-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, V4VqjO7XurcmLDuA6lI8FLJ1iJXNJtuemsWfLfMyU9svtj/VEb18mi+VPkmlinby cu4cLDa7odOiGRUsJD8fBQ== 0000310569-94-000004.txt : 19941013 0000310569-94-000004.hdr.sgml : 19941013 ACCESSION NUMBER: 0000310569-94-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940324 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC CENTRAL INDEX KEY: 0000310569 STANDARD INDUSTRIAL CLASSIFICATION: 2082 IRS NUMBER: 431162835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07823 FILM NUMBER: 94517588 BUSINESS ADDRESS: STREET 1: ONE BUSCH PL STREET 2: C/O OFFICE OF THE VP & SEC'Y CITY: ST LOUIS STATE: MO ZIP: 63118 BUSINESS PHONE: 3145773314 MAIL ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 10-K 1 FORM 10-K 12-31-93 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ----------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER 1-7823 DECEMBER 31, 1993 ----------------- 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:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- COMMON STOCK-$1 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE 8 5/8% SINKING FUND DEBENTURES, DUE DECEMBER 1, 2016 NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE ----------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. $13,033,120,000 AS OF FEBRUARY 28, 1994 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. $1 PAR VALUE COMMON STOCK 265,804,242 SHARES AS OF MARCH 8, 1994 DOCUMENTS INCORPORATED BY REFERENCE Portions of Annual Report to Shareholders for the Year ended December 31, 1993.... PART I, PART II, and PART IV Portions of Definitive Proxy Statement for Annual Meeting of Shareholders on April 27, 1994......................................................................... PART I and PART III
=============================================================================== 2 PART I ITEM 1. BUSINESS Anheuser-Busch Companies, Inc. (the "Company") is a Delaware corporation that was organized in 1979 as the holding company parent of Anheuser-Busch, Incorporated ("ABI"), a Missouri corporation whose origins date back to 1875. In addition to ABI, which is the world's largest brewer of beer, the Company is also the parent corporation to a number of subsidiaries that conduct various other business operations, including those related to the brewing of beer, the manufacture of metal beverage containers, the recycling of metal and glass beverage containers, the production and sale of food and food-related products, and the operation of theme parks. Financial information with respect to the Company's business segments appears in financial statement note 15, "Business Segments," on page 57 of the 1993 Annual Report to Shareholders, which note hereby is incorporated by reference. BEER AND BEER-RELATED OPERATIONS The Company's principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names Budweiser, Bud Light, Bud Dry Draft, Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Busch, Busch Light, Natural Light, Natural Pilsner, King Cobra, and O'Doul's (a non-alcoholic malt beverage). Additionally, ABI imports Carlsberg and Carlsberg Light beers and Elephant Malt Liquor in U.S. markets as part of an agreement with the Denmark based Carlsberg A/S (formerly United Breweries, Ltd.), brewer of the brands. A new brand, Ice Draft from Budweiser, was introduced in the fourth quarter of 1993. Sales of beer by the Company aggregated 87.3 million barrels in 1993 as compared with 86.8 million barrels in 1992 and accounted for approximately 66% of consolidated net sales dollars in 1993. In 1992 and 1991 the percentage was 67%. Budweiser, Bud Light, Bud Dry Draft, Ice Draft from Budweiser, Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Busch, Busch Light, Natural Light, Carlsberg, Elephant Malt Liquor, and O'Doul's are sold in both draught and packaged form. Natural Pilsner, King Cobra, and Carlsberg Light are sold only in packaged form. Budweiser, Bud Light, Bud Dry Draft, Ice Draft from Budweiser, Michelob, Michelob Light, Michelob Dry, Michelob Classic Dark, Natural Light, and O'Doul's are distributed and sold on a nationwide basis. Busch and Busch Light are distributed in 46 states, Natural Pilsner in 6 states, and King Cobra is distributed in 45 states. Michelob Golden Draft and Michelob Golden Draft Light are sold in 13 states. ABI's imported beer, Carlsberg is distributed in 45 states, Carlsberg Light in 28 states, and Elephant Malt Liquor is distributed in 38 states. Normally, due to the seasonality of the industry, sales of ABI's beers are at their lowest volume level in the first and fourth quarters of each year and at their highest in the second and third quarters. In 1993 the barrels sold in the lowest quarter (first quarter) differed by almost 19% from the barrels sold in the highest quarter (third quarter). ABI's 1994 quarterly sales to wholesalers volume growth is not expected to follow a consistent pattern; first quarter shipments in 1994 increased more significantly due to the roll-out of Ice Draft from Budweiser and higher planned inventory levels. ABI has developed a system of thirteen breweries, strategically located across the country, to economically serve its distribution system. (See Item 2 of Part I-Properties.) A major modernization of the St. Louis brewery is continuing. The thirteenth brewery, located near Cartersville, Georgia, began operation in the second quarter of 1993. ABI utilizes wholesaler and ABI owned branch warehouses to build inventory in early spring to support peak summer sales. By using controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are protected, while maximizing the utilization of production facilities throughout the entire year. During 1993 approximately 96% of the beer sold by ABI, measured in barrels, reached retail channels through approximately 900 independent wholesalers. ABI utilizes its regional vice presidents, sales directors, key account and retail sales managers, as well as certain other field sales personnel, to provide merchandising and sales assistance to its wholesalers. In addition, ABI provides national and local media advertising, point-of-sale advertising, and sales 1 3 promotion programs to help stimulate sales. The remainder of ABI's domestic beer sales in 1993 were made through ten ABI owned and operated branches, which perform similar sales, merchandising, and delivery services as wholesalers in their respective areas. There are over 100 companies engaged in the highly competitive brewing industry in the United States. ABI's domestic beers are distributed and sold in competition with other nationally distributed beers, with locally and regionally distributed beers and, to a lesser extent, with imported beers. Although the methods of competition in the industry vary widely among industry members and among states due to differences in applicable state laws, the principal methods of competition are the quality, taste and freshness of the products, packaging, price, advertising including television, radio, sponsorships, billboards, stadium signs, and print media, point-of-sale materials and service to retail customers including the replacement of over-age products with fresh products at no cost to the retailer. ABI's beers compete in different price categories. Although all brands compete against the total market, Budweiser, Bud Light, Bud Dry Draft, Ice Draft from Budweiser, Michelob Golden Draft, and Michelob Golden Draft Light compete primarily with premium priced beers. Michelob, Michelob Light, Michelob Dry, and Michelob Classic Dark compete primarily with super-premium priced beers. Busch, Busch Light, Natural Light, and Natural Pilsner compete with the sub-premium or popular priced beers. King Cobra competes against other brands in the malt liquor segment. Carlsberg, Carlsberg Light beers, and Elephant Malt Liquor compete primarily with imported malt beverages. O'Doul's competes in the premium priced non-alcoholic malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 1993 its sales exceeded those of its nearest competitor by over 44 million barrels and constituted approximately 44.3% of industry sales volume, including imports and non-alcohol malt beverage sales. Major competitors in the United States brewing industry during 1993 included Philip Morris, Inc. (through its subsidiary Miller Brewing Co.), Adolph Coors Co., Stroh Brewery Co., and G. Heileman Brewing Co. Through various subsidiaries, the Company is involved in a number of beer-related operations. Anheuser-Busch International, Inc. ("ABII"), a wholly-owned subsidiary of the Company, negotiates and administers licensed brewing contracts on behalf of ABI with various foreign brewers. The Labatt Brewing Company Limited ("Labatt") brews Budweiser and Bud Light for sale in Canada. ABI, through ABII, participates in a joint venture in Japan, Budweiser Japan Company, Ltd., of which the Company is a 90% shareholder, with Kirin Brewery Company, Ltd. for production, distribution and sale of Budweiser. Through Anheuser-Busch European Trade Limited ("ABET"), an indirect, wholly-owned subsidiary of the Company, ABI's beer brands are sold, marketed and distributed in nineteen European countries. In the United Kingdom (U.K.), ABET has full control of sales, marketing and distribution for the Budweiser and Michelob brands to both the on- and off-trade sectors. Budweiser for the U.K. market is brewed under the terms of a contract brewing agreement with Courage Ltd., with Michelob imported by ABII. Guinness Ireland, Ltd. markets and brews Budweiser under license for sale in The Republic of Ireland. Oriental Brewery Ltd. brews Budweiser under license for sale in the Republic of Korea. ABI's beer products are also being sold under import-distribution agreements in more than 60 countries and U.S. territories and to the U.S. military and diplomatic corps outside the continental United States. ABII also oversees the Company's 17.7% equity investment in Mexico's largest brewer, Grupo Modelo, S.A. de C.V. and its subsidiaries, and the Company's 5% interest in Tsingtao Brewery Company Limited, China's largest brewer. Both of these investments occurred in 1993. The Company's wholly-owned subsidiary, Metal Container Corporation ("MCC"), manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI and to soft drink and export customers. (See Item 2 of Part 1-Properties). MCC's eighth can plant located in Rome, Georgia began operation in the fourth quarter of 1993. Construction is in progress on a can plant in Mira Loma, California, which is scheduled to begin production in 1995. The Mira Loma can plant will replace MCC's can plant in Carson, California. Another wholly- owned subsidiary of the Company, Anheuser-Busch Recycling Corporation ("ABRC"), recycles non-refillable cans and bottles and operates refillable bottle sorting facilities in Marion, Ohio and Nashua, New Hampshire; ABRC's facilities in Union City, California, Cocoa, Florida, and Charlotte, North Carolina recycle aluminum beverage cans and its facility in Bridgeport, New Jersey recycles glass containers from curbside collections from municipal systems in Pennsylvania and New Jersey. The Company's wholly-owned subsidiary, Busch Agricultural Resources, Inc. ("BARI"), operates rice drying, milling and research facilities in Arkansas and California, twelve grain elevators in the western and midwestern United States, barley seed processing plants in Moorhead, Minnesota, Fairfield, Montana, Idaho Falls, Idaho, and Powell, Wyoming, a barley research facility in Colorado, and a wild rice processing facility in Minnesota. Through 2 4 wholly-owned subsidiaries, BARI operates land application farms in Jacksonville, Florida, Robersonville, North Carolina, Fayetteville, Tennessee, and Fort Collins, Colorado, hop farms in northern Idaho and Germany, and an international office in Mar del Plata, Argentina. BARI also owns malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho. The Company has owned for several years a joint venture interest in International Label Company. On December 31, 1993, the Company acquired the remaining interest in the joint venture from Illochroma International, S.A. The Company's wholly owned subsidiary, Precision Printing and Packaging, Inc. ("Precision Printing") now conducts the business previously conducted by International Label Company. Precision Printing produces metalized and paper labels at its plant in Clarksville, Tennessee and produces plain and printed folding cartons at its plant in Paris, Texas. Another wholly-owned subsidiary, Anheuser-Busch Investment Capital Corporation, shares equity positions with qualified partners in ABI independent wholesalerships and is currently invested in 21 wholesalerships. Through other wholly-owned subsidiaries, the Company owns and operates a marketing communications business (Busch Creative Services Corporation) and a transportation service business (Manufacturers Railway Co. and St. Louis Refrigerator Car Co.). FOOD PRODUCTS The Company's wholly-owned subsidiary, Campbell Taggart, Inc. ("CTI"), is a holding company whose operating subsidiaries are principally involved in the production and distribution of baked goods, refrigerated and frozen dough products, and edible oil products for sale to retail and food service companies. CTI's domestic bakery subsidiary operates a total of 41 bakeries; one subsidiary operates three refrigerated dough plants, four cake, variety bread and snack food plants, a cookie plant, a crouton plant, two refrigerated salad dressing, snack dips and toppings manufacturing plants; and one subsidiary operates a refrigerated warehouse in Puerto Rico. CTI's domestic bakeries and manufacturing plants are located in 19 states. CTI affiliated European companies operate eight bakeries in Spain, and one refrigerated dough plant in France, and distribute salted snacks under the Eagle Snacks line in Spain. The principal products of CTI's baking and refrigerated dough operations are baked bread, rolls, snack cake and other sweet goods and crackers, and refrigerated biscuits, rolls, and sweet goods. Baked products are sold principally on a wholesale basis throughout the southeast, midwest, and southwest United States (including parts of California), and in Spain. Refrigerated dough products, most of which are sold under private or controlled label agreements, are distributed throughout the United States and in the European Economic Community ("EEC"). The majority of the domestic bakery products are sold under the brand names Colonial, Rainbo, Kilpatrick's, Ironkids, Break Cake, Grant's Farm, and Earth Grains. These sales are to grocers, restaurants, and institutions, in areas generally within a range of 100 to 400 miles of the producing bakery, through a variety of distribution systems. In the U.S., refrigerated dough product distribution is principally by direct sales to large wholesale purchasers or through independent brokers, for delivery by refrigerated tractor-trailer units. In the EEC, selling is principally through contract packing arrangements with other food companies. Certain products produced by CTI's bakery subsidiary are also sold on a retail basis through bakery stores operated by the CTI bakeries. The bakeries compete with other wholesale bakeries, large grocery chains that have vertically integrated and in-store bakeries, small retail bakeries, and with many producers of alternative foods. The baking business is, to a large extent, a localized business, and the names and number of competitors vary from city to city. The refrigerated dough division competes primarily with Pillsbury Co. (owned by Grand Metropolitan (U.K.)), the other major company in that industry, and its refrigerated dough product line competes with other alternative foods. Due to the seasonality of the industry, sales of CTI's food products were at their lowest level in the first quarter of 1993 and at their highest in the fourth quarter. Based upon aggregate sales, the Company believes that CTI baking and refrigerated dough subsidiaries collectively are the second largest producer of bread, bread-type products, and refrigerated dough products in the United States. The Company's wholly-owned subsidiary, Eagle Snacks, Inc. ("ESI"), produces and distributes (through ABI's beer distribution network, independent wholesalers, and CTI) a line of salted snacks and nut items under the Eagle Snacks and Cape Cod brand names. ESI products are distributed nationally and in selected international markets. ESI 3 5 operates a kettle-cooked chip manufacturing facility in Hyannis, Massachusetts and snack food manufacturing plants in Robersonville, North Carolina, Fayetteville, Tennessee, Visalia, California, and York, Pennsylvania. The food business is highly competitive. There is intense price, product, and service competition with respect to all of the Company's food products. Sales of the Company's food products accounted for approximately 20% of consolidated net sales dollars in each of the last three years. FAMILY ENTERTAINMENT The Company is active in the family entertainment field, primarily through its wholly-owned subsidiary, Busch Entertainment Corporation ("BEC"), which owns, directly and through subsidiaries, ten theme parks. BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and Sea World theme parks in Orlando, Florida, San Antonio, Texas, Aurora, Ohio, and San Diego, California. BEC also operates water park attractions in Tampa, Florida (Adventure Island) and Williamsburg, Virginia (Water Country, U.S.A.), an educational play park for children near Philadelphia, Pennsylvania (Sesame Place), Cypress Gardens in Winter Haven, Florida, and the Baseball City Sports Complex near Orlando, Florida. Due to the seasonality of the theme park business, in 1993 BEC experienced higher revenues in the second and third quarters and lower revenues in the first and fourth quarters. Through a Spanish affiliate, the Company also holds a minority interest in Grand Peninsula, S.A., which is constructing a theme park and resort near Barcelona, Spain. The park is scheduled to open in 1995. The Company is also active in the family entertainment field through its ownership of the St. Louis National Baseball Club, Inc. (St. Louis Cardinals). The Company faces competition in the family entertainment field from other theme and amusement parks, public zoos, public parks, sporting events and other family entertainment events and attractions. Through its wholly-owned subsidiary, Busch Properties, Inc. ("BPI"), the Company is engaged in the business of real estate development. BPI also owns and operates a resort and conference center in Williamsburg, Virginia (Kingsmill). Through another wholly-owned subsidiary, Civic Center Corporation, the Company owns Busch Stadium and other properties in downtown St. Louis. SOURCES AND AVAILABILITY OF RAW MATERIALS The products manufactured by the Company require a large volume of various agricultural products, including barley for malt; hops, malt, rice, and corn grits for beer; peanuts, cashews, vegetable oils, corn, flour, and potatoes for the products of ESI; flours, sugars, and vegetable oils for the bakery products of CTI's subsidiaries; and rice for the rice milling and packaging operations of BARI. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements, and through purchases on the open market. The Company believes that adequate supplies of the aforementioned agricultural products are available at the present time, but cannot predict future availability or prices of such products and materials. The commodity markets have experienced and will continue to experience major price fluctuations. The price and supply of raw materials will be determined by, among other factors, the level of crop production, weather conditions, export demand, and government regulations and legislation affecting agriculture. ENERGY MATTERS The Company uses natural gas, fuel oil, and coal as its primary fuel materials. All of ABI's breweries can operate with either natural gas or fuel oil. The St. Louis brewery has the additional capability to use coal. Natural gas is the basic fuel used to fire the ovens in CTI's bakeries, and gasoline and diesel fuel are used in the route trucks and tractor-trailer units in distributing CTI's and ESI's products. Supplies of fuels in quantities sufficient to meet ABI's, CTI's and ESI's total requirements are expected to be available on a year-round basis during 1994. In an effort to prepare against possible future shortages, CTI and its subsidiaries have added standby propane systems to provide an alternate source of oven fuel and have improved fuel storage facilities in areas where it is believed most likely that shortages could occur in the future. The supply of natural gas, fuel oils and coal is normally covered by yearly contracts and no difficulty has been experienced in entering into these contracts. The cost of fuels used by ABI increased in 1993 and is expected to increase slightly in 1994. The cost of boiler fuel utilized by CTI increased 4 6 significantly in 1993 while the cost of road fuels was steady. The cost of fuels utilized by CTI are expected to increase only moderately in 1994. Based upon information presently available, there can be no assurance that adequate supplies of fuel will always be available to the Company and, should such supplies not be available, the Company's sales and earnings would be adversely affected. BRAND NAMES AND TRADEMARKS The Company's major brand names used in its principal business segments are mentioned in the discussion above. The Company's major trademarks used in its principal business segments are described under the caption "Trademarks" on page 64 of the Company's 1993 Annual Report to Shareholders, which description is incorporated herein by reference. The Company regards consumer recognition of and loyalty to its brand names and trademarks as being extremely important to the long-term success of its principal business segments. RESEARCH AND DEVELOPMENT The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company. ENVIRONMENTAL PROTECTION All of the Company's plants are subject to federal, state, and local environmental protection laws and regulations, and the Company is operating within existing laws and regulations or is taking action aimed at assuring compliance therewith. Various proactive strategies are utilized to help assure this compliance. Compliance with such laws and regulations is not expected to materially affect the Company's capital expenditures, earnings, or competitive position. The Company has devoted considerable effort to research and engineering of cost effective innovative systems to minimize emission effects on the environment. A significant portion of pollution control expenditures in 1993 and projected for 1994 was or will be justified on the basis of cost reduction. Considerable efforts were directed toward the development and implementation of innovative and economical solutions to control emissions from our operating facilities. These projects, coupled with an overall Company emphasis on improving efficiencies and creating saleable by-products from residuals, have generally resulted in low cost operating systems while reducing the quantities of materials entering the air, water, and land environments. ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS The states of California, Connecticut, Delaware, Florida, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont, and a small number of local jurisdictions, have adopted certain restrictive packaging laws and regulations for beverages that generally require deposits or advanced disposal fees on packages or restrict certain packaging options. ABI continues to do business in these states and local jurisdictions. Such laws have not had a significant effect on ABI's sales, but have had a significant adverse impact on beer industry growth and are considered by the Company to be inflationary, costly, and inefficient for recycling packaging materials. Congress and a number of additional states continue to consider similar legislation, the adoption of which by Congress or a substantial number of states or additional local jurisdictions might require the Company to incur significant capital expenditures. NUMBER OF EMPLOYEES As of December 31, 1993, the Company had 43,345 employees. Approximately 13,522 employees are represented by the International Brotherhood of Teamsters. Nineteen other unions represent approximately 9,873 employees. ABI and the Brewery and Soft Drink Workers Conference of the International Brotherhood of Teamsters, which represents the majority of brewery workers, have tentatively agreed to a new labor agreement, which will be presented to the union membership for a ratification vote in late March, 1994. The current labor agreement which was scheduled to expire on February 28, 1994, has been extended pending the vote. The Company considers its employee relations to be good. 5 7 ITEM 2. PROPERTIES ABI has thirteen breweries in operation at the present time, located in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California; Jacksonville and Tampa, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. Title to the Baldwinsville, New York brewery is held by the Onondaga County Industrial Development Agency ("OCIDA") pursuant to a Sale and Agency Agreement with ABI, which enabled OCIDA to issue tax exempt pollution control and industrial development revenue notes and bonds to finance a portion of the cost of the purchase and modification of the brewery. The brewery is not pledged or mortgaged to secure any of the notes or bonds, and the Sale and Agency Agreement with OCIDA gives ABI the unconditional right to require at any time that title to the brewery be transferred to ABI. ABI's breweries operated at approximately 94% of capacity in 1993. The Company, through wholly-owned subsidiaries, operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota and Idaho Falls, Idaho; rice mills in Jonesboro, Arkansas and Woodland, California; a wild rice processing facility in Clearbrook, Minnesota; can manufacturing plants in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Carson, California, Newburgh, New York, Ft. Atkinson, Wisconsin, and Rome, Georgia; can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California; refillable bottle sorting facilities in Marion, Ohio and Nashua, New Hampshire; and snack food production plants in Robersonville, North Carolina, Hyannis, Massachusetts, Fayetteville, Tennessee, Visalia, California, and York, Pennsylvania. BEC operates its principal family entertainment facilities in Tampa, Florida; Williamsburg, Virginia; San Diego, California; Aurora, Ohio; Orlando, Florida; San Antonio, Texas; and Winter Haven, Florida. The Tampa facility is 265 acres, Williamsburg is 364 acres, San Diego is 165 acres, Aurora is 90 acres, Orlando is 224 acres, San Antonio is 496 acres, and the Winter Haven facility is 223 acres. The Company's wholly-owned subsidiary, CTI, through its domestic subsidiaries, operates 41 bakeries and 11 manufacturing plants in 19 states. CTI's international subsidiaries own and operate eight bakeries in Spain and a refrigerated dough manufacturing plant in France. CTI's domestic bakeries operate at approximately 75% of capacity, which is about average for the baking industry. Except for the Baldwinsville brewery, the can manufacturing plants in Carson, California and in Newburgh, New York, eleven CTI facilities, one ESI plant, and the Sea World park in San Diego, California, all of the Company's principal properties are owned in fee. The lease for the land used by the Sea World park in San Diego, California expires in 2033. Title to eight CTI facilities is currently held by development authorities for the jurisdictions in which the facilities are located pursuant to Industrial Development Bonds; the remaining CTI facilities are leased. The Company considers its buildings, improvements, and equipment to be well maintained and in good condition, irrespective of dates of initial construction, and adequate to meet the operating demands placed upon them. The production capacity of each of the manufacturing facilities is adequate for current needs and, except as described above, substantially all of each facility's capacity is utilized. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or its operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 1993. EXECUTIVE OFFICERS OF THE REGISTRANT AUGUST A. BUSCH III (age 56) is presently Chairman of the Board and President, and Director of the Company and has served in such capacities since 1977, 1974, and 1963, respectively. Since 1979 he has also served as Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch, Incorporated. During the past five years he also served as President of that subsidiary (1987-1990). JERRY E. RITTER (age 59) is presently Executive Vice President-Chief Financial and Administrative Officer of the Company and was appointed to serve in such capacity in 1990. He is also Vice President-Finance of the 6 8 Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 1982. During the past five years he also served as Vice President and Group Executive of the Company (1984-1990). MICHAEL J. ROARTY (age 65) is presently Executive Vice President- Corporate Marketing and Communications of the Company and was appointed to serve in such capacity in 1990. He is also presently Chairman of the Board of the Company's subsidiary, Busch Media Group, Inc., and Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Busch Creative Services Corporation, and was appointed to serve in each such capacity in 1990. During the past five years he also served as Vice President of the Company (1988-1990) and Executive Vice President-Marketing of the Company's subsidiary, Anheuser-Busch, Incorporated (1983-1990). Mr. Roarty has elected to retire from his positions with the Company and its subsidiaries in September 1994. Details of Mr. Roarty's retirement are set forth on page 18 in the Company's Proxy Statement for the Annual Meeting of Shareholders on April 27, 1994. PATRICK T. STOKES (age 51) is presently Vice President and Group Executive of the Company and has served in such capacity since 1981. He is also presently President of the Company's subsidiary, Anheuser- Busch, Incorporated, and was appointed to serve in such capacity in 1990. During the past five years he also served as Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Campbell Taggart, Inc. (1985-1990) and Chairman of the Board and President of the Company's subsidiary, Eagle Snacks, Inc. (1987-1990). BARRY H. BERACHA (age 52) is presently Vice President and Group Executive of the Company and has served in such capacity since 1976. He is also presently Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Campbell Taggart, Inc. and has served in such capacity since September 1993. He is also Chairman of the Board of the Company's subsidiary, Metal Container Corporation and has served in such capacity since 1976. During the past five years he also served as Chief Executive Officer of Metal Container Corporation (1976-September 1993) and Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch Recycling Corporation (1978-1993). JOHN H. PURNELL (age 52) is presently Vice President and Group Executive of the Company and has served in such capacity since January 1991. He is also Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch International, Inc., and has served as Chairman since 1980 and as Chief Executive Officer since January 1991. During the past five years he also served as Senior Vice President-Corporate Planning and Development (1987-1991). W. RANDOLPH BAKER (age 47) is presently Vice President and Group Executive of the Company and has served in such capacity since 1982. During the past five years he also served as Chairman of the Board and President of the Company's subsidiaries, Busch Properties, Inc. and Busch Entertainment Corporation (1978-1991). STEPHEN K. LAMBRIGHT (age 51) is presently Vice President and Group Executive of the Company and has served in such capacity since 1984. STUART F. MEYER (age 60) is presently Vice President and Group Executive of the Company and has served in such capacity since April 1991 and has also served as Vice President-Corporate Human Resources of the Company (1984-March 1991). He was appointed President and Chief Executive Officer of the Company's subsidiary, St. Louis National Baseball Club, Inc., in January 1992 and prior to that served as Executive Vice President and Chief Operating Officer (April 1991-December 1991). He is also President and Chief Executive Officer of the Company's subsidiary, Civic Center Corporation, and has served in such capacity since April 1991. RAYMOND E. GOFF (age 48) is presently Vice President and Group Executive of the Company and has served in such capacity since 1986. He is also presently Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Busch Agricultural Resources, Inc., and has served in such capacity since 1986. JAIME IGLESIAS (age 63) is presently Chairman of the Board and Senior Vice President-Europe of the Company's subsidiary, Anheuser-Busch Europe, Inc. ("ABEI") and was appointed to these positions in January 1993. Prior to that he served as Chief Executive Officer (1989-January 1993) and as President (1988-January 1993) of ABEI. He was appointed President-International Operations of the Company's subsidiary, Campbell Taggart, Inc. ("CTI"), in 1991 and prior to that served as Vice President-International (1983-1991). He is also Chairman of CTI's subsidiary, Bimbo S.A., and President and Senior Vice President-Europe of the Company's subsidiary, Anheuser-Busch International, Inc. ("ABII"), and has served in such capacities since 1978 and January 1993, respectively. He also served as President and Managing Director- Europe of ABII (1988-January 1993). 7 9 ALOYS H. LITTEKEN (age 53) is presently Vice President-Corporate Engineering of the Company and has served in such capacity since 1981. WILLIAM L. RAMMES (age 52) is presently Vice President-Corporate Human Resources of the Company and has served in such capacity since June 1992. During the past five years he also served as Vice President- Operations of the Company's subsidiary, Anheuser-Busch Incorporated (1990-June 1992) and Vice President-Administration (1986-1989). JOHN B. ROBERTS (age 49) is presently Chairman of the Board and President of the Company's subsidiary, Busch Entertainment Corporation, and has served in such capacities since June 1992 and May 1991, respectively. During the past five years he also served as Executive Vice President and General Manager of Busch Entertainment Corporation (1990-May 1991) and Vice President and General Manager (1987-1990) and Vice President-Operations (1979-1987). JOSEPH L. GOLTZMAN (age 52) is presently Vice President and Group Executive of the Company and has served in such capacity since September 1993. He is also presently Chairman, Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch Recycling Corporation, President and Chief Executive Officer of the Company's subsidiary, Metal Container Corporation, and President of the Company's subsidiary, Metal Label Corporation, and has served in such capacities since January 1993, September 1993, and 1988, respectively. During the past five years he also served as President of Anheuser-Busch Recycling Corporation (1988-December 1992) and Vice President-Recycling and Metals Planning (January 1992-September 1993) and Director-Metals Planning and Recycling (1988-December 1991) of the Company. PART II The information required by Items 5, 6, 7, and 8 of this Part II are hereby incorporated by reference from pages 32 through 65 of the Company's 1993 Annual Report to Shareholders. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with Price Waterhouse, the Company's independent accountants since 1961, on accounting principles or practices or financial statement disclosures. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required with respect to Directors is hereby incorporated by reference from pages 3 through 5 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 27, 1994. The information required by this Item with respect to Executive Officers is presented on pages 6 through 8 of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is hereby incorporated by reference from page 7 and pages 15 through 21 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 27, 1994. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is hereby incorporated by reference from pages 2 and 6 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 27, 1994. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is hereby incorporated by reference from pages 21 through 23 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 27, 1994. 8 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
