock are paid in the months of
March, June, September and December of each year. In the third quarter 1999,
effective with the September dividend, the Board of Directors increased the
quarterly dividend rate by 7.1%, from $.28 to $.30 per share of common stock.
This increased annual dividends per common share 7.4%, to $1.16 in 1999,
compared with $1.08 per common share in 1998. In 1998, dividends were $.26
per share for the first two quarters and $.28 per share for the last two
quarters.
34 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 11
FINANCING ACTIVITIES
The company utilizes Securities and Exchange Commission "shelf"
registration statements to provide flexibility and efficiency when obtaining
long-term financing. At December 31, 1999, a total of $690 million of debt
was available for issuance under existing registrations.
Debt increased a net $404.3 million in 1999, compared to an increase of
$353.0 million in 1998. The change in debt during these years is detailed
below, by key component.
<TABLE>
INCREASES IN DEBT -- $994.7 million in 1999 compared to $451.5 million in
1998, as follows:
<CAPTION>
YEAR DESCRIPTION AMOUNT INTEREST RATE
<S> <C> <C> <C>
1999 LONG-TERM NOTES $300.0 5.75%, FIXED
COMMERCIAL PAPER $627.1 5.1%, WEIGHTED
AVERAGE
INDUSTRIAL REVENUE
BONDS $36.1 VARIOUS FIXED RATES
MISCELLANEOUS $31.5 VARIOUS FIXED RATES
1998 Long-term notes $300.0 $100.0 million each at
5.125%, 5.375%
and 5.65%, fixed
Debentures $100.0 6.5%, fixed
Commercial paper $23.3 5.5%, weighted average
Industrial revenue bonds $13.8 Various fixed rates
Miscellaneous $14.4 Various fixed rates
- --------------------------------------------------------------------------
REDUCTIONS IN DEBT -- $590.4 million in 1999 versus $98.5 million in 1998,
as follows:
<CAPTION>
YEAR DESCRIPTION AMOUNT INTEREST RATE
<S> <C> <C> <C>
1999 DUAL CURRENCY NOTES $262.4 QUARTERLY FLOATING RATE
LONG-TERM NOTES $250.0 8.75%, FIXED
DEBENTURES $23.0 8.5%, FIXED
MEDIUM-TERM NOTES $15.0 7.7%, WEIGHTED
AVERAGE
ESOP DEBT
GUARANTEE $36.7 8.25%, FIXED
MISCELLANEOUS $3.3 VARIOUS FIXED RATES
1998 Debentures $45.0 $22.5 million each at
8.5% and 8.625%, fixed
Medium-term notes $15.0 6.3%, weighted average
ESOP debt guarantee $34.9 8.25%, fixed
Miscellaneous $3.6 Various fixed rates
- --------------------------------------------------------------------------
</TABLE>
In addition to long-term debt financing, the company has access to funds
through the utilization of commercial paper and its $1 billion revolving bank
credit agreement that expires August 2001. The credit agreement provides the
company with an immediate and continuing source of liquidity. No borrowings
have been made under the credit agreement since its inception. See Note 4 for
additional discussion of debt.
The company's ratio of debt to total capitalization was 56.6% and 52.8% at
December 31, 1999 and 1998, respectively.
The company's cash flow to total debt ratio was $39.8% in 1999, 40.3% in
1998, and 42.5% in 1997.
The company's fixed charge coverage ratio was 6.9x, 6.8x, and 7.3x for the
years ended December 31, 1999, 1998 and 1997, respectively.
COMMON STOCK
At December 31, 1999, common stock shareholders of record numbered 60,100
compared with 62,110 at the end of 1998. See Note 7 for a summary of common
stock activity.
SHAREHOLDERS EQUITY/DEBT
(GRAPH)
PRICE RANGE OF COMMON STOCK
The company's common stock is listed on the New York Stock Exchange under
the symbol "BUD." The following table summarizes 1999 quarterly high and low
closing prices for BUD.
<TABLE>
PRICE RANGE OF ANHEUSER-BUSCH COMMON STOCK (BUD)
<CAPTION>
1999 1998
QUARTER HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
First 78-7/16 65-3/16 47-1/2 43-7/16
Second 78-7/8 68-15/16 49-1/4 45-7/16
Third 81-5/8 69-11/16 57-3/8 46-3/4
Fourth 76-3/8 66-11/16 68-1/4 52-1/2
- ------------------------------------------------------------------
</TABLE>
The closing price of the company's common stock at December 31, 1999 and
1998 was $70-7/8 and $65-5/8, respectively. The book value of each common
share of stock at December 31, 1999 was $8.50, compared to $8.84 at December
31, 1998.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 35
--
<PAGE> 12
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
SYSTEMS-RELATED YEAR 2000 COSTS
The company experienced no operating interruptions or other disturbances
due to Year 2000 events. The company resolved its Year 2000 date recognition
issues through either the replacement of existing systems with Year
2000-ready systems or by reprogramming existing systems.
All costs related to the assessment, reprogramming and testing of systems
for the Year 2000 effort were expensed as incurred. The company incurred Year
2000-related reprogramming costs of $11.8 million in 1999, $15.5 million in
1998 and $6.6 million in 1997, and expects to incur costs of approximately $2
million in 2000 to complete its efforts.
RISK MANAGEMENT
In the ordinary course of business, Anheuser-Busch is exposed to foreign
currency exchange, interest rate and commodity price risks. These exposures
primarily relate to the sale of product to foreign customers, purchases from
foreign suppliers, royalty receipts from license and contract brewers,
acquisition of raw materials from both domestic and foreign suppliers, and
changes in interest rates. The company utilizes derivative financial
instruments, including forward exchange contracts, futures contracts, swaps
and options to manage certain of these exposures that it considers practical
to do so. Anheuser-Busch has well-established policies and procedures
governing the use of derivatives. The company hedges only firm commitments or
anticipated transactions in the normal course of business and corporate
policy prohibits the use of derivatives for speculation, including the sale
of free-standing instruments. The company neither holds nor issues financial
instruments for trading purposes.
Specific hedging strategies depend on several factors, including the
magnitude and volatility of the exposure, offset through contract terms, cost
and availability of appropriate hedging instruments, the anticipated time
horizon, commodity basis, opportunity cost and the nature of the item being
hedged. The company's overall risk management goal is to strike a balance
between managing its exposure to market volatility and obtaining the most
favorable transaction costs possible within the constraints of its financial
objectives. Exposures the company currently is unable to hedge, or has
elected to substantially not hedge, primarily relate to its floating rate
debt, net investments in foreign-currency-denominated operations and
translated earnings of foreign subsidiaries.
Derivatives are either exchange-traded instruments which are highly liquid,
or over-the-counter instruments transacted with financial institutions. No
credit loss is anticipated as the counterparties to over-the-counter
instruments generally have long-term ratings from Standard and Poor's or
Moody's no lower than A+ or A1, respectively. Additionally, counterparty fair
value positions favorable to Anheuser-Busch and in excess of certain
thresholds are collateralized with cash, U.S. Treasury securities or letters
of credit. Anheuser-Busch has reciprocal collateralization responsibilities
for fair value positions unfavorable to the company and in excess of certain
thresholds. Collateral amounts at December 31, 1999 were not material.
The fair value of derivative financial instruments is the estimated amount
the company would receive or have to pay when terminating any contracts. The
company also monitors the effectiveness of its hedging structures, based
either on cash offset between changes in the value of the underlying exposure
and changes in the value of the derivative, or by the correlation between the
price of the underlying exposure and the pricing on which the value of the
derivative is based.
Following is a volatility analysis of the company's derivatives portfolio
that indicates potential changes in the fair value of the company's
derivative holdings under certain market movements. The company applies
sensitivity analysis for commodity price exposures and value-at-risk (VAR)
analysis for foreign currency and interest rate exposures.
VOLATILITY ANALYSIS
<TABLE>
ESTIMATED FAIR VALUE VOLATILITY AT DEC. 31, 1999 (in millions)
<S> <C>
Foreign Currency Risk (VAR):
Forwards, Options $(0.8)
Interest Rate Risk (VAR):
Swaps $(0.3)
Commodity Price Risk (Sensitivity):
Futures, Swaps, Options $(6.6)
- --------------------------------------------------------------------------
</TABLE>
VAR forecasts fair value changes using a statistical model (Monte Carlo
simulation method) which incorporates historical correlations among various
currencies and interest rates. The VAR model assumes the company could
liquidate its currency and interest rate positions in a single day (one-day
holding period). The volatility figures provided represent the maximum
one-day loss each portfolio could experience for 19 out of every 20 trading
days (95% confidence level), based on history.
36 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 13
The sensitivity analysis for commodities reflects the impact of a
hypothetical 10% adverse change in the market price for the company's
principal commodities.
The volatility of foreign currencies, interest rates and commodity prices
are dependent on many factors that cannot be forecasted with accuracy.
Therefore, changes in fair value over time could differ substantially from
the illustration.
The preceding derivatives volatility analysis ignores changes in the value
of the underlying hedged transactions. Because the company does not hold or
trade derivatives for speculation or profit, it seeks to establish only
highly effective hedging relationships. See Note 3 for additional
information.
INTRODUCTION OF THE EURO
The initial phase of the three-year phase-in of the new common currency of
the European Economic and Monetary Union, the "euro," began on January 1,
1999. Prior to introduction, the company made appropriate arrangements with
key financial institutions to ensure smooth handling of euro receipts and
disbursements.
The company's financial systems accommodated the euro introduction. Full
systems euro readiness will be achieved through planned systems upgrades
and/or replacement prior to the end of the euro transition period in 2001.
The company is able to denominate agreements and hedges in euros as
necessary. The company cannot readily predict what impact, if any, single
currency pricing will have on its European operations.
SIGNIFICANT NON-U.S. EQUITY INVESTMENTS
GRUPO MODELO
In September 1998, the company completed the purchase of an additional
13.25% of Diblo, S.A. de C.V., the operating subsidiary of Grupo Modelo, S.A.
de C.V., Mexico's largest brewer and leading exporter of beer. The purchase
price was $557 million, bringing Anheuser-Busch's total investment in Modelo
to $1.6 billion. The additional investment increased Anheuser-Busch's total
direct and indirect holdings in Diblo to 50.2%. The increase in ownership
does not give Anheuser-Busch voting or other effective control of either
Grupo Modelo or Diblo and, accordingly, the company continues to account for
its Modelo investment on the equity basis.
The economic benefit of the company's Modelo investment can be measured in
two ways--Anheuser-Busch's pro rata share in the earnings of Modelo (equity
income) and the excess of the fair value of the investment over its carrying
value. The excess of fair value over carrying value, based on Grupo Modelo's
closing stock price at December 31, 1999, was $4.0 billion. Although this
amount is appropriately not reflected in the company's income statement or
balance sheet, it represents economic value to Anheuser-Busch.
Due to the structure and composition of Anheuser-Busch's initial
investment, the company was not required to adjust the carrying amount of its
Modelo investment under FAS 115 while on the cost basis of accounting from
1993 to 1996. Additionally, the initial investment was configured such that
the company's return was largely protected against a decline in the value of
the Mexican peso.
The company adopted the equity method of accounting when ownership was
increased to 37% in May 1997, which gave Anheuser-Busch additional minority
rights and increased representation on the Grupo Modelo Board of Directors.
At that time, the company adjusted the carrying value of its Modelo
investment by $189.4 million to reflect the impact of cumulative peso
depreciation from 1993 to 1996, the period for which the investment was
accounted for under the cost method of accounting. The offset to this
translation adjustment was the foreign currency translation component of
other comprehensive income in shareholders equity.
Throughout 1997 and 1998, Mexico was considered hyperinflationary for
accounting purposes. Under hyperinflation accounting, the company effectively
recognized in earnings the relative impact of Mexican peso depreciation on
its investment during 1997 and 1998, which was unfavorable. The Mexican
economy ceased to be hyperinflationary for accounting purposes on January 1,
1999. Translation adjustments are now appropriately reflected in equity
rather than earnings. See Note 2 for additional discussion.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 37
--
<PAGE> 14
MANAGEMENT'S DISCUSSION & ANALYSIS OF
OPERATIONS & FINANCIAL CONDITION
ANTARCTICA
In April 1996, the company purchased a 5% equity stake in a subsidiary,
ANEP, that controlled 75% of the operations of Companhia Antarctica Paulista
(Antarctica), one of Brazil's leading brewers. The investment agreement
provided the company with options allowing it to increase its investment to
approximately 30% of ANEP which expired in April 2002. In July 1999,
Anheuser-Busch and Antarctica jointly announced the end of their equity
partnership. See Note 2 for additional discussion.
CORPORATE MATTERS
LABOR NEGOTIATIONS
On August 7, 1999, Teamster-represented employees at the company's 12 U.S.
breweries approved the national portion of a new contract offer by a margin
of 59% to 41%. The proposed agreement had been endorsed by the Teamsters'
International leadership and called for a new contract which would expire
February 29, 2004. Local agreements, however, remain unresolved in several
breweries. Both the company and the Teamsters have previously stated that
there can be no final agreement, and the new contract cannot go into effect,
until agreement is reached on all national and local issues. As a result, the
company continues to operate its breweries under the terms of the offer
implemented in September 1998. The company remains committed to operate its
breweries in the event of any work stoppages.
Proposed terms covering local issues were approved by employees at
breweries in Columbus, OH, Williamsburg, VA and Baldwinsville, NY, and
certain locals in St. Louis, MO, Newark, NJ and Los Angeles, CA. Local
supplements previously had been approved by employees in Houston, TX,
Fairfield, CA and Merrimack, NH. Local terms were rejected in Ft. Collins,
CO, Cartersville, GA and Jacksonville, FL, and at certain locals in St.
Louis, MO, Newark, NJ and Los Angeles, CA.
The terms of the proposed agreement include wage and benefit increases, as
well as provisions to support productivity improvement, promote workplace
flexibility, reduce absenteeism, improve the grievance procedure and
institute a more effective drug-testing program. Additionally, Anheuser-Busch
would reaffirm its commitment, contingent on the new contract going into
effect, to keep all 12 of its U.S. breweries open during the life of the
contract, barring an unforeseen event, providing its Teamster-represented
employees with unprecedented job security.
ENVIRONMENTAL MATTERS
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. None of the Environmental Protection Agency (EPA)
designated clean-up sites for which Anheuser-Busch has been identified as a
Potentially Responsible Party (PRP) would have a material impact on the
company's consolidated financial statements.
The company is strongly committed to environmental protection. Its
Environmental Management System provides specific guidance for how the
environment must be factored into business decisions and mandates special
consideration of environmental issues in conjunction with other business
issues when any of the company's facilities or business units plans capital
projects or changes in processes. Anheuser-Busch also encourages its
suppliers to adopt similar environmental management practices and policies.
38 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 15
MANAGEMENT'S 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.
These statements are prepared in accordance with generally accepted
accounting principles.
The company maintains accounting and reporting systems, supported by a
system of internal accounting control, 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 1999, the company's internal auditors,
in conjunction with PricewaterhouseCoopers LLP, the company's independent
accountants, performed a comprehensive review of the adequacy of the
company's internal accounting control system. Based on that 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
nonmanagement directors, oversees the company's financial reporting and
internal control systems, recommends selection of the company's independent
accountants and meets with the independent accountants and internal auditors
to review the overall scope and specific plans for their respective audits.
The Committee held four meetings during 1999. A more complete description of
the functions performed by the Audit Committee can be found in the company's
proxy statement.
REPORT OF INDEPENDENT ACCOUNTANTS
800 Market Street
St. Louis, MO 63101
[PRICEWATERHOUSECOOPERS LOGO]
February 1, 2000
To the Shareholders and Board of Directors
of Anheuser-Busch Companies, Inc.
We have audited the accompanying Consolidated Balance Sheet of
Anheuser-Busch Companies, Inc. and its subsidiaries as of December 31, 1999
and 1998, 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, 1999. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 1 and Note 2 to the Consolidated Financial
Statements, in 1997 the company respectively changed its method of accounting
for business process re-engineering costs incurred in connection with
information technology transformation projects, and adopted the equity method
of accounting for its investment in Grupo Modelo, S.A. de C.V. and its
operating subsidiary, Diblo, S.A. de C.V.
/s/ PriceWaterhouseCoopers LLP
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 39
--
<PAGE> 16
<TABLE>
CONSOLIDATED BALANCE SHEET
Anheuser-Busch Companies and Subsidiaries
<CAPTION>
YEAR ENDED DECEMBER 31 (in millions) 1999 1998
<S> <C> <C>
ASSETS
Current Assets:
Cash and marketable securities $ 152.1 $ 224.8
Accounts and notes receivable, less allowance for
doubtful accounts of $6.4 in 1999 and $5.5 in 1998 629.0 610.1
Inventories:
Raw materials and supplies 378.2 362.9
Work in process 84.7 90.7
Finished goods 160.9 169.8
Total inventories 623.8 623.4
Other current assets 195.7 182.1
------------------------------------
Total current assets 1,600.6 1,640.4
Investments in affiliated companies 2,012.5 1,880.6
Other assets 1,062.7 1,114.3
Plant and equipment, net 7,964.6 7,849.0
------------------------------------
TOTAL ASSETS $12,640.4 $12,484.3
====================================
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Accounts payable $ 932.6 $ 905.7
Short-term debt 242.3 --
Accrued salaries, wages and benefits 263.0 256.3
Accrued taxes 164.2 193.6
Other current liabilities 385.1 374.7
------------------------------------
Total current liabilities 1,987.2 1,730.3
------------------------------------
Postretirement benefits 506.4 515.8
------------------------------------
Long-term debt 4,880.6 4,718.6
------------------------------------
Deferred income taxes 1,344.7 1,303.6
------------------------------------
Common Stock and Other Shareholders Equity:
Common stock, $1.00 par value, authorized 1.6 billion shares 716.1 712.7
Capital in excess of par value 1,241.0 1,117.5
Retained earnings 9,181.2 8,320.7
Accumulated other comprehensive income:
Foreign currency translation adjustment (175.0) (205.6)
------------------------------------
10,963.3 9,945.3
Treasury stock, at cost (6,831.3) (5,482.1)
ESOP debt guarantee (210.5) (247.2)
------------------------------------
3,921.5 4,216.0
------------------------------------
Commitments and contingencies -- --
------------------------------------
TOTAL LIABILITIES AND EQUITY $12,640.4 $12,484.3
====================================
The Notes on pages 44-55 of this report are an integral component of the
company's Consolidated Financial Statements.
</TABLE>
40 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 17
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
Anheuser-Busch Companies and Subsidiaries
<CAPTION>
YEAR ENDED DECEMBER 31 (in millions) 1999 1998 1997
<S> <C> <C> <C>
Sales $13,723.3 $13,207.9 $12,832.4
Excise taxes (2,019.6) (1,962.1) (1,766.2)
--------------------------------------------------
Net sales 11,703.7 11,245.8 11,066.2
Cost of products and services (7,254.4) (7,162.5) (7,096.9)
--------------------------------------------------
Gross profit 4,449.3 4,083.3 3,969.3
Marketing, distribution and administrative expenses (2,147.0) (1,958.0) (1,916.3)
--------------------------------------------------
Operating income 2,302.3 2,125.3 2,053.0
Interest expense (307.8) (291.5) (261.2)
Interest capitalized 18.2 26.0 42.1
Interest income 4.3 5.8 7.9
Other expense, net (9.4) (13.0) (9.3)
--------------------------------------------------
Income before income taxes 2,007.6 1,852.6 1,832.5
Provision for income taxes (762.9) (704.3) (703.6)
Equity income, net of tax 157.5 85.0 50.3
--------------------------------------------------
Income before cumulative effect of accounting change 1,402.2 1,233.3 1,179.2
Cumulative effect of accounting change, net of tax benefit of $6.2 -- -- (10.0)
--------------------------------------------------
Net income $ 1,402.2 $ 1,233.3 $ 1,169.2
==================================================
Basic earnings per share:
Income before cumulative effect of accounting change $ 2.99 $ 2.56 $ 2.39
Cumulative effect of accounting change -- -- (.02)
--------------------------------------------------
Net income $ 2.99 $ 2.56 $ 2.37
==================================================
Diluted earnings per share:
Income before cumulative effect of accounting change $ 2.94 $ 2.53 $ 2.36
Cumulative effect of accounting change -- -- (.02)
--------------------------------------------------
Net income $ 2.94 $ 2.53 $ 2.34
==================================================
The Notes on pages 44-55 of this report are an integral component of the
company's Consolidated Financial Statements.
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 41
--
<PAGE> 18
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Anheuser-Busch Companies and Subsidiaries
<CAPTION>
YEAR ENDED DECEMBER 31 (in millions, except per share) 1999 1998 1997
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of period $ 712.7 $ 709.3 $ 705.8
Shares issued under stock plans 3.4 3.4 3.5
-------------------------------------------------
Balance, end of period $ 716.1 $ 712.7 $ 709.3
=================================================
CAPITAL IN EXCESS OF PAR VALUE
Balance, beginning of period $ 1,117.5 $ 1,017.0 $ 929.2
Shares issued under stock plans 123.5 100.5 87.8
=================================================
Balance, end of period $ 1,241.0 $ 1,117.5 $ 1,017.0
=================================================
RETAINED EARNINGS
Balance, beginning of period $ 8,320.7 $ 7,604.9 $ 6,924.5
Net income 1,402.2 1,233.3 1,169.2
Common dividends paid (per share: 1999 - $1.16;
1998 - $1.08; 1997 - $1.00) (544.7) (521.0) (492.6)
Shares issued under stock plans 3.0 3.5 3.8
-------------------------------------------------
Balance, end of period $ 9,181.2 $ 8,320.7 $ 7,604.9
=================================================
TREASURY STOCK
Balance, beginning of period $(5,482.1) $(4,793.3) $(4,206.2)
Treasury stock acquired (1,349.2) (688.8) (587.1)
-------------------------------------------------
Balance, end of period $(6,831.3) $(5,482.1) $(4,793.3)
=================================================
ESOP DEBT GUARANTEE
Balance, beginning of period $ (247.2) $ (282.1) $ (315.4)
Annual debt service 36.7 34.9 33.3
-------------------------------------------------
Balance, end of period $ (210.5) $ (247.2) $ (282.1)
=================================================
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of period $ (205.6) $ (214.0) $ (8.8)
Foreign currency translation adjustment 30.6 8.4 (205.2)
-------------------------------------------------
Balance, end of period $ (175.0) $ (205.6) $ (214.0)
=================================================
TOTAL SHAREHOLDERS EQUITY $ 3,921.5 $ 4,216.0 $ 4,041.8
=================================================
COMPREHENSIVE INCOME
Net income $ 1,402.2 $ 1,233.3 $ 1,169.2
Foreign currency translation adjustment 30.6 8.4 (205.2)
-------------------------------------------------
TOTAL COMPREHENSIVE INCOME $ 1,432.8 $ 1,241.7 $ 964.0
=================================================
The Notes on pages 44-55 of this report are an integral component of the
company's Consolidated Financial Statements.