PAGE IN ANNUAL REPORT* ----------- (a) The following documents are filed as part of this report: 1. Financial Statements: Report of Independent Accountants.............................................................................. 41 Consolidated Balance Sheet at December 31, 1993 and 1992....................................................... 42-43 Consolidated Statement of Income for the three years ended December 31, 1993................................... 44 Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 1993........... 45 Consolidated Statement of Cash Flows for the three years ended December 31, 1993............................... 46 Notes to Consolidated Financial Statements..................................................................... 47-59 Report of Independent Accountants on Financial Statement Schedules 2. Financial Statement Schedules For the Years 1993, 1992, and 1991: Property, plant and equipment (Schedule V) Accumulated depreciation of property, plant and equipment (Schedule VI) Guarantees of securities of other issuers (Schedule VII) (1993 only) Valuation and qualifying accounts and reserves (Schedule VIII) Short-term borrowings (Schedule IX)
3. Exhibits Exhibit 3.1 - Amendment to Article Fourth of the Restated Certificate of Incorporation of the Company dated June 10, 1992. (Restated Certificate of Incorporation with amendments previously filed and incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1987.) Exhibit 3.2 - Certificate of Designation, Rights and Preferences of the Series C Convertible Preferred Stock of the Company dated November 3, 1989. (Incorporated by reference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 1990.) Exhibit 3.3 - By-Laws of the Company (as amended and restated October 27, 1993). (Incorporated by reference to Exhibit 3 to Form 10-Q for the quarter ended September 30, 1993.) Exhibit 4.1 - Form of Rights Agreement, dated as of December 18, 1985 between Anheuser-Busch Companies, Inc. and Centerre Trust Company of St. Louis (now Boatmen's Trust Company), as amended and restated as of December 17, 1986. Exhibit 4.2 - Indenture between the Company and Manufacturers Hanover Trust Company. (Incorporated by reference to Exhibit 4 to Registration Statement on Form S-3, Registration No. 33-14685, filed with the Commission on June 3, 1987.) (Other indentures are not filed, but the Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.) [FN] - - - ----- *Incorporated by reference from the indicated pages of the 1993 Annual Report to Shareholders. 9 11 Exhibit 10.1 - Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (as amended and restated February 22, 1989.) (Incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal year ended December 31, 1988.)* Exhibit 10.2 - First Amendment to Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (as amended and restated February 22, 1989) effective April 24, 1991. (Incorporated by reference to Exhibit 10.2 to Form 10-K for the fiscal year ended December 31, 1991.)* Exhibit 10.3 - Second Amendment to Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (as amended and restated February 22, 1989) effective January 1, 1994.* Exhibit 10.4 - Anheuser-Busch Companies, Inc. Retirement Program for Non-Employee Directors. (Incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-14 filed September 14, 1982.)* Exhibit 10.5 - Anheuser-Busch Companies, Inc. 1981 Incentive Stock Option/Non-Qualified Stock Option Plan (as amended December 18, 1985, December 16, 1987, December 20, 1988 and July 22, 1992.) (Incorporated by reference to Exhibit 10.4 to Form 10-K for the fiscal year ended December 31, 1992.)* Exhibit 10.6 - Excerpts from resolutions adopted by the Anheuser-Busch Companies, Inc. Board of Directors on September 22, 1993 amending the Anheuser-Busch Companies, Inc. 1981 Incentive Stock Option/Non-Qualified Stock Option Plan.* Exhibit 10.7 - Anheuser-Busch Companies, Inc. 1981 Non- Qualified Stock Option Plan (as amended December 18, 1985, June 24, 1987, December 20, 1988 and July 22, 1992.) (Incorporated by reference to Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 1992.)* Exhibit 10.8 - Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan (as amended December 20, 1989, December 19, 1990 and December 15, 1993.)* Exhibit 10.9 - Anheuser-Busch Companies, Inc. Excess Benefit Plan.* Exhibit 10.10- First Amendment to Anheuser-Busch Companies, Inc. Excess Benefit Plan.* Exhibit 10.11- Second Amendment to Anheuser-Busch Companies, Inc. Excess Benefit Plan effective as of July 1, 1989. (Incorporated by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended December 31, 1989.)* Exhibit 10.12- Excerpts from resolutions adopted by the Anheuser-Busch Companies, Inc. Board of Directors on September 22, 1993 amending the Anheuser-Busch Companies, Inc. Excess Benefit Plan.* Exhibit 10.13- Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan Amended and Restated as of July 1, 1989. (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 1989.)* Exhibit 10.14- First Amendment to Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan. (Incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 1990.)* Exhibit 10.15- Excerpts from resolutions adopted by the Anheuser-Busch Companies, Inc. Board of Directors on September 22, 1993 amending the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan.* 10 12 Exhibit 10.16- Anheuser-Busch Executive Deferred Compensation Plan effective January 1, 1994.* Exhibit 10.17- Anheuser-Busch 401(k) Restoration Plan effective January 1, 1994.* Exhibit 10.18- Form of Indemnification Agreement with Directors and Executive Officers.* Exhibit 10.19- Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A. de C.V., Diblo, S.A. de C.V. and certain shareholders thereof, dated as of June 16, 1993. Exhibit 10.20- Letter agreement between Anheuser-Busch Companies, Inc. and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement filed as Exhibit 10.19 of this report. Exhibit 13 - Pages 32 through 65 of the Anheuser-Busch Companies, Inc. 1993 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed "filed" with the Commission. Exhibit 21 - Subsidiaries of the Company Exhibit 23 - Consent of Independent Accountants, filed as page 16 of this report. [FN] - - - ----- * A management contract or compensatory plan or arrangement required to be filed by Item 14(c) of this report. (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of 1993. 11 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANHEUSER-BUSCH COMPANIES, INC. ................................... (Registrant) By AUGUST A. BUSCH III ................................... August A. Busch III Chairman of the Board and President Date: March 23, 1994 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. AUGUST A. BUSCH III Chairman of the Board and President and March 23, 1994 - - - -------------------------------------------------------------- Director (Principal Executive Officer) (August A. Busch III) JERRY E. RITTER Executive Vice President-Chief Financial March 23, 1994 - - - -------------------------------------------------------------- and Administrative Officer (Principal (Jerry E. Ritter) Financial Officer) GERALD C. THAYER Vice President and Controller (Principal March 23, 1994 - - - -------------------------------------------------------------- Accounting Officer) (Gerald C. Thayer) PABLO ARAMBURUZABALA O. Director March 23, 1994 - - - -------------------------------------------------------------- (Pablo Aramburuzabala O.) RICHARD T. BAKER Director March 23, 1994 - - - -------------------------------------------------------------- (Richard T. Baker) ANDREW B. CRAIG III Director March 23, 1994 - - - -------------------------------------------------------------- (Andrew B. Craig III) BERNARD A. EDISON Director March 23, 1994 - - - -------------------------------------------------------------- (Bernard A. Edison) PETER M. FLANIGAN Director March 23, 1994 - - - -------------------------------------------------------------- (Peter M. Flanigan) JOHN E. JACOB Director March 23, 1994 - - - -------------------------------------------------------------- (John E. Jacob) CHARLES F. KNIGHT Director March 23, 1994 - - - -------------------------------------------------------------- (Charles F. Knight) VERNON R. LOUCKS, JR. Director March 23, 1994 - - - -------------------------------------------------------------- (Vernon R. Loucks, Jr.) 12 14 VILMA S. MARTINEZ Director March 23, 1994 - - - -------------------------------------------------------------- (Vilma S. Martinez) SYBIL C. MOBLEY Director March 23, 1994 - - - -------------------------------------------------------------- (Sybil C. Mobley) JAMES B. ORTHWEIN Director March 23, 1994 - - - -------------------------------------------------------------- (James B. Orthwein) DOUGLAS A. WARNER III Director March 23, 1994 - - - -------------------------------------------------------------- (Douglas A. Warner III) WILLIAM H. WEBSTER Director March 23, 1994 - - - -------------------------------------------------------------- (William H. Webster) EDWARD E. WHITACRE, JR. Director March 23, 1994 - - - -------------------------------------------------------------- (Edward E. Whitacre, Jr.) 13 15
ANHEUSER-BUSCH COMPANIES, INC. INDEX TO FINANCIAL STATEMENT SCHEDULES
PAGE ---- Report of independent accountants on Financial Statement Schedules..................................... 15 Consent of independent accountants..................................................................... 16 Financial schedules for the years 1993, 1992 and 1991: Property, plant and equipment (Schedule V)........................................................... 17 Accumulated depreciation of property, plant and equipment (Schedule VI).............................. 18 Guarantees of securities of other issuers (Schedule VII) (1993 only)................................. 19 Valuation and qualifying accounts and reserves (Schedule VIII)....................................... 20 Short-term borrowings (Schedule IX).................................................................. 21
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Separate financial statements of subsidiaries not consolidated have been omitted because, in the aggregate, the proportionate share of their profit before income taxes and total assets are less than 20% of the respective consolidated amounts, and investments in such companies are less than 20% of consolidated total assets. 14 16 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors of Anheuser-Busch Companies, Inc. Our audits of the consolidated financial statements referred to in our report dated February 7, 1994 appearing on page 41 of the 1993 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE St. Louis, Missouri February 7, 1994 15 17 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Forms S-3 (No. 33-31735 and No. 33-49051) and in the Registration Statements on Forms S-8 (No. 2-71762, No. 2-77829, No. 33-4664, No. 33-36132, No. 33-39714, No. 33-39715, and No. 33-46846) of Anheuser-Busch Companies, Inc. of our report dated February 7, 1994 appearing on page 41 of the Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page 15 of this Form 10-K. PRICE WATERHOUSE St. Louis, Missouri March 23, 1994 16 18 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (IN MILLIONS)
ADDITIONS ----------------------------- ASSETS BALANCE AT OF RETIRE- BALANCE AT BEGINNING ADDITIONS COMPANIES MENTS OTHER END OF CLASSIFICATION OF PERIOD AT COST ACQUIRED OR SALES CHANGES PERIOD -------------- ---------- --------- --------- -------- ------- --------- 1991 - - - ---- Land............................. $ 307.7 $ 6.4 $ - $ 1.1 $ (4.1) $ 308.9 Buildings........................ 2,825.2 211.9 - 11.4 2.1 3,027.8 Machinery and equipment.......... 6,080.3 597.0 - 87.6 (5.8) 6,583.9 Construction in progress......... 803.5 (112.8) - .1 (21.6) 669.0 --------- ------- ---- ------ ------- --------- $10,016.7 $ 702.5 $ - $100.2 $ (29.4)(1) $10,589.6 ========= ======== ==== ====== ======== ========= 1992 - - - ---- Land............................. $ 308.9 $ 4.4 $ .7 $ 61.5 $ 20.8 $ 273.3 Buildings........................ 3,027.8 144.1 8.4 10.1 125.0 3,295.2 Machinery and equipment.......... 6,583.9 480.0 13.6 81.7 91.1 7,086.9 Construction in progress......... 669.0 108.7 - 39.5 (8.5) 729.7 --------- -------- ---- ------ -------- --------- $10,589.6 $ 737.2 $22.7 $192.8 $ 228.4 (2) $11,385.1 ========= ======== ===== ====== ======= ========= 1993 - - - ---- Land............................. $ 273.3 $ 3.4 $ .7 $ .8 $ 5.3 $ 281.9 Buildings........................ 3,295.2 284.0 8.5 32.4 (109.8) 3,445.5 Machinery and equipment.......... 7,086.9 856.3 8.8 203.2 (92.3) 7,656.5 Construction in progress......... 729.7 (366.8) 4.1 (.3) (24.1) 343.2 --------- -------- ----- ------- ------- --------- $11,385.1 $ 776.9 $22.1 $236.1 $(220.9)(3) $11,727.1 ========= ======== ===== ====== ======= ========= - - - ----- The company provides for depreciation of plant and equipment on methods and at rates designed to amortize the cost of such equipment over its useful life (buildings 2% to 10% and machinery and equipment 4% to 25%). Depreciation is computed principally on the straight-line method. (1) Primarily represents the effect of translating foreign subsidiaries into U.S. dollars and the reclassification of Busch Properties developed properties to inventory. (2) Primarily represents the adjustment to the asset write-up at acquisition of Campbell Taggart due to adoption of FAS-109 as of January 1, 1992. Also includes the effect of translating foreign subsidiaries into U.S. dollars and the reclassification of Busch Properties developed properties to inventory. (3) Primarily represents asset write-downs to net realizable values in connection with the company's Restructuring Program. Also includes the effect of translating foreign subsidiaries into U.S. dollars.
17 19 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (IN MILLIONS)
ADDITIONS BALANCE AT CHARGED TO RETIRE- BALANCE AT BEGINNING COSTS AND MENTS OTHER END OF DESCRIPTION OF PERIOD EXPENSES OR SALES CHANGES PERIOD ----------- ---------- ---------- -------- ------- ---------- 1991 - - - ---- Buildings........................................ $ 648.5 $ 95.3 $ 9.1 $ (.7) $ 734.0 Machinery and equipment.......................... 2,304.4 424.6 65.6 (4.3) 2,659.1 -------- ------ ------ ------ -------- $2,952.9 $519.9 $ 74.7 $ (5.0)(1) $3,393.1 ======== ====== ====== ====== ======== 1992 - - - ---- Buildings........................................ $ 734.0 $103.1 $ 6.9 $ 2.8 $ 833.0 Machinery and equipment.......................... 2,659.1 449.7 71.8 (8.6) 3,028.4 -------- ------ ------ ------ -------- $3,393.1 $552.8 $ 78.7 $ (5.8)(1) $3,861.4 ======== ====== ====== ====== ======== 1993 - - - ---- Buildings........................................ $ 833.0 $107.6 $ 21.0 $(14.9) $ 904.7 Machinery and equipment.......................... 3,028.4 486.5 166.8 (22.8) 3,325.3 -------- ------ ------ ------ -------- $3,861.4 $594.1 $187.8 $(37.7)(2) $4,230.0 ======== ====== ====== ====== ======== - - - ----- (1) Primarily represents the effect of translating foreign subsidiaries into U.S. dollars. (2) Primarily represents the effect of asset write-downs to net realizable values in connection with the company's Restructuring Program. Also includes the effect of translating foreign subsidiaries into U.S. dollars.
18 20 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS (1993)
NATURE OF ANY DEFAULT BY ISSUER OF SECURITIES AMOUNT GUARANTEED IN NAME OF ISSUER TITLE OF OWNED BY PRINCIPAL, OF SECURITIES ISSUE OF TOTAL PERSON OR AMOUNT IN INTEREST, SINKING GUARANTEED BY EACH CLASS AMOUNT PERSONS TREASURY OF FUND OR REDEMP- PERSON FOR OF GUARANTEED FOR WHICH ISSUER OF TION PROVISIONS, WHICH STATEMENT SECURITIES AND STATEMENT SECURITIES NATURE OF OR PAYMENT IS FILED GUARANTEED OUTSTANDING IS FILED GUARANTEED GUARANTEE OF DIVIDENDS ------------ ---------- ----------- --------- ---------- --------- ----------------- ($ IN MILLIONS) Anheuser-Busch, Inc. ..............Notes $15.8 100% - Guarantee of None loans Anheuser-Busch ....................Loan 3.3 100% - Guarantee of None Investment Capital principal and Corporation interest Anheuser-Busch ....................Loan 8.5 100% - Guarantee of None Companies, Inc. loans
19 21 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN MILLIONS)
1993 1992 1991 ---- ---- ---- Reserve for doubtful accounts (deducted from related assets): Balance at beginning of period.......................................... $ 4.9 $ 5.5 $ 6.2 Additions charged to costs and expenses................................. 3.8 1.3 2.4 Additions (recoveries of uncollectible accounts previously written off). 1.2 .7 .6 Deductions (uncollectible accounts written off)........................ (3.2) (2.6) (3.7) ------ ----- ----- Balance at end of period................................................ $ 6.7 $ 4.9 $ 5.5 ====== ===== ===== Deferred income tax asset valuation allowance under FAS 109: Balance at beginning of period.......................................... $ 35.6 $36.8 $ - Additions to valuation allowance charged to costs and expenses.......... 16.3 5.1 - Deductions from valuation allowance (utilizations and expirations)...... (10.9) (6.3) - ------ ----- ---- Balance at end of period................................................ $ 41.0 $35.6 $ - ====== ===== ==== - - - ----- Note: Anheuser-Busch Companies, Inc. adopted FAS 109 effective January 1, 1992.
20 22 ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE IX - SHORT-TERM BORROWINGS (IN MILLIONS)
MAXIMUM AVERAGE WEIGHTED AMOUNT AMOUNT AVERAGE CATEGORY OF BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE AGGREGATE SHORT- END OF AVERAGE DURING DURING DURING TERM BORROWINGS PERIOD INTEREST RATE THE PERIOD THE PERIOD(1) THE PERIOD(2) ---------------- ---------- ------------- ----------- ------------- ------------- 1991 - - - ---- Commercial paper and bank line of credit......... $ - (3) - (3) $638.2 $293.6 6.57% 1992 - - - ---- Commercial paper and bank line of credit......... - (3) - (3) 382.0 122.0 4.04% 1993 - - - ---- Commercial paper and bank line of credit......... - (3) - (3) 696.0 221.7 3.25% - - - ----- (1) Calculated by multiplying the amount borrowed by the number of days outstanding and dividing the sum of the above by the number of days in the year. (2) Calculated by dividing the total interest expense on the borrowings during the year by the average borrowings outstanding during the year. (3) At December 31, 1993, 1992 and 1991, there was $569.1 million, $79.7 million and $104.4 million, respectively, of commercial paper borrowings outstanding at a weighted average interest rate of 3.35% for 1993, 3.44% for 1992 and 6.66% for 1991. The commercial paper is classified as long-term debt as it is expected to be maintained on a long-term basis, with ongoing credit provided by the Company's revolving credit agreements.
21 EX-4 2 EXHIBIT 4.1 RIGHTS AGREEMENT DTD 12-17-86 1 EX-4.1 - - - ----------------------------------------------------------------------- ANHEUSER-BUSCH COMPANIES, INC. and CENTERRE TRUST COMPANY OF ST. LOUIS Rights Agent ---------------- Rights Agreement Amended and Restated as of December 17, 1986 - - - -------------------------------------------------------------------------- 2 Table of Contents ----------------- Section Page - - - ------- ---- l Certain Definitions . . . . . . . . . . . . . . . . l 2 Appointment of Rights Agent . . . . . . . . . . . . 5 3 Issue of Rights Certificates . . . . . . . . . . . . 5 4 Form of Rights Certificates . . . . . . . . . . . . 7 5 Countersignature and Registration . . . . . . . . . 8 6 Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates . . . . . . . . . . . 9 7 Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . 10 8 Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . 13 9 Reservation and Availability of Capital Stock . . . . . . . . . . . . . . . . . . 13 10 Preferred Stock Record Date . . . . . . . . . . . . 15 11 Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights . . . . . . . . . . . . . . . . 16 12 Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . 29 13 Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . 30 14 Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . 33 15 Rights of Action . . . . . . . . . . . . . . . . . . 34 16 Agreement of Rights Holders . . . . . . . . . . . . 35 i 3 Section Page - - - ------- ---- 17 Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . 36 18 Concerning the Rights Agent . . . . . . . . . . . . 36 19 Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . 37 20 Duties of Rights Agent . . . . . . . . . . . . . . . 38 21 Change of Rights Agent . . . . . . . . . . . . . . . 41 22 Issuance of New Rights Certificates . . . . . . . . 42 23 Redemption and Termination . . . . . . . . . . . . . 42 24 Notice of Certain Events . . . . . . . . . . . . . . 44 25 Notices . . . . . . . . . . . . . . . . . . . . . . 45 26 Supplements and Amendments . . . . . . . . . . . . . 46 27 Successors . . . . . . . . . . . . . . . . . . . . . 46 28 Determinations and Actions by the Board of Directors, etc . . . . . . . . . . 47 29 Benefits of this Agreement . . . . . . . . . . . . . 47 30 Severability . . . . . . . . . . . . . . . . . . . . 48 31 Governing Law . . . . . . . . . . . . . . . . . . . 48 32 Counterparts . . . . . . . . . . . . . . . . . . . . 48 33 Descriptive Headings . . . . . . . . . . . . . . . . 48 Exhibit A -- Certificate of Designation, Preferences and Rights Exhibit B -- Form of Rights Certificate ii 4 RIGHTS AGREEMENT ---------------- RIGHTS AGREEMENT, dated as of December 18, 1985, amended as of July 23, 1986, and amended and restated as of December 17, 1986 (the "Agreement"), between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and Centerre Trust Company of St. Louis, a trust company organized under the laws of the State of Missouri (the "Rights Agent"). W I T N E S S E T H - - - - - - - - - - WHEREAS, on December 18, 1985 (the "Rights Dividend Declaration Date"), the Board of Directors of the Company authorized and declared a dividend distribution of one Right for each share of common stock, par value $1.00 per share, of the Company (the "Common Stock") outstanding at the close of business on December 27, 1985 (the "Record Date"), and has authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for each share of Common Stock of the Company issued between the Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date, each Right initially representing the right to purchase one one-hundredth of a share of Series B Junior Participating Preferred Stock of the Company having the rights, powers and preferences set forth in the form of Certificate of Designation, Preferences and Rights attached hereto as Exhibit A, upon the terms and subject to the conditions hereinafter set forth (the "Rights"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For ------------------- purposes of this Agreement, the following terms have the meanings indicated: (a) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsid- 5 iary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. (b) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement (the "Exchange Act"). (c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (i) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversions rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a -------- Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights; (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the 2 6 General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall -------- not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) of this paragraph (c)) or disposing of any voting securities of the Company. (d) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of Missouri are authorized or obligated by law or executive order to close. (e) "Close of business" on any given date shall mean 4:45 P.M., St. Louis time, on such date; provided, however, that if such date is -------- not a Business Day it shall mean 4:45 P.M., St. Louis time, on the next succeeding Business Day. (f) "Common Stock" shall mean the common stock, par value $1.00 per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the 3 7 equity securities or other equity interest having power to control or direct the management, of such Person. (g) "Continuing Director" shall mean (i) any member of the Board of Directors of the Company, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement, or (ii) any Person who subsequently becomes a member of the Board, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors. (h) "Person" shall mean any individual, firm, corporation, partnership or other entity. (i) "Preferred Stock" shall mean shares of Series B Junior Participating Preferred Stock, par value $1.00 per share, of the Company and, to the extent that there are not a sufficient number of shares of Series B Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of Preferred Stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series B Junior Participating Preferred Stock. (j) "Section 11 (a)(ii) Event" shall mean any event described in Section 11(a)(ii)(A) or (B) hereof. (k) "Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof. (l) "Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. 4 8 (m) "Subsidiary" shall mean, with reference to any Person, any corporation of which an amount of voting securities sufficient to elect at least a majority of the directors of such corporation is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person. (n) "Triggering Event" shall mean any Section 11(a) (ii) Event or any Section 13 Event. Section 2. Appointment of Rights Agent. The --------------------------- Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. Section 3. Issue of Rights Certificates. ---------------------------- (a) Until the earlier of (i) the close of business on the tenth day after the Stock Acquisition Date, or (ii) the close of business on the tenth business day after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of 30% or more of the shares of Common Stock then outstanding (the earlier of (i) and (ii) being herein referred to as the "Distribution note"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will 5 9 send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more right certificates, in substantially the form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Right Certificates, the company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. (b) Rights shall be issued in respect of all shares of Common Stock which are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as setforth in the Rights Agreement between Anheuser-Busch Companies, Inc. and Centerre Trust Company of St. Louis dated as of December 18, 1985, amended as of July 23, 1986, and amended and restated as of December 17, 1986 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Anheuser-Busch Companies, Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Anheuser-Busch Companies, Inc. will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights is- 6 10 sued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associates thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone and registered holders of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. Section 4. Form of Rights Certificates. --------------------------- (a) The Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of one one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-hundredth of a share, the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a 7 11 transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement. Section 5. Countersignature and Registration. --------------------------------- (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights 8 12 Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. Section 6. Transfer, Split Up, Combination ------------------------------- and Exchange of Rights Certificates; Mutilated, - - - ----------------------------------------------- Destroyed, Lost or Stolen Rights Certificates. (a) - - - --------------------------------------------- Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as, the Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and 9 13 signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price; ----------------------------------- Expiration Date of Rights. (a) Subject to Section - - - ------------------------- 7(e) hereof, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one one-hundredths of a share (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earlier of (i) the close of business on December 27, 1995 (the "Final Expiration Date"), or (ii) the time 10 14 at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as the "Expiration Date"). (b) The Purchase Price for each One one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $50, and shall be subject to adjustment from time to time as provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below. (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-hundredth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased as set forth below and an amount equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a) (iii) hereof) may 11 15 be made (x) in cash or by certified bank check or bank draft payable to the order of the Company, or (y) by delivery of a certificate or certificates (with appropriate stock powers executed in blank attached thereto) evidencing a number of shares of Common Stock equal to the then Purchase Price divided by the closing price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on the Trading Date immediately preceding the date of such exercise. In the event that the Company is obligated to issue other securities (including Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate. (d) In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first oc- currence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such 12 16 Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of ------------------------------- Rights Certificates. All Rights Certificates - - - ------------------- surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of ------------------------------- Capital Stock. (a) The Company covenants and agrees - - - ------------- that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and, following the occurrence of a Triggering Event, out 13 17 of its authorized and unissued shares of Common Stock and/or other securities or out of its authorized and issued shares held in its treasury), the number of shares of preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this Agreement including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights. (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. (c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933 (the "Act"), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporar- 14 18 ily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained. (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a share of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. (e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in respect of a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. Section 10. Preferred Stock Record Date. --------------------------- Each person in whose name any certificate for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes 15 19 be deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided, however, that if the date of -------- such surrender and payment is a date upon which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. Section 11. Adjustment of Purchase Price, ----------------------------- Number and Kind of Shares or Number of Rights. The - - - --------------------------------------------- Purchase Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a)(i) In the event the Company shall at any time after the date of this Agree- ment (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such 16 20 dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. (ii) In the event: (A)(1) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time after the date of this Agreement, directly or indirectly, shall merge into the Company or otherwise combine with the Company and the Company shall be the continuing or surviving corporation of such merger or combination and the Common Stock of the Company shall remain outstanding and unchanged, or (2) any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan), alone or together with its Affiliates and Associates, shall, at any time after the Rights Dividend Declaration Date, become the Beneficial Owner of 30% or more of the shares of Common Stock then outstanding, other than pursuant to any transaction set forth in Section 13(a) hereof, or pursuant to an offer for all outstanding 17 21 shares of Common Stock at a price and upon such terms and conditions as a majority of the Continuing Directors determine to be in the best interests of the Company and its stockholders, other than such Person, its Affiliates and its Associates, or (B) during such time as there is an Acquiring Person, there shall be any reclassification of securities (including any reverse stock split), or recapitalization of the Company, or any merger or consolidation of the Company with any of its Subsidiaries or any other transaction or series of transactions involving the Company or any of its Subsidiaries, other than a transaction or transactions to which the provisions of Section 13(a) apply (whether or not with or into or otherwise involving an Acquiring Person) which has the effect, directly or indirectly, of increasing by more than 1% the proportionate share of the outstanding shares of any class of equity securities of the Company or any of its Subsidiaries which is directly or indirectly beneficially owned by any Acquiring Person or any Associate or Affiliate of any Acquiring Person, then, promptly following the occurrence of a Section 11(a)(ii) Event, proper provision shall be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which, following such first occurrence, shall thereafter be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by 50% of the current market price (determined pursuant to Section 11(d) hereof) per share of Common Stock on the date of such first occurrence (such number of shares, the "Adjustment Shares"). 18 22 (iii) In the event that the number of shares of Common, Stock which are authorized by the Company's certificate of incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company shall: (A) determine the excess of (l) the value of the Adjustment Shares issuable upon the exercise of a Right (the "Current value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock which the Board of Directors of the Company has deemed to have the same value as shares of Common Stock (such shares of preferred stock, "common stock equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors of the Company; provided, however, if the Company -------- ------- shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors of the Com- 19 23 pany shall determine in good faith that it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a) (ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such period, as it may be extended, the "Substitution Period"). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the Suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of the Common Stock on the Section 11(a) (ii) Trigger Date and the value of any "common stock equivalent" shall be deemed to have the same value as the Common Stock on such date. (b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock ("equivalent preferred stock")) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per share of equiv- 20 24 alent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less than the current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (b) In case the Company shall fix a re- cord date for a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred stock) or subscription rights or warrants (exclud- 21 25 ing those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed. (d)(i) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the "current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days (as such term is herein after defined) immediately prior to such date, and for purposes of computations made pursuant to Section 11(a) (iii) hereof, the "current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following such date; provided, however, that in the event that -------- the current market price per share of the Common Stock is determined during a period following the announcement by the issuer of such Common Stock 22 26 of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the "current market price" shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used. The term 23 27 "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, "current market price" per share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. (ii) For the purpose of any computation hereunder, the "current market price" per share of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the current market price per share of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the "current market price" per share of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current market price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, "current market price" per share of the preferred Stock shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the "current market price" of one one-hundredth of a share of Preferred Stock 24 28 shall be equal to the "current market price" of one share of Preferred Stock divided by 100. (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (l%) in the Purchase Price; provided, however, that any -------- adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date. (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase at the adjusted Purchase Price, the number of one one-hundredths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right 25 29 outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths of a share covered by a Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of one one-hundredths of a share of preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one-hundredths of a share of preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company, shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidenc- 26 30 ing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. (j) Irrespective of any adjustment or change in the Purchase Price or the number of one one- hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth of a share and the number of one one-hundredth of a share which were expressed in the initial Rights Certificates issued here under. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number of one one-hundredths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable such number of one one-hundredths of a share of Preferred Stock at such adjusted Purchase Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company -------- shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. 27 31 (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in their good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such shareholders. (n) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. 28 32 (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, the number of Rights associated with each share of Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction the numerator which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. Section 12. Certificate of Adjusted Purchase -------------------------------- Price or Number of Shares. Whenever an adjustment is - - - ------------------------- made as provided in Section 11 and Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained. 29 33 Section 13. Consolidation, Merger or Sale or -------------------------------- Transfer of Assets or Earning Power. - - - ----------------------------------- (a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions each of which complies with Section 11(o) hereof), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) thereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such one one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence), and 30 34 dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by (2) 50% of the current market price (determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event. (b) "Principal Party" shall mean (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any such case, (1) if the - - - -------- Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) 31 35 month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, "principal Party" shall refer to such other person; and (2) in case such Person is a Subsidiary, directly or indirectly of more than one Person, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless the principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph (a) of this Section 13, the Principal Party will (i) prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; and (ii) will deliver to holders of the Rights historical financial statements for the principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 32 36 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a). Section 14. Fractional Rights and Fractional -------------------------------- Shares. - - - ------ (a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. 