</TABLE>
42 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 19
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Anheuser-Busch Companies and Subsidiaries
<CAPTION>
YEAR ENDED DECEMBER 31 (in millions) 1999 1998 1997
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,402.2 $ 1,233.3 $ 1,169.2
Cumulative effect of accounting change -- -- 10.0
-------------------------------------------
Income before cumulative effect of accounting change 1,402.2 1,233.3 1,179.2
Adjustments to reconcile income before cumulative
effect of accounting change to cash provided by operating activities:
Depreciation and amortization 777.0 738.4 683.7
Deferred income taxes 40.3 34.5 91.4
Undistributed earnings of affiliated companies (155.5) (53.7) (49.9)
Other, net 38.6 (27.1) (93.2)
-------------------------------------------
Operating cash flow before changes in working capital 2,102.6 1,925.4 1,811.2
(Increase)/decrease in working capital (18.3) 250.6 5.4
-------------------------------------------
Cash provided by operating activities 2,084.3 2,176.0 1,816.6
-------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (865.3) (817.5) (1,199.3)
New business acquisitions (7.0) (566.5) (683.3)
Proceeds from sale of business 59.6 -- --
-------------------------------------------
Cash (used for) investing activities (812.7) (1,384.0) (1,882.6)
-------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in debt 973.4 451.5 1,245.9
Decrease in debt (553.7) (63.6) (141.6)
Dividends paid to shareholders (544.7) (521.0) (492.6)
Acquisition of treasury stock (1,349.2) (688.8) (587.1)
Shares issued under stock plans 129.9 107.4 95.1
-------------------------------------------
Cash (used for)/provided by financing activities (1,344.3) (714.5) 119.7
-------------------------------------------
Net (decrease)/increase in cash during the year (72.7) 77.5 53.7
Cash, beginning of year 224.8 147.3 93.6
-------------------------------------------
Cash, end of year $ 152.1 $ 224.8 $ 147.3
===========================================
The Notes on pages 44-55 of this report are an integral component of the
company's Consolidated Financial Statements.
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 43
--
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES
This summary of the significant accounting principles and policies of
Anheuser-Busch Companies, Inc. and its subsidiaries is presented to assist in
evaluating the company's Consolidated Financial Statements included in this
annual report. These principles and policies conform to U.S. generally
accepted accounting principles. The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires that
management make estimates and assumptions about the future which impact the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates and assumptions.
REVENUE RECOGNITION
The company recognizes revenue only when finished products are shipped or
services have been rendered to unaffiliated customers. The company's beer and
packaging operations do not engage in consignment sales. Entertainment
operations recognize revenue related to advance ticket sales when customers
actually visit a park location.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the company
and all its subsidiaries. The company generally consolidates all
majority-owned and controlled subsidiaries, accounts for investments below
the 20% level under the cost method, and applies the equity method of
accounting for investments between 20% and 50%. All significant intercompany
transactions have been eliminated. Minority interests in consolidated
subsidiaries are not material.
FOREIGN CURRENCY TRANSLATION
Financial statements of foreign operations where the local currency is the
functional currency are translated using period-end exchange rates for assets
and liabilities, and weighted average exchange rates during the period for
the results of operations. Translation adjustments are reported as a separate
component of other comprehensive income within shareholders equity.
Translation practice differs for foreign operations in hyperinflationary
economies. See Note 2 for additional discussion.
Exchange rate adjustments related to foreign currency transactions are
recognized in income as incurred.
CASH AND MARKETABLE SECURITIES
Cash and marketable securities include cash, demand deposits and
short-term investments with initial maturities generally of 90 days or less.
EXCESS OF COST OVER NET ASSETS
OF ACQUIRED BUSINESSES (GOODWILL)
The excess of the cost over the net assets of acquired businesses, which
is included in other assets on the balance sheet, is amortized on a
straight-line basis over a period of 40 years. Accumulated amortization at
December 31, 1999 and 1998 was $131.7 million and $116.3 million, respectively.
The ongoing recoverability of goodwill is monitored based on applicable
operating unit performance and consideration of significant events or changes
in the overall business environment. See Note 11 for additional information.
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 approximately 75% and 73%,
respectively, of total inventories at December 31, 1999 and 1998. Had the
average-cost method (which approximates replacement cost) been used with
respect to such inventories at December 31, 1999 and 1998, total inventories
would have been $83.3 million and $100.3 million higher, respectively.
PLANT AND EQUIPMENT
Plant and equipment is carried at cost and includes expenditures for new
facilities and expenditures which substantially increase the useful lives of
existing facilities. The cost of maintenance, repairs and minor renewals is
expensed as incurred. When plant and equipment is retired or otherwise
disposed, the cost and related accumulated depreciation are eliminated, and
any gain or loss on disposition is recognized in earnings.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets, resulting in annual depreciation rates on
buildings ranging from 2% to 10% and on machinery and equipment ranging from
4% to 25%.
INCOME TAXES
The provision for income taxes is based on income and expense amounts as
reported in the Consolidated Statement of Income. The company utilizes
certain provisions of federal, state and foreign income tax laws and
regulations to reduce current taxes payable. Deferred income taxes are
recognized for the effect of temporary differences between financial and tax
reporting in accordance with the requirements of FAS No. 109, "Accounting for
Income Taxes."
44 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 21
DERIVATIVE FINANCIAL INSTRUMENTS
All derivative instruments held by the company are designated as hedges,
have high correlation with the underlying exposure and are highly effective
in offsetting underlying price movements. Accordingly, gains and losses from
changes in derivative fair values are deferred. Gains or losses upon
settlement of derivative positions when the underlying transaction occurs are
recognized in the income statement or recorded as part of the underlying
asset or liability, depending on the circumstances. Derivative positions are
settled if the underlying transaction is no longer expected to occur, with
related gains and losses recognized in earnings in the period settlement
occurs. Option premiums paid are recorded as assets and amortized over the
life of the option. Derivatives generally have initial terms of less than
three years, and all currently hedged transactions are expected to occur
within the next three years. See Note 3 for additional information regarding
the company's derivatives portfolio.
RESEARCH AND DEVELOPMENT COSTS, ADVERTISING
AND PROMOTIONAL COSTS, AND INITIAL PLANT COSTS
Research and development costs, advertising and promotional costs, and
initial plant costs are expensed as incurred. Advertising and promotional
expenses were $721.8 million, $642.1 million and $603.6 million in 1999, 1998
and 1997, respectively.
START-UP COSTS
Effective January 1, 1999, the company adopted SOP 98-5, "Reporting on the
Costs of Start-Up Activities," which requires the costs of start-up
activities to be expensed as incurred. Adoption of SOP 98-5 required no
significant changes to the company's accounting policies and had no impact on
the results of operations.
SYSTEMS DEVELOPMENT COSTS
The company capitalizes certain systems development costs that meet
established criteria in accordance with SOP 98-1, "Accounting for the Costs
of Computer Systems Developed or Obtained for Internal Use." Amounts
capitalized are amortized to expense over a five-year period.
In the fourth quarter 1997, in accordance with EITF consensus No. 97-13,
"Accounting for Costs Incurred in Connection with a Consulting Project or an
Internal Project That Combines Business Process Reengineering and Information
Technology Transformation," the company reported a $10 million after-tax
charge ($.02 per share) to expense previously capitalized systems
reengineering costs. The charge is shown as a separate cumulative effect of
accounting change line item in the income statement. The company now expenses
all such costs as incurred.
STOCK-BASED COMPENSATION
The company accounts for employee stock options in accordance with APB 25,
"Accounting for Stock Issued to Employees." Under APB 25, the company
recognizes no compensation expense related to employee stock options, since
options are always granted at a price equal to the market price on the day of
grant. See Note 5 for additional information on the company's stock options
plus pro forma disclosures required by FAS 123, "Accounting for Stock-Based
Compensation."
2. INTERNATIONAL INVESTMENTS
GRUPO MODELO
In 1993, Anheuser-Busch purchased a 17.7% direct and indirect equity
interest in Diblo, S.A. de C.V. (Diblo), the operating subsidiary of Grupo
Modelo, S.A. de C.V. (Modelo), Mexico's largest brewer and producer of the
Corona brand, for $477 million. In May 1997, the company increased its direct
and indirect equity ownership in Diblo to 37% for an additional $605 million.
Effective with the increase in equity ownership to 37%, the company received
expanded minority rights, increased its representation on Modelo's Board of
Directors to 10 of 21 members and adopted the equity method of accounting for
the investment. In September 1998, the company completed its purchase of an
additional 13.25% equity interest in Diblo for $557 million, and now owns a
50.2% direct and indirect interest in Diblo. Anheuser-Busch does not have
voting or other effective control of either Diblo or Modelo and therefore
continues to account for its investment using the equity method.
The difference between income recognized on the cost basis prior to 1997
and what would have been recognized had the company applied equity accounting
in those years is not material. In 1997, the company recorded a $189.4
million adjustment to the carrying value of the investment for cumulative
Mexican peso depreciation between 1993 and 1996 prior to the adoption of
equity accounting in 1997. The offset for the adjustment was to "foreign
currency translation," a component of other comprehensive income in
shareholders equity.
Included in the carrying amount of the Modelo investment is goodwill of
$541.4 million and $553.6 million, respectively, at December 31, 1999 and
1998 which is being amortized over 40 years. Accumulated amortization was
$29.2 million and $15 million, respectively, at December 31, 1999 and 1998.
Dividends received from Grupo Modelo in 1999 totaled $2.9 million, compared
to $50.3 million in 1998 and $16.4 million in 1997.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 45
--
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For foreign operations in countries whose economies are considered highly
inflationary, foreign currency translation practice under FAS No. 52,
"Foreign Currency Translation," requires that property, other long-lived
assets, long-term liabilities and related profit and loss accounts be
translated at historical rates of exchange. Additionally, net monetary asset
and liability related translation adjustments must be included in earnings in
the current period. Mexico's economy was considered highly inflationary for
accounting purposes for all of calendar 1997 and 1998. Accordingly, all
monetary translation gains and losses related to the Modelo investment were
recognized in equity income during 1997 and 1998.
Summary financial information for Grupo Modelo as of, and for the two years
ended December 31, is presented in the following table (in millions). The
amounts shown represent consolidated Grupo Modelo operating results and
financial position based on U.S. generally accepted accounting principles,
and include the impact of Anheuser-Busch's purchase accounting adjustments.