33 37 (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-hundredth of a share of Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise. (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (l) share of Common Stock. For purposes of this Section 14(c), the current market value of one share of Common Stock shall be the closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. (d) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14. Section 15. Rights of Action. All rights of ---------------- action in respect of this Agreement are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution 34 38 Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any person subject to this Agreement. Section 16. Agreement of Rights Holders. Ev- --------------------------- ery holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common stock; (b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and 35 39 (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its best - - - -------- efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. Section 17. Rights Certificate Holder Not ----------------------------- Deemed a Stockholder. No holder, as such, of any - - - -------------------- Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of one one-hundredths of a share of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented there by, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24 hereof), or to receive dividends or subscription rights, or otherwise, until the Right, or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. -------------------------- (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any 36 40 loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. Section 19. Merger or Consolidation or -------------------------- Change of Name of Rights Agent. - - - ------------------------------ (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, however, that such -------- corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full 37 41 force provided in the Rights Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. Section 20. Duties of Rights Agent. The ---------------------- Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of "current market price") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 38 42 (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or Section 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the President, any Vice President, the Secre- 39 43 tary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, de- fault, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, -------- however, reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company. 40 44 Section 21. Change of Rights Agent. The ---------------------- Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock, by registered or certified mail, and to the holders of the Rights CertificateS by first- class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of Missouri (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Missouri), in good standing, having a principal office in the State of Missouri, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100,000,000. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor 41 45 Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Rights ---------------------- Certificates. Notwithstanding any of the provisions of - - - ------------ this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, -------- however, that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. Section 23. Redemption and Termination. -------------------------- (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the tenth day following the Stock Acquisition Date or (ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of $.025 per Right, as such 42 46 amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"); provided, however, that if, following the -------- occurrence of a Stock Acquisition Date and following the expiration of the right of redemption hereunder but prior to any Triggering Event (i) a Person who is an Acquiring Person shall have transferred or otherwise disposed of a number of shares of Common Stock in one transaction or series of transactions, not directly or indirectly involving the Company or any of its Subsidiaries, which did not result in the occurrence of a Triggering Event such that such Person is thereafter a Beneficial Owner of 10% or less of the outstanding shares of Common Stock, and (ii) there are no other Persons, immediately following the occurrence of the event described in clause (i), who are Acquiring Persons, then the right of redemption shall be reinstated and thereafter be subject to the provisions of this Section 23. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has expired. (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder's last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. 43 47 Section 24. Notice of Certain Events. ------------------------ (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock whichever shall be the earlier. 44 48 (b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities. Section 25. Notices. Notices or demands ------- authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Anheuser-Busch Companies, Inc. One Busch Place St. Louis, Missouri 63118-1852 Attention: Corporate Secretary Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Centerre Trust Company of St. Louis 510 Locust Street St. Louis, Missouri 63101 Attention: Corporate Trust Department Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 45 49 Section 26. Supplements and Amendments. -------------------------- Prior to the Distribution Date and subject to the penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any holders of certificates representing shares of Common Stock. From and after the Distribution Date and subject to the penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates; provided, this -------- Agreement may not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable, or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made which changes the Redemption Price, the Final Expiration Date, the Purchase Price or the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. Section 27. Successors. All the covenants ---------- and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 46 50 Section 28. Determinations and Actions by ----------------------------- the Board of Directors, etc. For all purposes of this - - - --------------------------- Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d- 3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company (with, where specifically provided for herein, the concurrence of the Continuing directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board or the Continuing Directors to any liability to the holders of the Rights. Section 29. Benefits of this Agreement. -------------------------- Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common stock). 47 51 Section 30. Severability. If any term, ------------ provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that -------- notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth day following the date of such determination by the Board of Directors. Section 31. Governing Law. This ------------- Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. Section 32 Counterparts. This Agreement ------------ may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 33. Descriptive Headings. -------------------- Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 48 52 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. Attest: ANHEUSER-BUSCH COMPANIES, INC. By s/JOHN L. HAYWARD By s/AUGUST A. BUSCH III --------------------- -------------------------- Name: John L. Hayward Name: August A. Busch III Title: Vice President and Title: Chairman of the Board Secretary and President Attest: CENTERRE TRUST COMPANY OF ST. LOUIS By s/H. WHELAN By s/H. E. BRADFORD --------------------- --------------------------- Name: H. Whelan Name: H. E. Bradford Title: Assistant Secretary Title: Vice President 49 53 Exhibit A --------- FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK of ANHEUSER-BUSCH COMPANIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, August A. Busch III, Chairman of the Board and President, and John L. Hayward, Vice President and Secretary, of Anheuser-Busch Companies, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the said Corporation, the said Board of Directors on December 18, 1985, adopted the following resolution creating a series of four million (4,000,000) shares of Preferred Stock designated as Series B Junior Participating Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Restated Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created and that the designation and amount thereof, and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series B Junior Participating Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting such series shall be 4,000,000. Section 2. Dividends and Distributions. (A) The holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July and 54 October in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $20 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1 per share, of the Corporation (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fractional of a share of Series B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (b) the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in this paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $20 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. 2 55 Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series B Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or Is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock; or effect a subdivision or combination of the outstanding shares of Common Stock (by reclassificatiOn or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is 3 56 the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series B Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series B Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, the holders of Preferred Stock, voting as a class, irrespective of series, shall have the right to elect two Directors. (ii) During any default period, such voting right of the holders of Series B Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of Preferred Stock as hereinafter provided to increase in certain cases the authorized number of Directors shall be exer- cised unless the holders of 25% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by 4 57 them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate, not less than 10% of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore 5 58 elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the by-laws irrespective of any increase pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the by-laws). Any va- acancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (D) Except as set forth herein, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares 6 59 of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition 7 60 thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary liquidation, dissolution or wind of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, 8 61 merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series B Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or Lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series B Preferred Stock shall not be redeemable. Section 9. Ranking. The Series B Preferred Stock shall rank pari passu to all other series of the Corporation's Preferred Stock outstanding as of December 27, 1985 as to the payment of dividends and the distribution of assets. Section 10. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without 9 62 the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series B Preferred Stock, voting together as a single class. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this ----- day of December, 1985. ------------------------- August A. Busch III, Chairman of the Board and President ------------------------ John L. Hayward, Vice President and Secretary 10 63 Exhibit B --------- [Form of Rights Certificate] Certificate No. R- --------- Rights NOT EXERCISABLE AFTER DECEMBER 27, 1995 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.025 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]* Rights Certificate ANHEUSER-BUSCH COMPANIES, INC. This certifies that , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of December 18, 1985, amended as of July 23, 1986, and amended and re- - - - ---------------------- * The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence. 64 stated as of December 17, 1986 (the "Rights Agreement"), between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and Centerre Trust Company of St. Louis, a trust company organized under the State of Missouri (the "Rights Agent"), to purchase from the Company at any time prior to 4:45 P.M. (St. Louis time) on December 27, 1995 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, nonassessable share of Series B Junior Participating Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of $50 per one one-hundredth of a share (the "Pur- chase Price"), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The Purchase Price shall be paid, at the election of the holder, in cash or shares of Common Stock of the Company having an equivalent value. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of December 17, 1986, based on the Preferred Stock as constituted at such date. Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event. As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Preferred Stock or other securities, which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events. 2 65 This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent. This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one- hundredths of a share of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.025 per Right at any time prior to the earlier of the close of business on (i) the tenth day following the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement), and (ii) the Final Expiration Date. After the expiration of the redemption period, the Company's right of redemption may be reinstated if an Acquiring Person reduces his beneficial ownership to 10% or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company. No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples 3 66 of one one-hundredth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or, to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of ------------ --, 19-- ATTEST: ANHEUSER-BUSCH COMPANIES, INC. - - - ------------------- By --------------------------- Secretary Title: Countersigned: CENTERRE TRUST COMPANY OF ST. LOUIS By -------------------------------- Authorized Signature 4 67 [Form of Reverse Side of Rights Certificate] FORM OF ASSIGNMENT ------------------ (To be executed by the registered holder if such holder desires to transfer the Rights Certificate.) FOR VALUE RECEIVED ---------------------------------------------- hereby sells, assigns and transfers unto ------------------------ - - - ----------------------------------------------------------------- (Please print name and address of transferee) - - - ----------------------------------------------------------------- this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ------------------- Attorney, to transfer the within rights Certificate on the books of the within-named Company, with full power of substitution. Dated: ---------------, 19-- -------------------------- Signature Signature Guaranteed: Certificate ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person 68 who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: ----------, 19 -- -------------------------- Signature Signature Guaranteed: NOTICE ------ The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. 69 FORM OF ELECTION TO PURCHASE ---------------------------- (To be executed if holder desires to exercise Rights represented by the Rights Certificate.) To: ANHEUSER-BUSCH COMPANIES, INC.: The undersigned hereby irrevocably elects to exercise - - - ------------ Rights represented by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to: Please insert social security or other identifying number - - - ---------------------------------------------------------------- (Please print name and address) - - - ---------------------------------------------------------------- If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number - - - ---------------------------------------------------------------- (Please print name and address) - - - ---------------------------------------------------------------- - - - ---------------------------------------------------------------- Dated:------------, 19-- -------------------------- Signature 70 Signature Guaranteed: Certificate ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: ---------, 19-- --------------------------- Signature Signature Guaranteed: NOTICE ------ The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. EX-10 3 EXHIBIT 10.3 SECOND AMEND TO DEFERRED COMP PLAN 1 EX-10.3 SECOND AMENDMENT TO ANHEUSER-BUSCH COMPANIES, INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (AS AMENDED AND RESTATED FEBRUARY 22, 1989) The Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors (as amended and restated February 22, 1989) (the "Plan") hereby is amended as follows: 1. By adding the following subsection (jj) to section 1 in appropriate alphabetical order: (jj) "Prime Rate" - The annual prime interest rate charged on commercial loans by The Boatmen's National Bank of St. Louis. 2. By deleting section 3 in its entirety and substituting the following therefor: 3. Elections under the Plan ------------------------ (a) Each Non-Employee Director who desires to participate in the Plan for a calendar year shall execute and deliver to the Secretary an appropriate election form designating the portion of Compensation for the calendar year to be deferred and the account(s) to which it is to be credited before the beginning of the calendar year. Failure to execute and deliver such a form before the beginning of a calendar year shall cause termination of any existing election to defer Compensation then in force, effective as of January 1 of the calendar year, subject to resumption of the Non- Employee Director's election to defer future Compensation as of the first day of any succeeding calendar month pursuant to section 3(c). (b) (1) Each Non-Employee Director for whom any Cash Account is maintained at any time during a calendar year shall execute and deliver to the Secretary an appropriate election form designating the Rate/Term combinations which shall apply to the amounts in the Non-Employee Director's Cash Accounts as provided for in section 5(d) for the calendar year. (2) If a Non-Employee Director executes and delivers such a form before the beginning of a calendar year, it shall become effective as of January 1 of such calendar year. If a Non-Employee Director does not execute and deliver such a form before the beginning of a calendar year, the Non-Employee Director shall make such an election in connection with the Non-Employee Director's next election pursuant to section 3(a) or 3(c), whichever applies. (c) In addition to the elections provided for in sections 3(a) and (b), each Non-Employee Director may 2 from time to time execute and deliver to the Secretary an appropriate election form designating the portion of future Compensation to be deferred and the account(s) to which it is to be credited and the time and form of payment of Deferred Amounts attributable to such future Compensation. (d) (1) Any election under this section 3 shall be applicable on and after the first day of the month next following the month in which the election form is received by the Secretary. (2) The receipt by the Secretary of a new election form shall constitute a revocation of any previously filed inconsistent form as to future Compensation, provided that a Non-Employee Director shall not be able to change the elections provided for in section 3(b) for a calendar year before the later of the first day of the following calendar year or the expiration of the fixed Term, if any, the Non-Employee Director chose for any Deferred Amounts subject to the election. (3) No revocation of a prior election under the Plan shall be effective with respect to any Deferred Amount credited before the first day of the month next following the month in which notice of the revocation is received by the Secretary. 3. By deleting section 5 in its entirety and substituting the following therefor: 5. Cash Account ------------ (a) Each Cash Account shall consist of the Deferred Amount credited under a specific election to defer. (b) Crediting of interest on Deferred Amounts in a Non-Employee Director's Cash Accounts shall be governed by this section 5. (c) (1) Before the beginning of each calendar year, the Company shall offer one or more combinations of interest rates (hereinafter "Rates") and time periods (hereinafter "Terms") which shall apply to Compensation allocated to Non-Employee Directors' Cash Accounts for the calendar year, to all Deferred Amounts allocated to the Non-Employee Director's Cash Accounts in prior calendar years which were subject to the Prime Rate as of the prior December 31, and to other Deferred Amounts allocated to the Non-Employee Director's Cash -2- 3 Accounts as to which the previous Terms expired on December 31 of the prior calendar year. (2) The fixed Rates and Terms for each calendar year shall be determined by the Chief Financial Officer of the Company and shall be identical to the Rates and Terms available for the calendar year under the Anheuser-Busch Executive Deferred Compensation Plan. (3) All fixed Terms shall commence on a January 1 and expire on a December 31, provided that a Non-Employee Director's election of a fixed Rate after the first day of a calendar year shall not apply to any Deferred Amounts until the effective date of the election. For example: (i) if before January 1, 1995, a Non-Employee Director elects a combination of a 3- year Term and a 3% Rate for 1995, the 3% Rate shall apply to affected Deferred Amounts from January 1, 1995 through December 31, 1997; (ii) if a Non-Employee Director elects a combination of a 3-year Term and a 3% Rate as of April 1, 1995, the 3% Rate shall apply to affected Deferred Amounts from April 1, 1995 through December 31, 1997. (4) The fixed Terms elected by a Non- Employee Director need not be limited to the deferral period for the amount subject to the Term elected. For example, a Non-Employee Director may elect a 10-year Term for an amount that will become payable after 5 calendar years. (5) In addition to any fixed Rate/Term combinations provided for in this section 5(c), the Prime Rate shall be offered to Non-Employee Directors for each calendar year. Deferred Amounts subject to the Prime Rate shall be credited as of the end of each calendar quarter with an amount equal to the product of one-fourth of the Prime Rate in force at the end of that calendar quarter, multiplied by the average daily balance of such Deferred Amounts for that calendar quarter. (d) (1) Each Non-Employee Director shall elect among the Rate/Term combinations available under section 5(c) which shall apply to the Non-Employee Director's Compensation allocated to the Non-Employee Director's Cash Accounts for the calendar year, to all Deferred Amounts allocated to the Non-Employee Director's Cash Accounts in prior calendar years which were subject to the Prime Rate as of the prior December -3- 4 31, and to other Deferred Amounts allocated to the Non- Employee Director's Cash Accounts in prior calendar years as to which the previous Terms expired on December 31 of the prior calendar year. (2) The number of Rate/Term combinations a Non- Employee Director may select for a calendar year shall not exceed the number of Rate/Term combinations a participant may select under the Anheuser-Busch Executive Deferred Compensation Plan for the same calendar year. (3) If a Non-Employee Director does not execute and deliver the appropriate election form before the beginning of a calendar year, the Non-Employee Director shall be deemed to have elected that any amounts subject to such an election as of the beginning of the calendar year be credited with the Prime Rate from January 1 of the calendar year until the effective date of the Non-Employee Director's next such election. (e) Interest shall accrue on the Deferred Amounts of a Non-Employee Director for each calendar year in accordance with the Non-Employee Director's elections as provided for in this section 5 until payment becomes due with respect to such amounts. (f) If any Cash Account is paid in installments pursuant to a Non-Employee Director's election, interest shall accrue on any balance thereof