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current assets $1,156.3 $ 859.8
Noncurrent assets 3,322.3 3,008.4
Current liabilities 262.3 200.6
Noncurrent liabilities 328.0 172.0
Gross sales 2,576.3 1,748.3
Net sales 2,405.4 1,632.0
Gross profit 1,209.8 809.2
Minority interest 48.7 32.8
Net income 333.5 180.3
- -------------------------------------------------------------
</TABLE>
OTHER INTERNATIONAL INVESTMENTS
In April 1996, the company purchased a 5% equity stake in a subsidiary
controlling approximately 75% of the operations of the Brazilian brewer
Antarctica for $52.5 million, with options to increase its equity interest to
approximately 30%. Because Anheuser-Busch had the ability to exercise
significant influence as a result of rights granted in its investment
agreement, the company applied the equity method of accounting for the
investment in Antarctica in 1997, 1998 and 1999.
In originally approving the partnership, the Brazilian antitrust agency,
CADE, required Anheuser-Busch's options to be mandatorily exercised at
specified dates. The first of the required fixed-dollar investment options
was set to expire in September 1999, but was determined to be no longer
economically attractive for Anheuser-Busch. Accordingly, the company
exercised its right to end its equity partnership with Antarctica in July
1999. There was no impact on earnings associated with the divestiture.
CADE also required Anheuser-Busch to discontinue its joint venture with
Antarctica for the production, sale and distribution of Budweiser in Brazil.
The pretax cost of discontinuing Budweiser production in Brazil was
approximately $6 million. In December 1999, the company entered into a
distribution agreement with Expand Group and now exports Budweiser to Brazil.
In 1996, Anheuser-Busch purchased a 4.4% interest in the Argentine
subsidiary of Compania Cervecerias Unidas S.A. (CCU), CCU-Argentina, with
options to increase its investment up to 20%. In December 1998, the company
exercised a portion of its options and purchased an additional 3.8% in
CCU-Argentina for $10 million. The company purchased an additional 2.5% of
CCU-Argentina for $7.0 million in December 1999, bringing the company's total
ownership to 10.7%. The company's remaining options expire in December 2002.
The investment is accounted for on the cost basis. CCU-Argentina brews
Budweiser under license and sells the brand in Buenos Aires and other major
Argentine markets.
In the fourth quarter 1998, the company restructured the sales force and
made other organizational changes at its 90%-owned Japanese joint venture
subsidiary. Total pretax cost of the restructuring was almost $9 million,
primarily for severance benefits for workforce reductions. Effective January
2000, the company converted its joint venture operation into an exclusive
license agreement with Kirin Brewing Company, Ltd. for the production and
sale of Budweiser in Japan. The one-time pretax cost of converting to the
license agreement was approximately $9 million, primarily for severance
benefits, and is included in 1999 operating results.
The company owns an 86.6% interest in and controls a joint venture which
owns the Wuhan brewery located in the People's Republic of China. The joint
venture brews and distributes Budweiser primarily in the northern, eastern
and central regions of China. The joint venture is consolidated.
In 1997, the company purchased the remaining 50% of the Stag Brewing
Company Ltd. from its partner, Scottish Courage. Budweiser is brewed and
packaged at the Stag Brewery primarily for distribution in the United
Kingdom. Scottish Courage owns and leases the brewery site to the company.
The Stag Brewery operations are consolidated.
3. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The company currently uses the following derivative financial instruments:
purchased options and forward contracts for foreign currency risk; swaps for
interest rate risk; and futures, swaps and purchased options for commodity
price risk. Derivatives other than options are off-balance-sheet and
therefore have no recorded carrying value. Because the company hedges only
with instruments that have high correlation with the underlying transaction
pricing, changes in derivatives fair values are expected to be offset by
changes in the underlying pricing.
46 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 23
The following table summarizes the notional transaction amounts and fair
values for outstanding derivatives, by risk category and instrument type, at
December 31, (in millions). Bracketed figures indicate settlement of the
derivative contract without concluding the underlying hedged transaction
would be unfavorable to Anheuser-Busch. In practice, this rarely occurs.
<TABLE>
<CAPTION>
1999 1998
---- ----
Notional Fair Notional Fair
Amount Value Amount Value
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Currency:
Forwards $ 150.9 $ 4.0 $ 76.8 $ 1.5
Options 94.1 (.7) 323.1 6.5
---------------------------------------------------------------
245.0 3.3 399.9 8.0
---------------------------------------------------------------
Interest Rate:
Swaps 562.8 6.5 425.2 (53.4)
---------------------------------------------------------------
Commodity Price:
Swaps 92.4 4.5 14.1 (.3)
Futures 40.1 (3.0) 46.1 (3.6)
Options 559.6 64.5 94.4 2.0
---------------------------------------------------------------
692.1 66.0 154.6 (1.9)
---------------------------------------------------------------
Total of outstanding
derivatives $1,499.9 $75.8 $979.7 $(47.3)
===============================================================
- ------------------------------------------------------------------------------------------
</TABLE>
The interest rate swap and currency exchange agreements related to the
dual-currency notes described in Note 4 are included as interest rate swaps
in the preceding table. These agreements are integral parts of dual-currency
note structures which provide the company with floating-rate financing at
below-market rates.
The company has "long" exposure to the British pound sterling, Irish punt,
Mexican peso and Canadian dollar. The company's exposures to other currencies
are essentially "short," primarily for German mark-denominated purchases of
hops. Long exposure indicates the company has foreign currency in excess of
its needs, while a short exposure indicates the company requires additional
foreign currency to meet its needs. For commodity derivatives, as a net user
of raw materials, the company's underlying price exposure is short,
indicating additional quantities must be obtained to meet anticipated
production requirements.
CONCENTRATION OF CREDIT RISK
The company does not have a material concentration of credit risk.
NONDERIVATIVE FINANCIAL INSTRUMENTS
Nonderivative financial instruments included in the balance sheet are cash,
accounts receivable, commercial paper and long-term debt. The fair value of
long-term debt, based on future cash flows discounted at interest rates
currently available to the company for debt with similar maturities and
characteristics, was $4.5 billion and $5.0 billion at December 31, 1999 and
1998, respectively.
NEW DERIVATIVES AND HEDGING ACCOUNTING STANDARD
In June 1998, FAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. FAS 133 requires all derivative financial
instruments to be reported on an entity's balance sheet at fair value, with
changes in fair value recognized in either earnings or equity, depending on
the nature of the underlying exposure being hedged. The Standard is required
to be adopted no later than January 1, 2001.
Adoption of FAS 133 requires a one-time recognition on the balance sheet of
the fair value of the company's derivatives portfolio plus a cumulative
effect adjustment to earnings and/or equity. The company does not anticipate
a material earnings impact from the initial adoption of FAS 133. The company
plans no substantive changes to its risk management strategy as a result of
adopting the new Standard, and will revise its derivatives-related
documentation and policies as necessary on adoption. The company plans to
adopt FAS 133 on January 1, 2001.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 47
--
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DEBT
Debt at December 31, consisted of the following (in millions):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Long-term debt:
Commercial paper (weighted average
interest rates of 5.1% in 1999
and 5.5% in 1998) $1,000.0 $ 615.2
Medium-term Notes Due 2000 to 2001
(interest rates from 5.1% to 8.0%) 32.5 47.5
8.5% Sinking Fund Debentures
Maturing 1999 to 2017 -- 23.0
8.75% Notes Due 1999 -- 250.0
5.1% Japanese yen/Australian
dollar Notes Due 1999 -- 262.4
4.1% Japanese yen/U.S.
dollar Notes Due 2001 162.8 162.8
6.9% Notes Due 2002 200.0 200.0
6.75% Notes Due 2003 200.0 200.0
6.75% Notes Due 2005 200.0 200.0
7% Notes Due 2005 100.0 100.0
6.75% Notes Due 2006 250.0 250.0
7.1% Notes Due 2007 250.0 250.0
5.125% Notes Due 2008 100.0 100.0
5.375% Notes Due 2008 100.0 100.0
5.65% Notes Due 2008 100.0 100.0
9% Debentures Due 2009 350.0 350.0
5.75% Notes Due 2010 150.0 --
5.75% Notes Due 2011 150.0 --
7.25% Debentures Due 2015 150.0 150.0
7.125% Notes Due 2017 250.0 250.0
7.375% Debentures Due 2023 200.0 200.0
7% Debentures Due 2025 200.0 200.0
6.75% Debentures Due 2027 100.0 100.0
6.5% Debentures Due 2028 100.0 100.0
Industrial Revenue Bonds
(interest rates from 5.6% to 7.4%) 248.3 212.2
8.25% ESOP Debt Guarantee 210.5 247.2
Other long-term debt 76.5 48.3
------------------------------
Total long-term debt 4,880.6 4,718.6
Short-term debt:
Commercial paper (year-end
interest rate of 6.0%) 242.3 --
------------------------------
Total debt $5,122.9 $4,718.6
==============================
- --------------------------------------------------------------------------
</TABLE>
The company uses Securities and Exchange Commission shelf registrations to
maintain debt issuance flexibility and currently has $690 million in
registered debt available for issuance.
Gains/losses on debt redemptions (either individually or in the aggregate)
are not material for any year presented.
The company's 4.1% Japanese yen/U.S. dollar notes are hedged by an interest
rate swap and currency exchange structure that effectively transfers all
currency exchange risk to the counterparty over the life of the debt.
In October 1999, the company entered into a dual interest rate swap
structure which lowered the effective interest rate on the $200 million 6.9%
Notes Due 2002, to 6.44% over the remaining term.
The company has in place a single, committed revolving credit agreement
totaling $1 billion, expiring in August 2001, which supports the company's
commercial paper program. At December 31, 1999 and 1998, the company had no
outstanding borrowings under the agreement. Annual fees under the agreement
were $600,000 for 1999, 1998 and 1997.
Commercial paper borrowings classified as long-term are supported on a
long-term basis by the $1 billion revolving credit agreement. The company may
also choose to refinance some or all of its commercial paper debt with
long-term notes or debentures. Commercial paper borrowings in excess of $1
billion are classified as short-term.
The aggregate maturities on long-term debt are $75 million, $180 million,
$200 million, $200 million and zero, respectively, for each of the years
ending December 31, 2000 through 2004. These maturities do not include future
maturities of the ESOP debt guarantee or commercial paper.
5. STOCK OPTION PLANS
Under terms of the company's stock option plans, officers, certain other
employees and nonemployee directors may be granted options to purchase the
company's common stock at no less than 100% of the market price on the date
the option is granted. Options generally vest over three years and have a
maximum term of 10 years. At December 31, 1999, 1998 and 1997, a total of 40
million, 44 million and 27 million shares, respectively, were reserved for
future issuance under the plans. Certain of the plans also provide for the
granting of stock appreciation rights (SARs) in tandem with, or in lieu of,
stock options. When SARs and options are issued in tandem, the exercise of an
SAR cancels the related option and the exercise of an option cancels the
related SAR. There were 2,000 SARs outstanding at December 31, 1999 and none
outstanding at December 31, 1998.
48 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 25
Presented below is a summary of stock option plans activity for the years
shown:
<TABLE>
<CAPTION>
Options Wtd. Avg. Options Wtd. Avg.