remaining to be paid in installments from time to time at the Rate in effect with respect to such Cash Account on the day prior to the due date of the first installment. This Second Amendment shall be effective from and after January 1, 1994. IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has caused this Amendment to be executed this 22d day of December, 1993. --- ANHEUSER-BUSCH COMPANIES, INC. By s/JERRY E. RITTER ------------------------------ Executive Vice President, Chief Financial and Administrative Officer -4- EX-10 4 EXHIBIT 10.6 RESOLUTIONS AMENDING 1981 ISO/NQSO 1 EX-10.6 EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22, 1993 AMENDING THE ANHEUSER-BUSCH COMPANIES, INC. 1981 INCENTIVE STOCK OPTION/NON-QUALIFIED STOCK OPTION PLAN RESOLVED, that Section 7(f) of the 1981 ISO/NQSO Plan (relating to the Post-Termination Exercise Period) is amended to read as follows: (f) An Option may be exercised only by the Optionee during his or her lifetime, and only by the Optionee's Post-Death Representatives after his or her death. Option Agreements may contain any provision approved by the Committee, not inconsistent with Sections 7(d), 8, and 9 of the Plan, relating to the period for exercise of Options after termination of employment, death, or disability. RESOLVED, that Section 8 of the 1981 ISO/NQSO Plan (relating to the Two-Year Forfeiture Rule) is amended by adding to the end thereof the following new sentence: The Committee may waive, in whole or part and for any reason the Committee deems appropriate, any termination caused by this Section 8 of any Option or group of Options. RESOLVED, that the appropriate officers are authorized and directed to take whatever actions are necessary or appropriate to carry out the substance and intent of these resolutions and the amendments of the 1981 ISO/NQSO Plan referred to above. EX-10 5 EXHIBIT 10.8 ABC 1989 INCENTIVE STOCK PLAN 1 EX-10.8 ANHEUSER-BUSCH COMPANIES, INC. 1989 INCENTIVE STOCK PLAN (AS AMENDED DECEMBER 20, 1989, DECEMBER 19, 1990 AND DECEMBER 15, 1993) SECTION 1. PURPOSE. The purpose of the Plan is to attract, retain, motivate and reward employees of the Company, its Subsidiaries and Affiliates with compensatory arrangements that involve Options and SARs. SECTION 2. DEFINITIONS. (a) "Act" means the Securities Exchange Act of 1934, as amended from time to time. (b) "Affiliate" means any entity in which the Company has a substantial direct or indirect equity interest (other than a Subsidiary), as determined by the Committee. (c) "Board" means the Board of Directors of the Company. (d) "Code" means the Internal Revenue Code as in effect from time to time. (e) "Committee" means the Stock Option Committee described in Section 12 hereof. (f) "Company" means Anheuser-Busch Companies, Inc. and its successors. (g) "Disability" means the condition of being "disabled" within the meaning of Section 422(c)(6) of the Code or any successor provision. (h) "Eligible Employee" means a person who is eligible to receive an option under Section 4 of the Plan. (i) "Employer" means the Company, the Subsidiary, or the Affiliate which employs the Optionee. (j) "Fair Market Value" of Stock on a given date means (i) the average of the highest and lowest selling prices per share of Stock reported on the New York Stock Exchange Composite Tape or similar facility for such date, (ii) if Stock is not listed on the New York Stock Exchange, the average of the highest and lowest selling prices per share of Stock as reported for such date on the principal stock exchange in the U.S. on which Stock is listed (as determined by the Committee), or (iii) if neither of the preceding clauses is applicable, the value per share determined by the Committee in a manner consistent with the Treasury Regulations under Section 2031 of the Internal Revenue Code. If no sale of Stock occurs on such date, but there were sales reported within a reasonable period both before and after such date, the weighted average of the means between the highest and lowest selling prices on the nearest date before and the nearest date after such date shall be used, with the average to be weighted inversely by the respective numbers of trading days between the selling dates and such date. (k) "ISO" or "Incentive Stock Option" means an option to purchase Stock which is designated by the Committee as an "Incentive Stock Option" and which qualifies as an "incentive stock option" under Section 422 (or any successor provision) of the Code. 2 (l) "Limited Right" has the meaning given in Section 7. (m) "NQSO" or "Non-Qualified Stock Option" means an option to purchase Stock which is designated by the Committee as a "Non-Qualified Stock Option," or which is designated by the Committee as an ISO but which fails or ceases to qualify as an "incentive stock option" under the Code. (n) "Option" means an ISO or an NQSO. (o) "Option Agreement" means the written agreement referred to in Section 5(a) between the Company and the Optionee evidencing an Option or SAR. (p) "Optionee" means a person to whom an Option or SAR is granted pursuant to the Plan. (q) "Plan" means the Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan, as amended from time to time. (r) "Reporting Person," as of a given date, means an Optionee who would be required to report a purchase or sale of Stock occurring on such date to the Securities and Exchange Commission pursuant to Section 16(a) of the Act and the rules and regulations thereunder. (s) "Rule 16b-3" means Rule 16b-3 (as amended from time to time) promulgated by the Securities and Exchange Commission under the Act, and any successor thereto, as in effect as to the Plan. (t) "SAR" means a stock appreciation right, which is the right to receive cash, Stock, or other property having a value on the date the SAR is exercised equal to (i) the excess of the Fair Market Value of one share of Stock on the exercise date over (ii) the base price of the SAR. The term "SAR" does not include a Limited Right. (u) "Stock" means shares of the common stock of the Company, par value $1.00 per share, or such other class or kind of shares or other securities as may be applicable under Section 10. (v) "Subsidiary" means a "subsidiary corporation" of the Company as defined in Section 424 (or any successor provision) of the Code. (w) "Withholding Taxes" means, in connection with an Option or SAR (including without limitation the receipt of Stock pursuant to the exercise of an NQSO or SAR or the disposition of ISO shares), (a) the total amount of Federal and state income taxes, social security taxes and other taxes which the Employer of the Optionee is required to withhold ("Required Withholding Taxes") plus (b) any other such taxes which the Employer, in its sole discretion, withholds at the request of the Optionee. SECTION 3. MAXIMUM SHARES. (a) The maximum number of shares of Stock which may be issued to Eligible Employees pursuant to Options and SARs under the Plan shall be 22,000,000 shares, subject to adjustment as provided in Section 10. For this purpose: (i) Only shares actually issued pursuant to the grant or exercise of an Option or SAR shall be counted against the Plan maximum. 2 3 (ii) Except to the extent prohibited by Rule 16b-3, Shares which are forfeited by an Optionee after issuance shall be deemed to have never been issued under the Plan and accordingly shall not be counted against the Plan maximum. (iii) The number of shares available for the grant of new Options and SARs at any particular time shall be (A) the maximum number of shares specified above (as adjusted), minus (B) the sum of the number of shares issued under the Plan prior to that time and the number of shares issuable upon exercise of Options and SARs outstanding at that time. In its discretion, the Company may issue treasury shares or authorized but previously unissued shares. (b) Notwithstanding paragraph (a) above, the maximum number of shares for which ISOs may be granted under the Plan shall be 22,000,000 shares, subject to adjustment as provided in Section 10, regardless of the fact that a lesser number of shares is issued pursuant to the exercise of ISOs. (c) Shares issued under other plans of the Company shall not be counted against the Plan maximum. (d) Notwithstanding any other provisions of this Plan, the maximum number of options that may be granted to any Eligible Employee during any calendar year shall be 500,000, subject to adjustment as provided in Section 10. SECTION 4. ELIGIBILITY. Officers and management employees of the Company, Subsidiaries or Affiliates shall be eligible to receive Options and SARs under the Plan. A Director of the Company or a Subsidiary or an Affiliate shall be eligible only if he or she also is an officer or employee of the Company, a Subsidiary or an Affiliate. Notwithstanding the foregoing, persons employed only by Affiliates shall not be eligible to receive ISOs. SECTION 5. OPTION AND SAR GRANTS. (a) Subject to the limitations in this Plan, the Committee may cause the Company to grant Options and/or SARs to such Eligible Employees, at such times, in such amounts, for such periods, becoming exercisable at such times, with such option prices or base prices, and subject to such other terms, conditions, and restrictions as the Committee deems appropriate. Each Option or SAR shall be evidenced by a written Option Agreement between the Company and the Optionee. In granting an Option or SAR, the Committee may take into account any factor it deems appropriate and consistent with the purpose of the Plan. Options and/or SARs may be granted as additional compensation to the Optionee, or in lieu of other compensation. (b) Options and SARs may be granted separately or as alternatives to each other, except that (i) Options and SARs shall be granted as alternatives to each other only if the option prices and the base prices are equal, (ii) Limited Rights shall not be granted separately, and shall be granted only as alternatives to Options and/or SARs, (iii) SARs and/or Limited Rights which are alternatives to ISOs may be granted only at the same time the ISO is granted, and (iv) SARs which are alternatives to Options, and Limited Rights which are 3 4 alternatives to Options or SARs, shall expire or terminate at the same time as the Option or SARs to which they are alternatives. (c) All or any portion of any payment to an Optionee whether in cash or shares of Stock, may be deferred to a later date if and as provided in the Option Agreement. Deferrals may be for such periods and upon such terms and conditions (including the provision of interest, dividend equivalents, or other return on such amounts) as the Committee may determine. (d) Option Agreements may contain any provision approved by the Committee, not inconsistent with Section 9, relating to the period for exercise after termination of employment, death or Disability. (e) Option Agreements may, in the discretion of the Committee, contain a provision permitting an Optionee to designate the person who may exercise an Option or SAR upon the Optionee's death, either by Will or by appropriate notice to the Company. (f) Notwithstanding any other provision of this Section 5, (i) no Option or SAR shall contain a so-called "reload" feature under which Options or SARs are automatically granted to Optionees upon exercise of Options or SARs, and (ii) no Option or SAR shall be granted in exchange for a so-called "underwater" Option or SAR which has an option price or base price in excess of the Fair Market Value of the Stock (nor shall an underwater Option or SAR be amended to reduce its option price or base price). SECTION 6. PROVISIONS GOVERNING OPTIONS AND SARS. (a) If Options and SARS are alternatives to each other, the exercise of all or part of one automatically shall cause an immediate equal and corresponding termination of the other. (b) An Optionee shall have none of the rights of a shareholder with respect to shares of Stock subject to his or her Option or SAR until shares are issued in his or her name. (c) Nothing in the Plan or any Option Agreement shall confer on any person any right or expectation to continue in the employ of his or her Employer, or shall interfere in any manner with the absolute right of the Employer to change or terminate such person's employment at any time for any reason or for no reason. (d) Options and SARs shall not be transferable other than by will or the laws of descent and distribution, and shall be exercisable during the Optionee's lifetime only by the Optionee or his or her guardian or legal representative. (e) Except as provided in Section 10(b), (A) the option price per share of an Option or the base price of an SAR shall not be less than Fair Market Value on the Option's or the SAR's grant date, nor less than the par value of a share of Stock, except that an SAR which is an alternative to an Option but which is granted at a later time may have a base price equal to the option price even though the base price is less than Fair Market Value on the date the SAR is granted. (f) The grant of an Option and the Option Agreement for an Option must clearly identify the Option as either an ISO or as an NQSO. (g) In the case of an SAR, the Option Agreement may specify the form of payment of SARs or may provide that the form is to be determined at a later date, and may require the satisfaction of any rules or conditions in connection with receiving payment in any particular 4 5 form. If the Optionee is a Reporting Person at the time of grant or during the SAR's term and is given an election to receive cash in full or partial settlement of an SAR, the Committee shall have sole discretion to approve or disapprove such election at any time after it is made. SECTION 7. LIMITED RIGHTS. (a) The Committee shall have authority to grant limited stock appreciation rights ("Limited Rights") to the holder of any Option or SARs granted under the Plan (the "Related Option or SAR") with respect to all or some of the shares of Stock covered by such Related Option or SAR. A Limited Right may be granted either at the time of grant of the Related Option or SAR or (except in the case of an ISO) at any time thereafter during its term. A Limited Right may be granted to an Optionee with respect to Options irrespective of whether such Optionee is being granted or has been granted an SAR. Limited Rights shall be transferable only when the Related Option or SAR is transferable and under the same conditions, and shall be exercisable during the Optionee's lifetime only by the Optionee or his or her guardian or legal representative. If an ISO is a Related Option to Limited Rights, the Limited Rights may be exercised only if the Fair Market Value per share of Stock on the exercise date exceeds the option price per share of the ISO. A Limited Right may be exercised only during the sixty-day period beginning on an "Acceleration Date" (as defined in Section 11(a) hereof); provided, however, that if the Acceleration Date occurs within the six month period following the grant of the Limited Right or the grant of the Related Option or SAR, whichever is applicable as provided below, to a Reporting Person, then the Limited Right will be exercisable by the Reporting Person for a period of thirty days following expiration of such six-month period, or, if earlier, thirty days following the Optionee's death or Disability. Each Limited Right shall be exercisable only if, and to the extent that, the Related Option or SAR is exercisable (ignoring paragraph (j) below). Notwithstanding the provisions of the two immediately preceding sentences, no Limited Right may be exercised by a Reporting Person until the expiration of six months from the date of grant of the Limited Right unless otherwise permitted by Rule 16b-3 in the case of an SAR granted prior to the grant of the Limited Right. (b) Upon the exercise of Limited Rights, the holder thereof shall receive in cash whichever of the following amounts is applicable: (i) in the case of an exercise of Limited Rights by reason of an acquisition of Stock described in Section 11(a), an amount equal to the Acquisition Spread (as defined in paragraph (d) below); or (ii) in the case of an exercise of Limited Rights by reason of shareholder approval of an agreement described in Section 11(a), an amount equal to the Merger Spread (as defined in paragraph (f) below); (iii) in the case of an exercise of Limited Rights by reason of a change in the composition of the Board of Directors as described in Section 11(a), an amount equal to the Board Change Spread (as defined in paragraph (g) below); (iv) in the case of an exercise of Limited Rights by reason of stockholder approval of a plan of liquidation described in Section 11(a), an amount equal to the Liquidation Spread (as defined in paragraph (i) below); 5 6 provided, however, that if an ISO is a Related Option to the Limited Rights, the cash received for each Right shall not exceed 100% of the spread under the ISO, i.e., the difference between the option price of the ISO and the Fair Market Value of Stock on the date the Limited Right is exercised. (c) The term "Acquisition Price per Share" as used in this Section shall mean, with respect to the exercise of any Limited Right by reason of an acquisition of Stock described in Section 11(a), the greater of (i) the highest price per share of Stock stated on the Schedule 13D, 14D-1 or similar schedule (or amendment thereto) filed by the holder of 50% or more of the Company's voting power which gives rise to the exercise of such Limited Right, and (ii) the highest Fair Market Value per share of Stock during the sixty-day period ending on the date the Limited Right is exercised. (d) The term "Acquisition Spread" as used in this Section shall mean an amount equal to the product computed by multiplying (i) the excess of (A) the Acquisition Price per Share over (B) the option or base price per share of Stock at which the Related Option or SAR is exercisable, by (ii) the number of Limited Rights being exercised. (e) The term "Merger Price per Share" as used in this Section shall mean, with respect to the exercise of any Limited Right by reason of shareholder approval of an agreement described in Section 11(a), the greater of (i) the fixed or formula price for the acquisition of shares of Stock specified in such agreement if such fixed or formula price is determinable on the date on which such Limited Right is exercised, and (ii) the highest Fair Market Value per share of Stock during the sixty-day period ending on the date on which such Limited Right is exercised. Any securities or property which are part or all of the consideration paid for shares of Stock pursuant to such agreement shall be valued in determining the Merger Price per share at the higher of (A) the valuation placed on such securities or property by the corporation, person or other entity which is a party with the Company to such agreement or (B) the valuation placed on such securities or property by the Committee. (f) The term "Merger Spread" as used in this Section shall mean an amount equal to the product computed by multiplying (i) the excess of (A) the Merger Price per Share over (B) the option or base price per share of Stock at which the Related Option or SAR is exercisable, by (ii) the number of Limited Rights being exercised. (g) The term "Board Change Spread" as used in this Section shall mean, with respect to the exercise of any Limited Rights by reason of a change in the composition of the Board described in Section 11(a), an amount equal to the product computed by multiplying (i) the excess of (A) the highest Fair Market Value per share of Stock during the sixty-day period ending on the date the Limited Rights are exercised over (B) the option or base price per share of Stock at which the Related Option or SAR is exercisable, by (ii) the number of Limited Rights being exercised. (h) The term "Liquidation Price per Share" as used in this Section shall mean, with respect to the exercise of any Limited Right by reason of shareholder approval of a plan of liquidation described in Section 11(a) the greater of (i) the highest amount paid or to be paid per share of Stock pursuant to the plan of liquidation as determined by the Committee and (ii) the highest Fair Market Value per share of Stock during the sixty-day period ending on the date on which such Limited Right is exercised. Any securities or property which (A) are part or all of the consideration paid for shares of Stock pursuant to such plan of liquidation 6 7 or (B) are to be sold and the proceeds distributed in liquidation shall be valued in determining the Liquidation Price per share at the higher of (i) the valuation placed on such securities or property by the Company upon the distribution of such securities or property in accordance with the plan of liquidation, if known, at the time of the exercise of such Limited Right, or (ii) the valuation placed on such securities or property by the Committee. (i) The term "Liquidation Spread" as used in this Section shall mean an amount equal to the product computed by multiplying (i) the excess of (A) the Liquidation Price per Share over (B) the option or base price per share of Stock at which the Related Option or SAR is exercisable, by (ii) the number of Limited Rights being exercised. (j) Notwithstanding any other provision of the Plan, an SAR may not be exercised at a time when any Limited Rights held by the holder of such SAR may be exercised. (k) Notwithstanding the provisions of Section 7(a) above, if an Acceleration Date specified in Section 11(a)(i) occurs and if such Date occurs in connection with a Window Period Situation, then each Optionee who is a Restricted Reporting Person may exercise his or her Limited Rights only during the Window Period immediately following the Acceleration Date, subject to the following exceptions: (i) if the Acceleration Date occurs during the six-month period following the grant of a Limited Right or the grant of the Related Option or SAR, whichever is applicable as provided in the last sentence of Section 7(a) above, then such Limited Right may be exercised by such Optionee only during the Window Period immediately following the expiration of such six-month period or, if earlier, following the death or Disability of such Optionee; and (ii) if such Acceleration Date or the expiration of such six-month period (as applicable) occurs during a Window Period, such Optionee may exercise such Limited Right either during the remainder of such Window Period or during the next whole Window Period thereafter. For the purposes of this paragraph, a "Window Period Situation" exists (A) if one or more Reporting Persons are the "Person" or members of the group constituting the "Person" specified in Section 11(a)(i) below, or (B) if, by excluding all voting securities acquired by the "Person" directly from the Company, no Acceleration Date would occur. Each Reporting Person specified in clause (A) above, and all Reporting Persons in the case of a clause (B) Window Period Situation, are "Restricted Reporting Persons" for the purposes of this paragraph. A "Window Period" is the period defined from time to time in paragraph (e)(3)(iii) of Rule 16b-3, or the corresponding paragraph(s) of any successor to Rule 16b-3. SECTION 8. STOCK ISSUANCE, PAYMENT, AND WITHHOLDING. (a) An Optionee may pay the option price of an Option in cash, Stock (including shares of previously-owned Stock, or Stock issuable in connection with the Option), or other property, to the extent permitted or required by the Option Agreement or the Committee from time to time. The Committee may