Outstanding Exercise Price Exercisable Exercise Price
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE,
DEC. 31, 1996 24,320,664 $28.55 15,230,871 $24.67
Granted 5,558,073 43.37
Exercised (3,971,384) 22.48
Cancelled (185,377) 35.11
-------------
BALANCE,
DEC. 31, 1997 25,721,976 $32.64 15,908,186 $27.69
Granted 5,043,905 59.82
Exercised (4,084,369) 24.70
Cancelled (139,691) 40.81
BALANCE,
DEC. 31, 1998 26,541,821 $38.98 16,712,205 $31.79
Granted 5,295,646 75.76
Exercised (3,508,208) 27.11
Cancelled (43,984) 53.20
BALANCE,
DEC. 31, 1999 28,285,275 $47.32 18,083,477 $37.39
- ---------------------------------------------------------------------------------------------
</TABLE>
The following table provides additional information for options
outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ------------------------------------------------------------------------------
Range of Wtd. Avg. Wtd. Avg.
Prices Number Remaining Life Exercise Price
------ ------ -------------- --------------
<S> <C> <C> <C>
$20-29 4,749,947 4 YRS $25.72
30-39 4,390,445 6 YRS 32.35
40-49 8,869,516 7 YRS 42.29
50-59 4,981,101 9 YRS 59.85
60-77 5,294,266 10 YRS 75.76
---------
$20-77 28,285,275 7 YRS $47.32
- ------------------------------------------------------------------------------
<CAPTION>
OPTIONS EXERCISABLE
- ------------------------------------------------------------------------------
Range of Wtd. Avg.
Prices Number Exercise Price
------ ------ --------------
<S> <C> <C>
$20-29 4,749,947 $25.72
30-39 4,390,445 32.35
40-49 7,077,526 42.01
50-59 1,682,824 59.85
60-77 182,735 75.76
-------
$20-77 18,083,477 $37.39
- ------------------------------------------------------------------------------
</TABLE>
The company's stock option plans provide for acceleration of exercisability
of the options upon the occurrence of certain events relating to a change in
control, merger, sale of assets or liquidation of the company (Acceleration
Events). Certain of the plans also provide that optionees may be granted
Limited Stock Appreciation Rights (LSARs). LSARs become exercisable, in lieu
of an option, upon the occurrence, at least six months following the date of
grant, of an Acceleration Event. The LSARs entitle the holder to a cash
payment per share equivalent to the excess of the share value (as defined
under terms of the LSAR) over the grant price. As of December 31, 1999 and
1998, there were zero and .1 million, respectively, of LSARs outstanding.
PRO FORMA FAIR VALUE DISCLOSURES
Had compensation expense for the company's stock options been recognized
based on the fair value on the grant date under the methodology prescribed by
FAS 123, the company's income from continuing operations and earnings per
share for the three years ended December 31, would have been impacted as
shown in the following table (in millions, except per share).
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Reported income
from continuing operations $1,402.2 $1,233.3 $1,179.2
Pro forma income from
continuing operations 1,373.3 1,209.3 1,165.0
Reported diluted earnings
per share 2.94 2.53 2.36
Pro forma diluted earnings
per share 2.88 2.48 2.33
- -------------------------------------------------------------------------------
</TABLE>
The fair value of options granted, which is hypothetically amortized to
expense over the option vesting period in determining the pro forma impact,
has been estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Expected life of option 5 YRS. 5 yrs. 5 yrs.
Risk-free interest rate 6.2% 4.7% 5.7%
Expected volatility of
Anheuser-Busch stock 18% 16% 15%
Expected dividend yield
on Anheuser-Busch stock 1.6% 1.7% 2.3%
- -------------------------------------------------------------------------------
</TABLE>
The weighted average fair value of options granted during 1999, 1998 and
1997 determined using the Black-Scholes model is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Fair value of each
option granted $18.76 $11.72 $8.37
Total number of options
granted (in millions) 5.3 5.0 5.6
------------------------------------------
Total fair value of all options
granted (in millions) $ 99.4 $ 58.6 $46.9
==========================================
- -------------------------------------------------------------------------------
</TABLE>
For FAS 123 disclosure purposes, the weighted average fair value of stock
options granted is required to be based on a theoretical option pricing
model. In actuality, because the company's stock options are not traded on
any exchange, employees can receive no value nor derive any benefit from
holding stock options under these plans without an increase in the market
price of Anheuser-Busch stock. Such an increase in stock price would benefit
all stockholders commensurately.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 49
--
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. EMPLOYEE STOCK OWNERSHIP PLANS
In 1989, the company added Employee Stock Ownership Plans (ESOPs) to its
existing Deferred Income Stock Purchase and Savings Plans. Most regular
employees are eligible for participation in the ESOPs. The ESOPs initially
borrowed $500 million for a term of 15 years at an interest rate of 8.25% and
used the proceeds to buy approximately 22.7 million shares of common stock
from the company at market price. The debt is guaranteed by the company and
the shares are being allocated to participants over the 15-year period as
contributions are made to the plans. The ESOPs purchased an additional .2
million shares from the company using proceeds from the sale of
spin-off-related Earthgrains shares in 1996. Of the 22.9 million total shares
purchased, 16.8 million shares have been allocated to plan participants.
ESOP cash contributions and expense accrued during the calendar year are
determined by several factors, including the market price, number of shares
allocated to participants, debt service, dividends on unallocated shares and
the company's matching contribution. Over the 15-year life of the ESOPs,
total expense recognized will equal total cash contributions made by the
company for ESOP debt service.
ESOP expense is allocated to operating expense and interest expense based
on the ratio of principal and interest payments on the debt. Total ESOP
expense for the three years ended December 31, is presented below (in
millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Operating expense $1.7 $ 7.4 $ 8.6
Interest expense .9 4.5 6.7
----------------------------------
Total ESOP expense $2.6 $11.9 $15.3
==================================
- -----------------------------------------------------------------------------
</TABLE>
ESOP cash contributions are made in March and September to correspond with
debt service requirements. A summary of cash contributions and dividends on
unallocated ESOP shares for the three years ended December 31, is presented
below (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash contributions $2.5 $14.2 $15.2
==================================
Dividends $7.8 $ 8.9 $ 9.9
==================================
- -----------------------------------------------------------------------------
</TABLE>
7. PREFERRED AND COMMON STOCK
COMMON STOCK ACTIVITY
Activity for the company's common stock for the three years ended December
31, is summarized below (in millions of shares):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
COMMON STOCK
Beginning common stock 712.7 709.3 705.8
Shares issued under
stock plans 3.4 3.4 3.5
------------------------------------
Common stock 716.1 712.7 709.3
------------------------------------
TREASURY STOCK
Beginning treasury stock (236.1) (222.2) (208.4)
Treasury stock acquired (18.9) (13.9) (13.8)
------------------------------------
Cumulative treasury stock (255.0) (236.1) (222.2)
------------------------------------
NET COMMON STOCK
OUTSTANDING 461.1 476.6 487.1
====================================
- ----------------------------------------------------------------------------
</TABLE>
PREFERRED STOCK
At December 31, 1999 and 1998, 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 to return cash to shareholders
and to meet the requirements of the company's various stock purchase and
incentive plans. At December 31, 1999, approximately 6 million shares were
available for repurchase under a 1996 repurchase authorization.The company's
current resolution was approved by the Board in February 2000 and authorized
the repurchase of 50 million shares.
The company acquired 18.9 million, 13.9 million and 13.8 million shares of
common stock in 1999, 1998 and 1997 for $1,349.2 million, $688.8 million and
$587.1 million, respectively.
STOCKHOLDER RIGHTS PLAN
The Board of Directors adopted a Stockholder Rights Plan in 1985, which was
extended in 1994, that would permit shareholders to purchase common stock at
prices substantially below market value under certain change-in-control
scenarios.
50 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 27
8. RETIREMENT BENEFITS
PENSION PLANS
The company has pension plans covering substantially all of its regular
employees. Total pension expense for the three years ended December 31, is
presented below (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Single-employer
defined benefit plans $21.1 $ 3.3 $12.0
Multi-employer plans 15.7 14.4 13.2
Defined contribution plans 18.3 18.2 15.9
--------------------------------------
Total pension expense $55.1 $35.9 $41.1
======================================
- -----------------------------------------------------------------------------
</TABLE>
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 or weeks worked.
Expense recognized for multi-employer and defined contribution plans equals
cash contributions for all years shown.
Net annual pension expense for single-employer defined benefit plans was
comprised of the following for the three years ended December 31, (in
millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Service cost (benefits earned
during the year) $ 63.2 $ 53.4 $ 51.5
Interest cost on projected
benefit obligation 116.7 106.4 100.7
Assumed return on plan assets (169.2) (156.8) (141.0)
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 10.4 .3 .8
----------------------------------------
Net annual pension expense $ 21.1 $ 3.3 $ 12.0
========================================
- ----------------------------------------------------------------------------
</TABLE>
The key actuarial assumptions used in determining annual pension expense
for single-employer defined benefit plans were as follows for the three years
ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Discount rate 7.0% 7.5% 7.75%
Long-term rate of
return on plan assets 10.0% 10.0% 10.0%
Weighted average rate
of compensation increase 4.75% 4.75% 5.5%
- -----------------------------------------------------------------------------
</TABLE>
The following table provides a reconciliation of the funded status of
single-employer defined benefit plans to prepaid pension cost for the two
years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Funded status - plan assets in excess of
projected benefit obligation (PBO) $320.4 $120.2
Unamortized excess of market value of
plan assets over PBO at January 1, 1986,
being amortized over 15 years (12.7) (23.0)
Unrecognized net actuarial (gain) (258.8) (61.8)
Unamortized prior service cost 155.8 167.9
------------------------------
Prepaid pension cost $204.7 $203.3
==============================
- ----------------------------------------------------------------------------
</TABLE>
The assumptions used in determining the funded status of the plans as of
December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Discount rate 7.5% 7.0%
Weighted average rate of
compensation increase 4.75% 4.75%
- -----------------------------------------------------------------------------
</TABLE>
The following tables summarize the changes in the projected benefit
obligation and the fair market value of plan assets (consisting primarily of
corporate equity securities and publicly traded bonds) for all company
single-employer defined benefit pension plans for the two years ended
December 31, (in millions).
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Projected benefit obligation,
beginning of year $1,704.0 $1,428.4
Service cost 63.2 53.4
Interest cost 116.7 106.4
Plan amendments 7.2 111.9
Actuarial (gain)/loss (36.0) 92.0
Benefits paid (109.0) (88.1)
---------------------------------
Projected benefit obligation,
end of year $1,746.1 $1,704.0
=================================
- -----------------------------------------------------------------------------
<CAPTION>
1999 1998
<S> <C> <C>
Fair market value of plan assets,
beginning of year $1,824.2 $1,821.4
Actual return on plan assets 328.5 68.7
Employer contributions 22.8 22.2
Benefits paid (109.0) (88.1)
---------------------------------
Fair market value of plan assets,
end of year $2,066.5 $1,824.2
=================================
- -----------------------------------------------------------------------------
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 51
--
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
POSTRETIREMENT HEALTH CARE AND INSURANCE BENEFITS
The company provides certain health care and life insurance benefits to
eligible retired employees. Generally, participants must accrue 10 years of
continuous service after reaching age 45 to become eligible for retiree
health care benefits.
The following table sets forth the accumulated postretirement benefit
obligation (APBO) and the total postretirement benefit liability for all
company single-employer defined benefit health care and life insurance plans
at December 31, (in millions). Postretirement benefit obligations are not
prefunded and there are no assets associated with the plans.