permit deemed or constructive transfers of shares in lieu of actual transfer and physical delivery of certificates. Except to the extent prohibited by applicable law, the Committee or its delegate may take any necessary or appropriate steps in order to facilitate the payment of any such purchase price. Without limiting the foregoing, the Committee may allow the Optionee to defer payment of the option price, or may cause the Company to loan the option price to the Optionee or to guaranty that any shares to be issued will be delivered to a broker or lender in order to allow the Optionee to borrow the purchase price. The Committee may require satisfaction of any rules or conditions in 7 8 connection with paying the Option price at any particular time, in any particular form, or with the Company's assistance. (b) When the Optionee's Employer becomes required to collect and pay Required Withholding Taxes, the Optionee shall promptly reimburse the Company or Employer (as required by the Committee) for the amount of such Required Withholding Taxes in cash, unless the Option Agreement or the Committee permits or requires payment in another form. In the discretion of the Committee or its delegate and at the Optionee's request, the Committee or its delegate may cause the Company or Employer to pay Withholding Taxes in excess of Required Withholding Taxes on behalf of an Optionee, which shall be reimbursed by the Optionee. The Committee may allow an Optionee to reimburse the Company or Employer for payment of Withholding Taxes with shares of Stock or other property. The Committee may require the satisfaction of any rules or conditions in connection with any non-cash payment of Withholding Taxes. If an Optionee is a Reporting Person at the time of grant or during the Option's term and is given an election to pay any Withholding Taxes with Stock, the Committee shall have sole discretion to approve or disapprove such election at any time after the election is made. (c) If provided in the Option Agreement relating to an ISO, the Committee may prohibit the transfer by an Optionee of shares of Stock issued to him or her upon exercise of an ISO into the name of a nominee, and the Committee may require the placement of a legend on certificates for such shares reflecting such prohibition. SECTION 9. FORFEITURES. (a) If any Optionee voluntarily terminates employment within two years of the grant of an Option or SAR, or is dismissed from employment at any time for any reason, such Option or SAR shall immediately terminate and be forfeited to the extent not previously exercised. (b) Notwithstanding any other provision in this Plan except paragraph (c) below, the receipt of any Option or SAR, and the receipt of any share of Stock, cash, or other benefit in connection with such Option or SAR, shall be subject to the following provisions: (i) At all times during his or her employment with the Company or a Subsidiary or Affiliate, the Optionee shall continuously satisfy his or her duties of loyalty and faithful service to the Company and his or her Employer and shall refrain from engaging in any undisclosed conflict of interest or from otherwise acting in any manner inimical to or contrary to the best interests of the Company or Employer. Any violation of law or of any Company or Employer policy or the Business Practices and Ethics Manual (or any manual, or portion thereof, which replaces such Manual) of the Company shall be considered conduct inimical to or contrary to the best interests of the Company and Employer for the purposes of this Section 9(b). The exercise of any Option or SAR, or the acceptance of any share of stock, cash, or other benefit hereunder in connection with any Option or SAR shall be deemed to be the certification by the Optionee that he or she has satisfied this condition. In addition, the Optionee shall furnish to the Committee on request any other information concerning satisfaction of such condition which the Committee may request. 8 9 (ii) This Section 9(b) is intended to establish, as a condition to the realization of economic benefits under the Plan, a standard of conduct consistent with (A) the duties of loyalty and faithful performance of services imposed on an employee by the common law, and (B) the Company's and Employer's published standards and policies which the Optionee is bound to observe. This Section 9(b) shall in no way impair or derogate from the rights or remedies which the Company or Employer may have at law or in equity or under any employment contract or agreement with an Optionee to prevent or to recover damages for the disclosure of trade secrets, or to recover any restitution or damages properly owing the Company or Employer because of any theft, fraud, embezzlement, or other illegal conduct on the part of an Optionee. (iii) If the Committee determines that an Optionee has not observed the standard of conduct required by this Section 9(b), the Committee may require the Optionee to forfeit any right to or in any outstanding Option or SAR, as of the date such determination is made, and may require repayment of any Stock or cash received in connection with any Option or SAR by such Optionee after the act or acts of misconduct which gave rise to the Committee's determination. (iv) This Section 9(b) shall not be interpreted as requiring the Committee to take action in each and every instance of suspected misconduct, and in determining to attempt to enforce the forfeiture and repayment provisions of this Section 9(b), the Committee may consider, among other things, the nature of the misconduct, its seriousness, the impact on the Company, the possible economic effects, the circumstances surrounding the discontinuance of the Optionee's employment with the Employer, and the amount of proof which the Employer may have of any alleged misconduct. Any decision by the Committee to forego enforcement of this Section 9(b) in whole or in part in any particular instance shall in no way constitute a waiver of the right to enforce such Section in any other instance. (v) During the period of any investigation into whether an Optionee has engaged in conduct prohibited by this Section 9(b), the Optionee's rights to receive delivery of any Stock or cash, or to have any transfer of Stock recognized on the stock books of the Company, shall be suspended. An Optionee may exercise Options or SARs subject to the prior sentence. (c) The provisions of this Section 9 shall terminate upon the occurrence of an Acceleration Date described in Section 11. SECTION 10. ADJUSTMENTS AND ACQUISITIONS. (a) In the event of (i) any change in the outstanding shares of Stock by reason of any stock split, combination of shares, stock dividend, reorganization, merger, consolidation, or other corporate change having a similar effect, (ii) any separation of the Company including a spin-off or other distribution of stock or property by the Company, or (iii) any distribution to stockholders generally other than a normal dividend, the Committee shall make such equitable adjustments to the Plan and to outstanding Options, SARs and Limited Rights as it shall deem appropriate in order to prevent the dilution or enlargement of (a) the Options, SARs and Limited Rights which may be granted, the shares of Stock which may be issued, or the shares for which ISOs may be granted under the Plan, (b) the economic value of 9 10 outstanding Options, SARs and Limited Rights or (c) the limitations imposed by Section 3(d) of this Plan, provided, however, that the Committee shall not make any adjustment which would constitute or result in an increase in the aggregate number of Shares available under the Plan, or the annual limit on the number of options which may be granted to an Eligible Employee under Section 3(d) of this Plan, requiring shareholder approval under Section 422 or Section 162(m) of the Code. Any such determination by the Committee shall be conclusive and binding on all concerned. (b) In the event the Company or a Subsidiary enters into a transaction described in Section 424(a) of the Code with any other corporation, the Committee may grant Options, SARs, or Limited Rights to employees or former employees of such corporation in substitution of stock options, stock appreciation rights or limited stock appreciation rights previously granted to them by such corporation upon such terms and conditions as shall be necessary to qualify such grant as a substitution described in Section 424(a) of the Code. SECTION 11. ACCELERATION. (a) If, while unexercisable Options or SARs remain outstanding under the Plan, (i) any Person (as defined herein) becomes the beneficial owner directly or indirectly (within the meaning of Rule 13d-3 under the Act) of more than 50% of the Company's then outstanding voting securities (measured on the basis of voting power); (ii) the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with any other corporation, other than an agreement providing for (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; (iii) a change occurs in the composition of the Board of Directors during any period of twenty-four consecutive months such that individuals who at the beginning of such period were members of the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets, 10 11 then on the date as of which any of the events described in clauses (i) thru (iv) occurs (such date being referred to as an "Acceleration Date"), each Option and SAR automatically shall become exercisable. For purposes of this paragraph, "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (aa) the Company or any of its subsidiaries, (bb) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (cc) an underwriter temporarily holding securities pursuant to an offering of such securities, or (dd) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Stock. (b) Except to the extent prohibited by Rule 16b-3 in the case of Reporting Persons, the Committee may accelerate the date on which any Options and SARs become exercisable and may remove any restrictions on such Options or SAR at any time after grant and for any reason the Committee deems appropriate. (c) All Options and SARs shall automatically become exercisable upon a termination of employment caused by the death or Disability of the Optionee. SECTION 12. ADMINISTRATION. (a) The Plan shall be administered by a Stock Option Committee appointed by the Board consisting of three or more persons, each of whom at all times shall be a member of the Board, a "disinterested person" as defined in Rule 16b-3 and an "outside director" within the meaning of Section 162(m)(4)(C)(i) of the Code. Committee members shall not be eligible for selection to receive Options or SARs under the Plan. The initial Committee shall consist of the members of the "Stock Option Committee" administering the Anheuser-Busch 1981 Non-Qualified Stock Option Plan at the time this Plan is adopted by the Board. (b) A majority of the members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Committee, shall be the acts of the Committee. From time to time the Committee may adopt, amend, and rescind such rules and regulations for carrying out the Plan and implementing Option Agreements, and the Committee may take such action in the administration of the Plan, as it deems proper. The interpretation of any provisions of the Plan by the Committee shall be final and conclusive unless otherwise determined by the Board. SECTION 13. AMENDMENT, TERMINATION, SHAREHOLDER APPROVAL. (a) The Board may amend or terminate the Plan at any time, except that without the approval of the Company's shareholders, no amendment shall (i) increase the maximum number of shares issuable, or the maximum number of shares for which ISOs may be granted, under the Plan, (ii) change the class of persons eligible to be Optionees, (iii) change the annual limit on options which may be granted to an Eligible Employee provided in Section 3(d) or (iv) change the provisions of this Section 13(a). (b) The Committee may amend the Plan from time to time to the extent necessary to (i) comply with Rule 16b-3 and (ii) prevent benefits under the Plan from constituting "applicable employee remuneration" within the meaning of Section 162(m) of the Code. 11 12 (c) No Options or SARs may be granted under the Plan after September 26, 1999. (d) Notwithstanding any other provision of the Plan, no Option or SAR granted under the Plan on or after December 15, 1993 may be exercised unless and until either (i) the amendment to the Plan adopted by the Board on December 15, 1993 which added Section 3(d) to this Plan is approved by the Company's shareholders within twelve months of such adoption, or (ii) if earlier, the Company receives an opinion of counsel or other evidence satisfactory to it that such shareholder approval is not required by the Code in order to prevent benefits under the Plan from constituting "applicable employee remuneration" within the meaning of Section 162(m) of the Code. (e) The approval by shareholders described in this Section shall consist of the approving vote of the holders of a majority of the outstanding shares of Stock present (in person or by proxy) at a meeting of the shareholders at which a quorum is present, unless a greater vote is required by the Company's charter or by-laws or by applicable law. SECTION 14. ADDITIONAL PAYMENTS. The Committee may grant an Optionee the right to receive additional compensation in cash or other property (in addition to any cash or other property payable under the terms of the Option or SAR itself) upon an Option or SAR becoming exercisable or being exercised provided that (i) in the case of an ISO such compensation is includible in income under Sections 61 and 83 of the Code at the time of such exercise and (ii) no such right may be granted in connection with any SAR or Limited Right which is an alternative to an ISO. SECTION 15. MISCELLANEOUS. (a) Each provision of the Plan and each Option Agreement relating to an ISO shall be construed so that each ISO shall be an incentive stock option as defined in Section 422 of the Code or any statutory provision that may replace Section 422, and any provisions thereof which cannot be so construed shall be disregarded. Except as provided in Section 9, no discretion granted or allowed to the Committee under the Plan shall apply to an ISO after its grant except to the extent the Option Agreement with respect to the ISO grant shall so provide. (b) Without amending the Plan, Options and SARs may be granted to Eligible Employees who are foreign nationals or who are employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to further the purposes of the Plan. Such different terms and conditions may be reflected in Addenda to the Plan. However, in the case of an ISO, no such different terms or conditions shall be employed if such term or condition constitutes, or in effect results in, an increase in the aggregate number of shares which may be issued under the Plan or a change in the definition of Eligible Employee. (c) Notwithstanding any other provision in the Plan, the Committee shall not act with respect to any Reporting Person in a manner which would contravene any requirement of Rule 16b-3 as in effect at the time of such action. (d) Amendments to this Plan which were adopted by the Board on December 15, 1993 shall not apply to Options granted prior to that date except for (i) the definition of "Required Withholding Tax" now contained in Section 2(w) and (ii) the amendment adding the express authority for beneficiary designations which is contained in Section 5(e). 12 EX-10 6 EXHIBIT 10.9 EXCESS BENEFIT PLAN 1 EX-10.9 ANHEUSER-BUSCH EXCESS BENEFIT PLAN Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), hereby establishes this Excess Benefit Plan, effective as of January l, 1984, to provide supplemental retirement benefits to Participants in the Anheuser-Busch Salaried Employees' Pension Plan (the "Basic Plan") who may be adversely affected as to the amount of Retirement Benefits they might otherwise receive by the limitations of Section 415 of the Internal Revenue Code of 1954, as amended by the Tax Equity and Fiscal Responsibility Act of 1982. This Plan is intended to be an "excess benefit plan" as defined in Section 3(36) of the Employee Retirement Income Security Act of 1974. l. Definitions Applicable to this Excess Benefit Plan. All capitalized -------------------------------------------------- terms defined in the Basic Plan and not defined herein shall have the meanings set out in the Basic Plan. In addition, the words and terms defined below have the meanings herein set out: (a) "Actuarial Equivalent" means a benefit or benefits, or a payment or payments, which are of equal value at the date of determination to the benefits for which they are to be substituted. Equivalence of value is determined from actuarial calculations based on actuarial assumptions as to interest and mortality as follows: Interest - The required return on investment used by Anheuser-Busch -------- Companies, Inc. to evaluate capital projects associated with existing business activities ("hurdle rate") as in effect on the first day of the month preceding the Participant's Effective Benefit Date. Mortality The mortality table set forth in the Basic Plan. --------- (b) "Pension Committee" means the same group of persons appointed to administer the Basic Plan. (c) "Employee" means any Salaried Employee employed by a Participating Employer. (d) "Participant" means an Employee who is eligible to participate herein in accordance with Section 2 hereof. 2 -2- (e) "Participating Employer" as used in this Plan means a Participating Employer in the Basic Plan which has adopted this Plan. (f) "Plan" shall mean the Anheuser-Busch Excess Benefit Plan, effective January l, 1984, as originally adopted and as hereafter amended. 2. Eligibility to Participate. Any Employee or former Employee who --------------------------- retires and whose Retirement Benefit under the Basic Plan will be limited by the provisions of Section 415 of the Internal Revenue Code, or any regulations issued thereunder, shall be a Participant in this Plan. 3. Benefits Under this Plan. The Retirement Benefit payable by a ------------------------- Participating Employer under this Plan shall be equal to: (i) The Retirement Benefit a Participant would be entitled to under Section 4.1, 4.2, 4.3, 4.4 or 5.1 of the Basic Plan, determined as if Section 12 of the Basic Plan, (incorporating the Section 415 limitations) was inapplicable, less (ii) The Retirement Benefit actually payable to the Participant under the Basic Plan. 4. Pre-Retirement Death Benefits. There will be no pre-retirement death ----------------------------- benefit under this Plan. 5. Payment Method. The Retirement Benefit determined under Section 3 -------------- shall be payable under the Basic Method of payment. However, a Participant may elect, subject to approval of the Pension Committee, to have his or her Retirement Benefit hereunder paid under one or more of the Optional Methods of payment set forth in the Basic Plan. All Optional Methods of payment shall be the Actuarial Equivalent of the Basic Method of payment. A Participant may elect an Optional Method of payment under this Plan which is different from the method of payment elected under the Basic Plan. Only Participants eligible for Option (e) (One-Sum Option) under the Basic Plan shall be eligible to elect the One-Sum option under this Plan. Retirement Benefits under this Plan shall commence as of the same date benefits commence under the Basic Plan. 6. Obligation to Pay Benefits Hereunder. No trust fund, escrow account ------------------------------------ or other segregation of assets shall be established or made by a Participating Employer to guarantee, secure or assure the payment of any benefit hereunder. A Participating Employer's obligation to pay Retirement Benefits pursuant 3 -3- to this Plan shall constitute only a general contractual liability to the Participants and other payees hereunder in accordance with the terms hereof. Payment of benefits by a Participating Employer shall be made only from the general funds of such Participating Employer and no Participant or any other potential payee of any amount hereunder shall have any interest in any particular asset of a Participating Employer by reason of the existence of this Plan. The amounts payable hereunder shall be subject in all respects to claims of general creditors of the Participating Employer until actually paid over to the person(s) entitled to receive the same. 7. Concerning Payment. All amounts payable during the lifetime of a ------------------ Participant shall be paid directly to the Participant or his or her legal representative. Any amount payable after the death of a Participant shall be payable to the Beneficiary or Beneficiaries designated by such Participant for purposes of this Plan. 8. Payees Presumed Competent. Every person receiving or claiming ------------------------- amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age until the Pension Committee receives a written notice, in form, manner and substance acceptable to it, that any such person is incompetent or is a minor or that a guardian or other person legally vested with the care of his estate has been appointed. 9. Notice of Address; Lost Payees. The address of every Participant or ------------------------------ other person entitled to any payment hereunder on file for purposes of the Basic Plan shall be used for all purposes of this Plan. If the Pension Committee is unable to locate any person, or the estate of such person, entitled to receive a payment hereunder within two years after an amount becomes payable, the right and interest of such payee in and to the amount payable shall terminate on the last day of such two year period. 10. No Liability for Participant's Debts. Amounts payable under this ------------------------------------ Plan shall not be liable for or subject to the debts or liabilities of any payee, and no amount payable hereunder shall at any time or in any manner be subject to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance of any kind, whether to the Participating Employer or to any other party whomsoever, and whether with or without consideration. If any payee shall attempt to, or shall anticipate, alienate, sell, transfer, assign, pledge or otherwise encumber any amounts payable hereunder or any part thereof, or if by reason of bankruptcy or other event, such amounts would at any time be received or enjoyed by persons other than such payee, except as otherwise permitted by this Plan, the Pension Commit- 4 -4- tee in its sole discretion may terminate such person's interest in any such amounts and hold or apply such amounts to or for the use of such person, his or her spouse, children or other dependents, or any of them, as the Pension Committee may determine. 11. Administration. The Pension Committee shall have full power and -------------- authority to do all things necessary or appropriate to the proper administration hereof, including, without limiting the generality of the foregoing, full power and authority to construe the Plan and to determine all questions which may arise. 12. Negation of Employment Contract. This Plan does not create an ------------------------------- employment contract and nothing contained herein shall be deemed (a) to give a Participant the right to be retained in the employ of any Participating Employer: (b) to interfere with the right of the Participating Employer to discharge a Participant at any time: (c) to give the Participating Employer the right to require a Participant to remain in its employ: or (d) to interfere with the right of a Participant to terminate his employment voluntarily whenever he chooses. 