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO) $369.9 $348.1
Unrecognized prior service benefits 76.3 87.9
Unrecognized net actuarial gains 79.2 98.7
----------------------------
Total postretirement benefit liability $525.4 $534.7
============================
- --------------------------------------------------------------------------
</TABLE>
As of December 31, 1999 and 1998, $19.0 million and $18.9 million of these
obligations were classified as current liabilities and $506.4 million and
$515.8 million were classified as long-term liabilities, respectively.
Net periodic postretirement benefits expense for company single-employer
defined benefit health care and life insurance plans was comprised of the
following for the three years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Service cost (benefits earned
during the year) $ 16.8 $ 13.6 $ 12.0
Interest cost on APBO 24.0 23.3 23.2
Amortization of prior
service benefit (11.6) (11.7) (11.7)
Amortization of actuarial (gains) (13.0) (8.9) (10.1)
------------------------------------------
Net periodic postretirement
benefits expense $ 16.2 $ 16.3 $ 13.4
==========================================
- ------------------------------------------------------------------------------
</TABLE>
The following table summarizes the change in the APBO for the two years
ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
APBO, beginning of year $348.1 $318.4
Service cost 16.8 13.6
Interest cost 24.0 23.3
Actuarial loss 6.5 11.8
Benefits paid (25.5) (19.0)
-------------------------------
APBO, end of year $369.9 $348.1
===============================
- -------------------------------------------------------------
</TABLE>
In measuring the APBO, annual trend rates for health care costs of 9.6%,
8.7% and 8.3% were assumed for 1999, 1998 and 1997, respectively. These rates
were assumed to decline ratably over the subsequent 9-12 years to 5.4% for
1999, 5.95 % for 1998, and 5.3% for 1997, and remain at that level
thereafter. The weighted average discount rate used in determining the APBO
was 8.0% and 7.5% at December 31, 1999 and 1998, respectively.
If the assumed health care cost trend rate changed by 1%, the APBO as of
December 31, 1999 would change by 13%. A 1% change in the health care cost
trend rate would result in a corresponding change of 14% in net periodic
postretirement benefits expense.
9. EARNINGS PER SHARE OF COMMON STOCK
Basic earnings per share are based on the weighted average number of shares
of common stock outstanding during the year. Diluted earnings per share are
based on the weighted average number of shares of common stock plus common
stock equivalents outstanding during the year.
A reconciliation of weighted average shares outstanding between basic and
diluted earnings per share for the three years ended December 31, follows (in
millions of shares). There were no adjustments to income available to common
shareholders for any year shown.
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Basic weighted average
shares outstanding 469.5 482.1 492.6
Stock option shares 7.3 5.4 7.1
------------------------------------
Diluted weighted average
shares outstanding 476.8 487.5 499.7
====================================
- -----------------------------------------------------------------------------
</TABLE>
52 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 29
10. INCOME TAXES
The provision for income taxes consists of the following for the three
years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Current tax provision:
Federal $615.9 $564.3 $510.9
State 106.3 93.3 85.8
Foreign .4 12.2 15.5
-------------------------------------
722.6 669.8 612.2
-------------------------------------
Deferred tax provision:
Federal 32.3 31.6 78.2
State 4.7 2.9 13.8
Foreign 3.3 -- (.6)
-------------------------------------
40.3 34.5 91.4
-------------------------------------
Total tax provision $762.9 $704.3 $703.6
=====================================
- -----------------------------------------------------------------------------
</TABLE>
The deferred tax provision results from temporary 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 $13.8
million in 1999, $51.5 million in 1998 and $67.8 million in 1997).
At December 31, 1999 and 1998, the company had deferred tax liabilities of
$1,903.5 million and $1,841.3 million, and deferred tax assets of $558.8
million and $537.7 million, respectively. Deferred tax liabilities are
primarily related to fixed assets of $1,614.9 million and $1,601.1 million,
respectively. Deferred tax assets are related to accrued postretirement
benefits ($198.5 million and $202.1 million, respectively) and other accruals
and temporary differences ($300.4 million and $335.6 million, respectively)
which are not deductible for tax purposes until paid or utilized.
A reconciliation between the U.S. federal statutory tax rate and the
effective tax rate for the three years ended December 31, is presented below:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 3.6 3.4 3.5
Impact of foreign operations .2 .1 .1
Other items (.8) (.5) (.2)
---------------------------------
Effective tax rate 38.0% 38.0% 38.4%
=================================
- --------------------------------------------------------------------------
</TABLE>
11. SUPPLEMENTAL INFORMATION
Accounts payable include $124.0 million and $135.0 million, respectively,
of outstanding checks at December 31, 1999 and 1998.
Supplemental cash flow information for the three years ended December 31,
is presented below (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
CASH PAID DURING THE YEAR:
Interest, net of
interest capitalized $ 286.9 $ 263.3 $ 205.1
Income taxes 706.2 644.3 609.5
Excise taxes 2,016.6 1,966.6 1,760.6
CHANGES IN WORKING CAPITAL:
(Increase)/decrease in
noncash current assets:
Accounts receivable $ (18.9) $ 103.3 $ (80.7)
Inventories (0.4) (73.2) (19.1)
Other current assets (13.6) (9.1) 35.4
Increase/(decrease) in
current liabilities:
Accounts payable 26.9 113.9 65.0
Accrued salaries, wages
and benefits 6.7 32.0 (3.3)
Accrued taxes (29.4) 9.7 (49.1)
Other current liabilities 10.4 74.0 57.2
-----------------------------------------
Net (increase)/decrease
in working capital $ (18.3) $ 250.6 $ 5.4
=========================================
- ------------------------------------------------------------------------------
</TABLE>
The components of plant and equipment, net, at December 31, are summarized
below (in millions):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Land $ 260.8 $ 250.9
Buildings 3,684.7 3,569.9
Machinery and equipment 9,921.8 9,570.4
Construction in progress 512.3 446.5
--------------------------------------
14,379.6 13,837.7
Accumulated depreciation (6,415.0) (5,988.7)
--------------------------------------
Total plant and equipment, net $ 7,964.6 $ 7,849.0
======================================
- ------------------------------------------------------------------------------
</TABLE>
The components of other assets at December 31, are summarized below (in
millions):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Investment properties $ 119.0 $ 116.4
Goodwill 425.0 442.2
Deferred charges 518.7 555.7
------------------------------------
Total other assets $1,062.7 $1,114.3
====================================
- --------------------------------------------------------------------------
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 53
--
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized below is selected legal entity financial information for
Anheuser-Busch, Inc., a wholly-owned subsidiary of Anheuser-Busch Companies,
as of and for the years ended December 31, (in millions). This information is
provided to satisfy certain Securities and Exchange Commission reporting
requirements necessitated by Anheuser-Busch, Inc. being co-obligor on
substantially all Anheuser-Busch Companies debt.
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Income Statement Information:
Net sales $8,939.9 $ 8,408.0 $ 8,116.3
Gross profit 3,589.9 3,197.1 3,141.2
Net income <F1> 1,078.2 969.7 906.8
Balance Sheet Information:
Current assets $ 649.9 $ 581.4 $ 623.9
Noncurrent assets <F2> 6,494.1 17,086.7 15,619.0
Current liabilities 836.1 733.9 677.7
Noncurrent liabilities <F1> 5,694.1 4,998.6 4,599.4
- -----------------------------------------------------------------------------
<FN>
<F1> All guaranteed debt for which Anheuser-Busch, Inc. is co-obligor is
included as an element of noncurrent liabilities, with related interest
expense included in the determination of net income.
<F2> The reduction in noncurrent assets in 1999 is due to an intercompany
dividend from Anheuser-Busch, Inc. to Anheuser-Busch Companies.
</TABLE>
12. COMMITMENTS AND CONTINGENCIES
The company had commitments for capital expenditures of approximately $148
million at December 31, 1999. 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. It is the opinion of management that the
ultimate resolution of all existing claims, legal proceedings and other
contingencies, either individually or in the aggregate, will not materially
affect the company's financial position, results of operations, or liquidity.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Net Gross Net Diluted Earnings
Sales Profit Income per Share
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED
DEC. 31, 1999
1st Quarter $ 2,685.2 $ 973.1 $ 319.1 $ .66
2nd Quarter 3,080.7 1,216.2 431.0 .90
3rd Quarter 3,222.3 1,316.8 461.5 .97
4th Quarter 2,715.5 943.2 190.6 .41
----------------------------------------------------------------
Annual $11,703.7 $4,449.3 $1,402.2 $2.94
================================================================
- -----------------------------------------------------------------------------------
YEAR ENDED
DEC. 31, 1998
1st Quarter $ 2,507.5 $ 868.7 $ 265.2 $ .54
2nd Quarter 3,006.3 1,142.9 391.2 .80
3rd Quarter 3,122.0 1,226.4 408.3 .84
4th Quarter 2,610.0 845.3 168.6 .35
----------------------------------------------------------------
Annual $11,245.8 $4,083.3 $1,233.3 $2.53
================================================================
- -----------------------------------------------------------------------------------
</TABLE>
14. BUSINESS SEGMENTS
The company categorizes its operations into five business segments:
Domestic Beer, International Beer, Packaging, Entertainment and Other.
The Domestic Beer segment consists of the company's U.S. beer production,
marketing, distribution and raw materials acquisition.
The International Beer segment consists of the company's export sales and
overseas beer production and marketing operations, which include
company-owned operations, administration of contract and license brewing
arrangements and equity investments. The company sells beer in more than 80
countries, with principal markets in Canada, the United Kingdom, Ireland,
China and Japan.
The Packaging segment is comprised of the company's aluminum beverage can
manufacturing, aluminum can recycling and label printing operations. Cans are
produced for both the company's domestic beer operations and U.S. soft drink
industry customers.
The Entertainment segment consists of the company's SeaWorld, Busch
Gardens and other adventure park operations.
The Other segment is comprised of the company's real estate development,
transportation and communications businesses.
Summarized on the following page is the company's business segment
information for 1999, 1998 and 1997 (in millions). Intersegment sales are
fully eliminated in consolidation. No single customer accounted for more than
10% of sales. Corporate expenses, including net interest expense, are not
allocated to operating segments.
54 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 31
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
1999 Beer Beer Pkg. Enter. Other Elims <F1> Consol.
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Gross sales $10,966.8 763.3 1,941.9 750.5 120.2 (819.4) $13,723.3
Net sales - external $ 9,088.2 622.3 1,151.2 750.5 91.5 -- $11,703.7
Net sales - intersegment $ -- -- 790.7 -- 28.7 (819.4) $ --
Depreciation & amortization $ 535.5 20.2 94.6 89.7 6.1 30.9 $ 777.0
Income before income taxes $ 2,250.7 (19.9) 149.3 111.3 12.2 (496.0) $ 2,007.6
Equity income, net of tax $ -- 157.5 -- -- -- -- $ 157.5
Net income $ 1,395.4 145.2 92.6 69.0 7.6 (307.6) $ 1,402.2
BALANCE SHEET INFORMATION:
Total assets $ 7,183.9 2,439.6 843.6 1,360.4 197.0 615.9 $12,640.4
Equity method investments $ -- 1,787.9 -- -- -- -- $ 1,787.9
Foreign-located fixed assets $ -- 221.4 -- -- -- -- $ 221.4
Capital expenditures $ 563.2 45.3 49.7 162.6 13.5 31.0 $ 865.3
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
1998 Beer Beer Pkg. Enter. Other Elims <F1> Consol.
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Gross sales $10,391.6 809.1 1,842.0 760.8 147.0 (742.6) $13,207.9
Net sales - external $ 8,569.9 668.7 1,127.4 760.8 119.0 -- $11,245.8
Net sales - intersegment $ -- -- 714.6 -- 28.0 (742.6) $ --
Depreciation & amortization $ 498.9 14.6 102.6 90.3 6.1 25.9 $ 738.4
Income before income taxes $ 2,018.0 10.1 148.2 116.6 9.9 (450.2) $ 1,852.6
Equity income, net of tax $ -- 85.0 -- -- -- -- $ 85.0
Net income $ 1,251.2 91.3 91.9 72.3 6.1 (279.5) $ 1,233.3
BALANCE SHEET INFORMATION:
Total assets $ 7,078.5 2,340.9 874.1 1,283.1 211.0 696.7 $12,484.3
Equity method investments $ -- 1,662.6 -- -- -- -- $ 1,662.6
Foreign-located fixed assets $ -- 202.1 -- -- -- -- $ 202.1
Capital expenditures $ 514.1 82.9 81.4 97.2 9.9 32.0 $ 817.5
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Domestic Int'l Corp. &
1997 Beer Beer Pkg. Enter. Other Elims <F1> Consol.
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT INFORMATION:
Gross sales $10,023.9 784.8 1,867.2 756.2 151.7 (751.4) $12,832.4
Net sales - external $ 8,257.7 784.8 1,150.8 756.2 116.7 -- $11,066.2
Net sales - intersegment $ -- -- 716.4 -- 35.0 (751.4) $ --
Depreciation & amortization $ 459.8 7.7 100.5 83.5 6.3 25.9 $ 683.7
Income before income taxes $ 1,984.8 18.2 115.0 115.3 8.8 (409.6) $ 1,832.5
Equity income, net of tax $ -- 50.3 -- -- -- -- $ 50.3
Income from
continuing operations $ 1,230.6 61.6 71.3 71.5 5.5 (261.3) $ 1,179.2
BALANCE SHEET INFORMATION:
Total assets $ 7,121.1 1,636.9 863.9 1,291.7 220.1 593.4 $11,727.1
Equity method investments $ -- 1,045.6 -- -- -- -- $ 1,045.6
Foreign-located fixed assets $ -- 128.7 -- -- -- -- $ 128.7
Capital expenditures $ 888.5 36.8 98.1 140.1 15.0 20.8 $ 1,199.3
- ------------------------------------------------------------------------------------------------------------------------
<FN>
<FNote 1:> Corporate assets principally include cash, marketable securities,
deferred charges and certain fixed assets. Eliminations impact only
gross and intersegment sales.
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 55
--
<PAGE> 32
FINANCIAL SUMMARY -- OPERATIONS
Anheuser-Busch Companies and Subsidiaries
<TABLE>
<CAPTION>
(In millions, except per share data) 1999 1998 1997
<S> <C> <C> <C>
Consolidated Summary of Operations:
Barrels of A-B beer brands sold worldwide 102.9 99.8 96.6
=================================================
Gross sales $13,723.3 $13,207.9 $12,832.4
Excise taxes (2,019.6) (1,962.1) (1,766.2)
-------------------------------------------------
Net sales 11,703.7 11,245.8 11,066.2
Cost of products and services (7,254.4) (7,162.5) (7,096.9)
-------------------------------------------------
Gross profit 4,449.3 4,083.3 3,969.3
Marketing, distribution and administrative expenses (2,147.0) (1,958.0) (1,916.3)
Gain on sale of St. Louis Cardinals -- -- --
Shutdown of Tampa brewery -- -- --
Restructuring charge -- -- --
-------------------------------------------------
Operating income 2,302.3 2,125.3 2,053.0
Interest expense (307.8) (291.5) (261.2)
Interest capitalized 18.2 26.0 42.1
Interest income 4.3 5.8 7.9
Other income/(expense), net (9.4) (13.0) (9.3)
-------------------------------------------------
Income before income taxes 2,007.6 1,852.6 1,832.5
Provision for income taxes (current and deferred) (762.9) (704.3) (703.6)
Revaluation of deferred tax liability under FAS 109 -- -- --
Equity income, net of tax 157.5 85.0 50.3
-------------------------------------------------
Income from continuing operations 1,402.2 1,233.3 1,179.2
Income/(loss) from discontinued operations -- -- --
-------------------------------------------------
Income before accounting changes 1,402.2 1,233.3 1,179.2
Cumulative effect of accounting changes -- -- (10.0) <F1>
-------------------------------------------------
Net income $ 1,402.2 $ 1,233.3 $ 1,169.2
=================================================
Basic Earnings Per Share:
Income from continuing operations $ 2.99 $ 2.56 $ 2.39
Income/(loss) from discontinued operations -- -- --
-------------------------------------------------
Income before accounting changes 2.99 2.56 2.39
Cumulative effect of accounting changes -- -- (.02) <F1>
-------------------------------------------------
Net income $ 2.99 $ 2.56 $ 2.37
=================================================
Diluted Earnings Per Share:
Income from continuing operations $ 2.94 $ 2.53 $ 2.36
Income/(loss) from discontinued operations -- -- --
-------------------------------------------------
Income before accounting changes 2.94 2.53 2.36
Cumulative effect of accounting changes -- -- (.02) <F1>
-------------------------------------------------
Net income $ 2.94 $ 2.53 $ 2.34
=================================================
Cash dividends paid on common stock $ 544.7 $ 521.0 $ 492.6
Per share 1.16 1.08 1.00
Weighted average number of common shares:
Basic 469.5 482.1 492.6
Diluted 476.8 487.5 499.7
- -----------------------------------------------------------------------------------------------------------------------
All per share information and weighted average number of common shares data
reflect the September 12, 1996 two-for-one stock split and the 1997 adoption
of FAS 128, "Earnings per Share," as applicable. All financial information has
been restated to recognize the 1995 divestiture of the Food Products segment.
All amounts include the acquisition of SeaWorld as of December 1, 1989.
<FN>
<FNote 1:> 1997 change in accounting for deferred systems re-engineering costs,
net of tax benefit of $6.2 million. 1992 change in accounting for
income taxes and other postretirement benefits, net of tax benefit
of $186.4 million.
</TABLE>
56 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 33
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
95.1 90.9 91.3 89.7 88.9 87.9 88.1 82.2
========================================================================================================================
$12,621.5 $12,004.5 $11,705.0 $11,147.3 $11,008.6 $10,631.9 $9,716.1 $8,553.7
(1,737.8) (1,664.0) (1,679.7) (1,679.8) (1,668.6) (1,637.9) (868.1) (802.3)
- ------------------------------------------------------------------------------------------------------------------------
10,883.7 10,340.5 10,025.3 9,467.5 9,340.0 8,994.0 8,848.0 7,751.4
(6,964.6) (6,791.0) (6,492.1) (6,167.6) (6,051.8) (5,953.5) (5,963.4) (5,226.5)
- ------------------------------------------------------------------------------------------------------------------------
3,919.1 3,549.5 3,533.2 3,299.9 3,288.2 3,040.5 2,884.6 2,524.9
(1,890.0) (1,756.6) (1,679.9) (1,612.1) (1,583.7) (1,409.5) (1,364.9) (1,244.3)
54.7 -- -- -- -- -- -- --
-- (160.0) -- -- -- -- -- --
-- -- -- (401.3) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
2,083.8 <F2> 1,632.9 <F3> 1,853.3 1,286.5 <F4> 1,704.5 1,631.0 1,519.7 1,280.6
(232.8) (225.9) (219.3) (205.1) (194.6) (234.0) (277.2) (172.9)
35.5 24.3 21.8 35.2 46.9 45.6 52.5 49.8
9.4 9.9 2.6 3.4 4.4 6.6 4.3 7.9
(3.0) 20.5 17.6 21.0 (2.5) 1.3 (16.5) 17.7
- ------------------------------------------------------------------------------------------------------------------------
1,892.9 <F2> 1,461.7 <F3> 1,676.0 1,141.0 <F4> 1,558.7 1,450.5 1,282.8 1,183.1
(736.8) (575.1) (661.5) (452.6) (594.6) (549.6) (481.4) (438.2)
-- -- -- (31.2) -- -- -- --
-- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
1,156.1 <F2> 886.6 <F3> 1,014.5 657.2 <F4> 964.1 900.9 801.4 744.9
33.8 (244.3) 17.6 (62.7) 30.1 38.9 41.0 22.3
- ------------------------------------------------------------------------------------------------------------------------
1,189.9 642.3 1,032.1 594.5 994.2 939.8 842.4 767.2
-- -- -- -- (76.7) <F1> -- -- --
- ------------------------------------------------------------------------------------------------------------------------
$ 1,189.9 $ 642.3 $ 1,032.1 $ 594.5 $ 917.5 $ 939.8 $ 842.4 $ 767.2
========================================================================================================================
$ 2.31 $ 1.73 $ 1.93 $ 1.20 $ 1.71 $ 1.59 $ 1.42 $ 1.32
.07 (.47) .04 (.11) .05 .06 .07 .04
- ------------------------------------------------------------------------------------------------------------------------
2.38 1.26 1.97 1.09 1.76 1.65 1.49 1.36
-- -- -- -- (.13) <F1> -- -- --
- ------------------------------------------------------------------------------------------------------------------------
$ 2.38 $ 1.26 $ 1.97 $ 1.09 $ 1.63 $ 1.65 $ 1.49 $ 1.36
========================================================================================================================
$ 2.27 <F2> $ 1.71 <F3> $ 1.90 $ 1.20 <F4> $ 1.68 $ 1.56 $ 1.40 $ 1.30
.07 (.47) .04 (.11) .05 .06 .07 .04
- ------------------------------------------------------------------------------------------------------------------------
2.34 1.24 1.94 1.09 1.73 1.62 1.47 1.34
-- -- -- -- (.13) <F1> -- -- --
- ------------------------------------------------------------------------------------------------------------------------
$ 2.34 $ 1.24 $ 1.94 $ 1.09 $ 1.60 $ 1.62 $ 1.47 $ 1.34
========================================================================================================================
$ 458.9 $ 429.5 $ 398.8 $ 370.0 $ 338.3 $ 301.1 $ 265.0 $ 226.2
.92 .84 .76 .68 .60 .53 .47 .40
499.1 510.9 524.6 544.3 563.7 568.0 563.7 565.5
510.6 524.4 538.0 558.6 581.6 585.8 579.4 572.4
- ------------------------------------------------------------------------------------------------------------------------
<FN>
<FNote 2:> 1996 results include the impact of the gain on the sale of the
St. Louis Cardinals. Excluding the Cardinal gain, operating income,
pretax income, income from continuing operations and diluted
earnings per share would have been $2,029.1 million, $1,838.2
million, $1,122.7 million and $2.21, respectively.
<FNote 3:> 1995 results include the impact of the one-time pretax charge of
$160 million for the closure of the Tampa brewery, and the $74.5
million pretax impact of the beer wholesaler inventory reduction.
Excluding these nonrecurring special items, operating income,
pretax income, income from continuing operations and diluted
earnings per share would have been $1,867.4 million, $1,696.2
million, $1,032.3 million and $1.99, respectively.
<FNote 4:> 1993 results include the impact of two nonrecurring special charges.
These charges are (1) a restructuring charge ($401.3 million,
pretax) and (2) a revaluation of the deferred tax liability due to
the 1% increase in federal tax rates ($31.2 million, after-tax).
Excluding these nonrecurring special charges, operating income,
pretax income, income from continuing operations and diluted
earnings per share would have been $1,687.8 million, $1,542.3
million, $935.2 million and $1.69, respectively.
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 57
--
<PAGE> 34
FINANCIAL SUMMARY -- BALANCE SHEET AND OTHER INFORMATION
Anheuser-Busch Companies and Subsidiaries
<TABLE>
<CAPTION>
(In millions, except per share and statistical data) 1999 1998 1997
<S> <C> <C> <C>
Balance Sheet Information:
Working capital (deficit) $ (386.6) $ (89.9) $ 83.2
Current ratio 0.8 0.9 1.1
Debt 5,122.9 4,718.6 4,365.6
Shareholders equity 3,921.5 4,216.0 4,041.8
Return on shareholders equity 34.5% 29.9% 29.2% <F1>
Debt to total capitalization ratio 56.6% 52.8% 51.9%
Book value per share 8.50 8.84 8.30
Total assets $12,640.4 12,484.3 11,727.1
Other Information:
Capital expenditures $ 865.3 $ 817.5 $ 1,199.3
Price/earnings ratio 24.1 25.9 18.6 <F1>
Market price range of common stock (high and low closing) 81-5/8-65-3/16 68-1/4-43-7/16 47-7/8-39-1/2
- ---------------------------------------------------------------------------------------------------------------------------------
All share and per share information reflects the September 12, 1996 two-for-one
stock split. All financial information has been restated to recognize the 1995
divestiture of the Food Products segment. All amounts include the acquisition
of SeaWorld as of December 1, 1989.
<FN>
<FNote 1:> These ratios have been calculated based on income from continuing
operations before the cumulative effect of accounting changes.
</TABLE>
58 1999 Annual Report ANHEUSER-BUSCH COMPANIES
- --
<PAGE> 35
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
$ 34.9 $ 268.6 $ 57.0 $ (41.3) $ 247.8 $ 107.9 $ (62.8) $ (82.8)
1.0 1.2 1.0 1.0 1.2 1.1 0.9 0.9
3,270.9 3,270.1 3,066.4 3,019.7 2,630.3 2,627.9 3,115.8 3,268.9
4,029.1 4,433.9 4,415.5 4,255.5 4,620.4 4,438.1 3,679.1 3,099.9
30.0% <F2> 25.0% <F3> 29.9% 18.8% <F4> 27.6% <F1> 30.2% 34.0% 34.6%
44.8% 47.1% 47.3% 47.3% 42.0% 43.9% 54.5% 60.7%
8.10 7.22 6.64 6.31 6.51 5.90 4.60 3.74
10,463.6 10,590.9 10,547.4 10,267.7 9,954.9 9,642.5 9,274.2 8,690.1
$ 1,084.6 $ 952.5 $ 662.8 $ 656.3 $ 628.8 $ 625.5 $ 805.3 $ 979.0
17.6 <F2> 19.6 <F3> 13.1 22.6 <F4> 16.9 <F1> 18.9 14.6 14.4
42-7/8-32-1/2 34-25-3/8 27-5/8-23-1/2 30-22 30-1/4-26 30-3/4-19-3/4 22-1/2-17-1/8 22-7/8-15-1/4
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
<FNote 2:> These ratios have been calculated based on reported income from
continuing operations, which includes the $54.7 million pretax gain
on the sale of the St. Louis Cardinals. Excluding the Cardinal gain,
return on shareholders equity would have been 29.2% and the
price/earnings ratio would have been 18.1.
<FNote 3:> These ratios have been calculated based on reported income from
continuing operations. Excluding the two nonrecurring 1995 items
($160 million pretax charge for closure of the Tampa brewery and
$74.5 million impact of the beer wholesaler inventory reduction),
return on shareholders equity would have been 29.1% and the price/
earnings ratio would have been 16.8.
<FNote 4:> These ratios have been calculated based on reported income from
continuing operations. Excluding the two nonrecurring 1993 charges
($401.3 million pretax restructuring charge and $31.2 million
after-tax FAS 109 charge), return on shareholders equity would have
been 26.7% and the price/earnings ratio would have been 13.8.
</TABLE>
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 59
--
<PAGE> 1
<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
Anheuser-Busch Asia, Inc. Delaware Anheuser-Busch Asia, Inc.
Anheuser-Busch Australia Limited Delaware Anheuser-Busch Australia Limited
Anheuser-Busch Distributors of Delaware Anheuser-Busch Distributors of
New York, Inc. New York, Inc.
Anheuser-Busch Entertainment Delaware Anheuser-Busch Entertainment
Limited Limited
Anheuser-Busch Europe, Inc. Delaware Anheuser-Busch Europe, Inc.
Anheuser-Busch European Trade United Kingdom Anheuser-Busch European Trade
Limited Limited
Anheuser-Busch Import Investments, Delaware Anheuser-Busch Import Investments,
Inc. Inc.
Anheuser-Busch International, Inc. Delaware Anheuser-Busch International, Inc.
Anheuser-Busch International Delaware Anheuser-Busch International
Holdings, Inc. Holdings, Inc.
Anheuser-Busch Investments, S.L. Barcelona, Spain Anheuser-Busch Investments, S.L.
Anheuser-Busch Latin American Delaware Anheuser-Busch Latin American
Development Corporation Development Corporation
Anheuser-Busch Mexico, Inc. Delaware Anheuser-Busch Mexico, Inc.
Anheuser-Busch Recycling Ohio Anheuser-Busch Recycling
Corporation Corporation
Anheuser-Busch Sales of Hawaii, Inc. Delaware Anheuser-Busch Sales of Hawaii, Inc.
Anheuser-Busch Sales of South Bay, Delaware Anheuser-Busch Sales of South Bay,
Inc. Inc.
<PAGE> 2
SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC.
----------------------------------------------
<CAPTION>
STATE OF DOING BUSINESS
NAME OF COMPANY INCORPORATION UNDER NAME OF
- --------------- ------------- --------------
<S> <C> <C>
Anheuser-Busch Spanish Holdings, Delaware Anheuser-Busch Spanish Holdings,
Inc. Inc.
Anheuser-Busch Wholesaler Delaware Anheuser-Busch Wholesaler
Development Corp. Development Corp.
Anheuser-Busch World Trade Ltd. Delaware Anheuser-Busch World Trade Ltd.
August A. Busch & Co. of Massachusetts August A. Busch & Co. of
Massachusetts, Inc. Massachusetts, Inc.
BARI-Canada, Inc. Delaware BARI-Canada, Inc.
Boardwalk and Baseball, Inc. Delaware Boardwalk and Baseball, Inc.
Budweiser Japan Company, Ltd. Japan Budweiser Japan Company, Ltd.
Budweiser Philippines, Inc. Delaware Budweiser Philippines, Inc.
Budweiser Wuhan International China Budweiser Wuhan International
Brewing Company Limited Brewing Company Limited
Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc.
Busch Agricultural Resources Delaware Busch Agricultural Resources
International, Inc. International, Inc.
Busch Biotech, Inc. Delaware Busch Biotech, Inc.
Busch Creative Services Corporation Delaware Busch Creative Services Corporation
Busch Entertainment Corporation Delaware Busch Entertainment Corporation
Busch Foreign Sales Corporation Barbados Busch Foreign Sales Corporation
Busch International Sales Delaware Busch International Sales
Corporation Corporation
Busch Investment Corporation Delaware Busch Investment Corporation
Busch Mechanical Services, Inc. Delaware Busch Mechanical Services, Inc.
Busch Media Group, Inc. Delaware Busch Media Group, Inc.
Busch Properties, Inc. Delaware Busch Properties, Inc.
Busch Properties of Florida, Inc. Florida Busch Properties of Florida, Inc.
<PAGE> 3
SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC.
----------------------------------------------
<CAPTION>
STATE OF DOING BUSINESS
NAME OF COMPANY INCORPORATION UNDER NAME OF
- --------------- ------------- --------------
<S> <C> <C>
Civic Center Corporation Missouri Civic Center Corporation
Coleridge Corporation Delaware Coleridge Corporation
Consolidated Farms, Inc. Delaware Consolidated Farms, Inc.
Eagle Packaging, Inc. Delaware Eagle Packaging, Inc.
Fairfield Transport, Inc. Delaware Fairfield Transport, Inc.
HSH of Orlando, Inc. Florida HSH of Orlando, Inc.
Kingsmill Realty, Inc. Virginia Kingsmill Realty, Inc.
Litchfield Development Corporation Delaware Litchfield Development Corporation
Manufacturers Cartage Company Missouri Manufacturers Cartage Company
Manufacturers Railway Company Missouri Manufacturers Railway Company
Metal Container Corporation Delaware Metal Container Corporation
Metal Container Corporation of California Metal Container Corporation of
California California
Metal Label Corporation Tennessee Metal Label Corporation
M.R.S. Redevelopment Corporation Missouri M.R.S. Redevelopment Corporation
MRS Transport Company Texas MRS Transport Company
Nutri-Turf, Inc. Delaware Nutri-Turf, Inc.
Pacific International Rice Mills, Delaware Pacific International Rice Mills,
Inc. Inc.
Packaging Business Services, Inc. Delaware Packaging Business Services, Inc.
Pestalozzi Street Insurance Bermuda Pestalozzi Street Insurance
Company, Ltd. Company, Ltd.
Precision Printing and Packaging, Delaware Precision Printing and Packaging,
Inc. Inc.
Sea World, Inc. Delaware Sea World, Inc.
<PAGE> 4
SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC.
----------------------------------------------
<CAPTION>
STATE OF DOING BUSINESS
NAME OF COMPANY INCORPORATION UNDER NAME OF
- --------------- ------------- --------------
<S> <C> <C>
Sea World of Florida, Inc. Florida Sea World of Florida, Inc.
Sea World of Texas, Inc. Delaware Sea World of Texas, Inc.
Stag Brewing Company Limited England Stag Brewing Company Limited
St. Louis Refrigerator Car Company Delaware St. Louis Refrigerator Car Company
Wholesaler Equity Development Delaware Wholesaler Equity Development
Corporation Corporation
Williamsburg Transport, Inc. Virginia Williamsburg Transport, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 152,100
<SECURITIES> 0
<RECEIVABLES> 629,000
<ALLOWANCES> 0
<INVENTORY> 623,800
<CURRENT-ASSETS> 1,600,600
<PP&E> 14,379,600
<DEPRECIATION> 6,415,000
<TOTAL-ASSETS> 12,640,400
<CURRENT-LIABILITIES> 1,987,200
<BONDS> 5,122,900
<COMMON> 716,100
0
0
<OTHER-SE> 3,205,400
<TOTAL-LIABILITY-AND-EQUITY> 12,640,400
<SALES> 11,703,700
<TOTAL-REVENUES> 11,703,700
<CGS> 7,254,400
<TOTAL-COSTS> 9,401,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 307,800
<INCOME-PRETAX> 2,007,600
<INCOME-TAX> 762,900
<INCOME-CONTINUING> 1,402,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,402,200
<EPS-BASIC> 2.99
<EPS-DILUTED> 2.94
</TABLE>