13. Forfeiture for Activity Contrary to a Participating Employer's Best ------------------------------------------------------------------- Interests. --------- (a) Notwithstanding any provision of this Plan to the contrary, the right of a Participant and his or her Beneficiary or Beneficiaries to receive a benefit hereunder is expressly conditioned upon the Participant neither (i) having ceased to be employed by a Participating Employer under circumstances or conditions inimical to the best interests of the Participating Employer or its affiliates and subsidiaries, nor (ii) thereafter engaging in any activity (such as competing with any business of the Participating Employer or its affiliates or subsidiaries, or disclosing secret formulae, processes or procedures, or any customers' or suppliers' list or other confidential information, or encouraging any other employee to leave the Participating Employer or performing any activity inimical to the Participating Employer's best interests) which is contrary to the best interests of his or her former Participating Employer or its affiliates and subsidiaries. (b) Should the Participating Employer propose to enforce the foregoing, it shall give written notice to the Participant or other person(s) otherwise entitled to payment, and may withhold payment pending final resolution of the matter. The Pension Committee shall thereupon investigate the alleged violation and shall consider, under such rules of procedure as the Pension Committee shall deem reasonable, such evidence and 5 -5- testimony as the Participating Employer and the Participant or other person(s) entitled to payment may wish to submit in support or refutation of the alleged violation. The decision of the Pension Committee shall be final and conclusive. If the Pension Committee concludes that there has been a violation, the right of the Participant and all Beneficiaries to receive payment hereunder shall thereupon cease. If the Pension Committee concludes that there has not been a violation, the amounts withheld or suspended shall become payable as though the Participating Employer had never instituted any proceedings or withheld or suspended payment without, however, any interest for the period during which such amounts were withheld or suspended. (c) The provisions of this Section authorizing the Participating Employer to give notice of an alleged violation or possible violation of the conditions of paragraph (a) shall not be interpreted as requiring the Participating Employer to take such action in each and every instance of a violation or suspected violation and in determining whether an attempt to enforce the forfeiture provisions of this Section shall be made, the Participating Employer may consider the possible economic damage it might suffer from the violation or suspected violation, the circumstances surrounding the discontinuance of the employment of the Participant with the Participating Employer and the quantum of proof which the Participating Employer may have of a violation of the aforesaid conditions. (d) The provisions of this Section shall in no way impair or derogate the rights which the Participating Employer may otherwise have under any employment contract with a Participant or at law or in equity, to prevent the disclosure of trade secrets or to recover damages for the disclosure thereof or to prevent a Participant from engaging in competition with the Participating Employer or to recover damages therefor. (e) The Board of Directors of Anheuser-Busch Companies, Inc. (or the Executive Committee at any time the Board of Directors is not in session) may revoke this Section at any time, whereupon no Accrued Benefit at that time shall ever be subject to forfeiture or revocation for any reason, including (but not limited to) any subsequent amendment to this Plan which reinstates the provisions of this Section or imposes similar conditions on a Participant's right to receive benefits hereunder. 14. Amendment. The Board of Directors of Anheuser-Busch Companies, Inc. --------- ("Board") shall have the absolute right to modify or amend this Plan in whole or in part, at any time and from time to time, effective as of any specified prior, current 6 -6- or future date. Any amendments to the Basic Plan shall automatically amend the provisions of this Plan where they would so apply, except that the interest rate assumption in this Plan shall only be amended under the provisions of this Section. 15. Termination. The Board reserves the right to terminate this Plan as ----------- of any specified current or future date. The Plan shall be automatically terminated upon: (a) termination of the Basic Plan: (b) Anheuser-Busch Companies, Inc. being legally adjudicated a bankrupt: (c) the appointment of a receiver or trustee in bankruptcy with respect to Anheuser-Busch Companies, Inc.'s assets and business if such appointment is not set aside within 90 days thereafter: or (d) the making by Anheuser-Busch Companies, Inc. of an assignment for the benefit of creditors. Upon a termination of this Plan, no additional Employees shall become eligible to participate herein, and no additional benefits shall be accrued hereunder. Notwithstanding the termination of this Plan, a Participant shall remain entitled to a Retirement Benefit under this Plan, payable at his or her Normal Retirement Date, equal to his Accrued Benefit in the Basic Plan as of the date of Plan termination (determined without regard to Section 415 limitations) less the amount of Retirement Benefit actually payable under the Basic Plan. 16. Participating Employer. Any Participating Employer in the Basic Plan ---------------------- may become a Participating Employer in this Plan by submitting to the Pension Committee a resolution of its board of directors adopting the provisions of this Plan. The adoption of this Plan by a Participating Employer shall constitute an automatic delegation by it to the Board of full authority to amend or terminate the Plan. A Participating Employer may withdraw from the Plan by action of its board of directors. Notwithstanding such withdrawal, a Participant shall remain entitled to a Retirement Benefit from such withdrawing Participating Employer, payable at his or her Normal Retirement Date, equal to his or her Accrued Benefit in the Basic Plan as of the date of the Participating Employer's withdrawal (determined without regard to Section 415 limitations), less the amount of the Retirement Benefit actually payable under the Basic Plan. 17. Successor Participating Employer. In the event of the dissolution, -------------------------------- merger, consolidation or reorganization of a Participating Employer, the successor company may adopt and continue this Plan as a Participating Employer, provided it has adopted the Basic Plan. If a successor company does not continue this Plan, all Participants affected thereby shall be entitled to a Retirement Benefit from such successor company calculated and payable as provided in Section 15, with the Accrued Benefit determined as of the date of dissolution, merger, consolidation or reorganization. 7 -7- 18. Miscellaneous. ------------- (a) In any instance in which the Pension Committee believes such action to be in the best interest of the party entitled to receive any payment under this Plan, or to be in the best interests of a Participating Employer (such as to eliminate small monthly retirement payments or to avoid the administrative inconvenience and expense which might be incurred if relatively small amounts were to be paid to multiple recipients over lengthy periods of time), amounts payable hereunder may be paid in a single lump sum, the amount of which shall be the Actuarial Equivalent of the benefits otherwise payable. (b) In the event of the death of a Participant or any Beneficiary designated by him or her, no payment need be made by the Plan until the Pension Committee shall have received proof satisfactory to it of such death and of the identity, existence and location of the party thereafter entitled to receive payments under this Plan. (c) In making any payment or taking any action under this Plan, the Participating Employer and the Pension Committee shall be absolutely protected in relying upon any finding or statement of facts believed by it to be true, and on any written instrument believed by it to have been signed by the proper party. (d) This Plan shall be construed and enforced under and in accordance with the laws of the State of Missouri. (e) All actuarial matters hereunder shall be decided by the Actuary then employed to provide actuarial services to the Basic Plan. IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this Plan to be executed, and its corporate seal to be hereunto affixed, by its officers thereunto duly authorized, this 11th day of September, 1984, effective as of January 1, 1984. ---- --------- - ANHEUSER-BUSCH COMPANIES, INC. BY s/JERRY E. RITTER --------------------------- Vice President (Seal) Attest: s/JOHN HAYWARD - - - ------------------- Secretary EX-10 7 EXHIBIT 10.10 FIRST AMEND TO EXCESS BENEFIT PLAN 1 EX-10.10 FIRST AMENDMENT TO ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN -------------------------------- Effective as of January 1, 1984, Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company") established the Anheuser-Busch Companies, Inc. Excess Benefit Plan (the "Plan") to provide supplemental retirement benefits to Participants in the Anheuser-Busch Salaried Employees' Pension Plan. Pursuant to Section 14 of the Plan and authority granted by the Board, the Plan is hereby amended, effective January l, 1986, as follows: 1. The Plan is hereby amended by adding a new Section 19 at the end thereof, to read as follows: "19. Change in Control. ----------------- If a Change in Control (as defined herein) shall occur, then, notwithstanding anything to the contrary herein, the Participant's accrued benefit under the Plan to the date of such Change in Control shall be fully vested and nonforfeitable. At any time prior to the occurrence of a Change in Control, a Participant may request, by completing an application form provided to such Participant by the Pension Committee administering the Plan, that payment of the present value of such accrued benefit shall be made to the Participant in a single sum as soon as practicable after the Change in Control. For purposes hereof, present value shall be determined by utilizing the actuarial assumptions used under the Company's Salaried Employees' Pension Plan as in effect immediately prior to such Change in Control. Within a reasonable time after the receipt by the Pension Committee of a completed application from a Participant requesting payment upon a Change in Control, as described above, but in any event prior to a Change in Control (unless circumstances make it otherwise impossible), the Pension Committee shall, in its sole discretion, determine whether to make such payment upon the occurrence of such Change in Control or to pay the Participant his accrued benefit in accordance with the provisions of the Plan 2 - 2 - (other than this provision) as in effect immediately prior to the Change in Control. Notwithstanding the the provisions of Section 14 hereof, following a Change in Control, the provisions of this Section cannot be amended in any manner without the written consent of each individual who was a Participant immediately prior to a Change in Control. For purposes of this Section 19, a "Change in Control" shall occur if any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than fifty percent (50%) of the then outstanding voting stock of the Company." 2. Except as provided hereinabove, the Plan is ratified and confirmed in all respects. IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. has executed this Amendment this 28th day of May , 1986. ---- ------- ANHEUSER-BUSCH COMPANIES, INC. By s/JERRY E. RITTER ---------------------------- (SEAL) Attest: s/JOBETH BROWN --------------------- (Assistant) Secretary 4478J EX-10 8 EXHIBIT 10.12 RESOLUTIONS AMENDING EXCESS PLAN 1 EX-10.12 EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22, 1993 AMENDING THE ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN RESOLVED, that the Excess Plan be amended, effective for individuals terminating employment on or after October 1, 1993, as follows: (i) to implement the features of the Enhanced Retirement Program which relate to the plan; (ii) to provide for an increased benefit payment in the amount necessary to cover any parachute or similar penalty taxes which would be assessed against a participant if accelerated payment occurs because of a change in control as described in the plan; (iii) to require that the lump-sum method of payment be the only payment method available on and after January 1, 1995, unless the participant elects another form of payment at least one year prior to retirement; (iv) to defer commencement of benefit payments for executives named in the Summary Compensation Table of the Company's proxy statement for the Annual Meeting of Shareholders ("Named Executive Officers") until the year following retirement; (v) to recognize, under the benefit formula, any compensation deferred in any year under the new Executive Deferred Compensation Plan referred to below; and (vi) to adopt such other changes as are necessary or appropriate to carry into effect the foregoing. EX-10 9 EXHIBIT 10.15 RESOLUTIONS AMENDING SERP 1 EX-10.15 EXCERPTS FROM RESOLUTIONS ADOPTED BY THE ANHEUSER-BUSCH COMPANIES, INC. BOARD OF DIRECTORS ON SEPTEMBER 22,1993 AMENDING THE ANHEUSER-BUSCH COMPANIES, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN RESOLVED, that the SERP be amended, effective for individuals terminating employment on or after October 1, 1993, as follows: (i) to implement the features of the Enhanced Retirement Program which relate to the plan; (ii) to index the minimum compensation level required to participate in the plan in accordance with the Company's annual budgeted merit increase factor; (iii) to permit otherwise qualified executives employed by Campbell Taggart, Inc. and Merico, Inc. to participate in the plan; (iv) to provide for an increased benefit payment in the amount necessary to cover any parachute or similar penalty taxes which would be assessed against a participant if accelerated payment occurs because of a change in control as described in the plan; (v) to revise the benefit accrual method, early retirement reductions and interest rate formula for lump-sum payments, all in accordance with parallel amendments in the SEPP; (vi) to require that the lump-sum method of payment be the only payment method available on or after January 1, 1995, unless the participant elects another form of payment at least one year prior to retirement; (vii) to permit installment payments over a five-year period using such methodology as is adopted for the Executive Deferred Compensation Plan referred to below; (viii) to defer commencement of benefit payments for Named Executive Officers until the year following retirement; (ix) to recognize, under the benefit formula, any compensation deferred in any year under the new Executive Deferred Compensation Plan referred to below; and (x) to adopt such other changes as are necessary or appropriate to carry into effect the foregoing. EX-10 10 EXHIBIT 10.16 EXECUTIVE DEFERRED COMP PLAN 1 EX-10.16 ANHEUSER-BUSCH EXECUTIVE DEFERRED COMPENSATION PLAN Effective January 1, 1994 2 ANHEUSER-BUSCH EXECUTIVE DEFERRED COMPENSATION PLAN Preamble -------- Anheuser-Busch Companies, Inc. does hereby adopt the Anheuser- Busch Executive Deferred Compensation Plan set forth herein for the purpose of providing deferred compensation to a select group of management and highly compensated employees, effective as of January 1, 1994. I. DEFINITIONS Base Salary: The substantially equal amounts owed by a ----------- Participating Employer to an Employee on a regular periodic basis in exchange for services rendered during a Year, regardless of when paid. Bonus: Any amount awarded by a Participating Employer to an ----- Employee for a Year under a bonus plan, regardless of when awarded or paid. Company: Anheuser-Busch Companies, Inc. ------- Effective Date: January 1, 1994. -------------- Eligible Compensation: As to any Year, a Participant's Base --------------------- Salary and Bonus for such Year. No payments under the Company's Supplemental Life Insurance Program or any like program, taxable or non-taxable fringe benefits, stock-related compensation, international service premiums or other cash or in-kind compensation shall be taken into account as Eligible Compensation. Eligible Employee: With respect to any Year, an Employee ----------------- who satisfies the requirements for participation in the Plan for the Year, as determined pursuant to Section II. Employee: A salaried common-law employee of a Participating -------- Employer as determined from time to time. In no event shall any individual be classified as an Employee while he or she is in any of the following categories: (a) Independent contractors, including non-employee directors of the Company and its subsidiaries. (b) Leased employees. (c) Non-resident aliens. (d) Professional baseball players. (e) Collective bargaining unit members. 3 Participant: With respect to any Year, an Eligible Employee ----------- who elects to defer a portion of his or her Eligible Compensation for the Year or who so elected with respect to an earlier Year as to which the entire amount deferred and all interest accrued thereon have not been paid. Participating Employer: The Company and any other business ---------------------- entity in which the Company has an equity interest of at least fifty percent (50%), and which adopts this Plan, as determined from time to time. Plan: Anheuser-Busch Executive Deferred Compensation Plan, ---- the Plan set forth herein, as duly amended from time to time. Related Employer: Each Participating Employer and each ---------------- other legal entity as to which the Company has at least fifty percent (50%) of the voting power. Year: Each calendar year commencing on or after January 1, ---- 1994. II. ELIGIBILITY An Employee shall be an Eligible Employee for a Year only if the sum of the Employee's annual rate of Base Salary as of October 1 of the immediately preceding calendar year and the Employee's Bonus for the second preceding calendar year exceeds $250,000, as adjusted for each Year after 1994 in accordance with the Company's budgeted internal merit increase factor for that Year (hereinafter "$250,000 As Adjusted"). III. DEFERRAL ELECTIONS 3.01. Types of Election; Time of Election. Each ---- ----------------------------------- Participant for a Year shall make the following irrevocable elections in writing on a form provided by the Company and delivered to the Company not later than the Company may direct, but in any event before the first day of the Year. (a) The portion of the Participant's Eligible Compensation for the Year that shall be deferred; however: (i) The maximum portion of each installment of a Participant's Base Salary subject to deferral election hereunder shall be equal to a pro rata share of the --- ---- portion of the Participant's Base Salary in excess of $250,000 As Adjusted. If by reason of Section 3.04, an -2- 4 installment is insufficient to support any deferral, no make-up deferral shall be made from any future Base Salary installment. (ii) If a Participant's annual Base Salary rate is changed during a Year, the amounts deferred prior to the date of change shall not be changed, but the maximum portion of each installment that can be deferred after the change shall be adjusted as if the new annual Base Salary rate applied throughout the Year. (iii) The maximum portion of a Participant's Bonus subject to deferral election hereunder shall be equal to the amount by which the Participant's Eligible Compensation exceeds the sum of the portion of the Participant's Base Salary deferred hereunder plus $250,000 As Adjusted. (iv) If any portion of a Participant's total compensation from all Participating Employers for a Year would not be deductible for the Year by any Participating Employer under section 162(m) of the Internal Revenue Code, the Participant may elect to defer an indefinite amount equal to such non-deductible portion of the Participant's compensation, and the Company may adopt such special rules and procedures as it deems appropriate to carry out such election. (b) The period of deferral for amounts deferred during the Year, which may be a definite period of five (5), ten (10), fifteen (15) or twenty (20) Years including the Year of deferral, or an indefinite period ending on termination of the Participant's employment with all Related Employers, subject to extension provided for in Sections 3.01(e) and 3.02 or acceleration as provided for in Sections 5.01(b), 5.05, 5.06 and 5.07. (c) The interest rates to be applied to amounts deferred during the Year and to any previously deferred amounts as to which a new election is required under Section 4.01. (d) Whether payment of amounts deferred for the Year and interest accrued thereon shall be made in a single sum or in five (5) installments, subject to acceleration as provided for in Sections 5.02(c), 5.05, 5.06 and 5.07. (e) Whether payment of amounts deferred for the Year that become due on account of termination of the Participant's employment with all Related Employers shall -3- 5 begin as of the first day of the calendar month following the termination or the January 1 following the termination. 3.02. Special Rule for Non-deductible Amounts. Any amount ---- --------------------------------------- otherwise payable under the Plan in a Year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code shall not be paid until such Year as the Company determines that the amount has ceased to be non-deductible by any Participating Employer under section 162(m) of the Internal Revenue Code. In the case of any inconsistency between this Section 3.02 and any other provision of the Plan, this Section 3.02 shall govern, except in the case of Section 5.06. 3.03. Termination of Deferrals on Termination of Employment. ---- ----------------------------------------------------- If a Participant's employment with all Participating Employers is terminated before the end of a Year as to which the Participant elected to defer a portion of Eligible Compensation under the Plan: (a) Except for deferrals described in Section 3.01(a)(iv), all such deferrals shall cease upon such termination of employment, whether or not the Participant receives any amounts otherwise classified as Eligible Compensation after such termination, and (b) No portion of the Participant's Eligible Compensation previously deferred during the Year shall be refunded to the Participant, even though the Participant's total Eligible Compensation for the Year may be less than $250,000 As Adjusted. 3.04. Miscellaneous Limitations on Deferral. ---- ------------------------------------- Notwithstanding Section 3.01, a Participant's deferral election for a Year shall be of no force or effect to the extent that it requires deferral of: (i) any amounts the Participant elects to contribute under the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan on either a before-tax or after-tax basis and the Anheuser-Busch 401(k) Restoration Plan; (ii) any amounts the Participant elects or is required to contribute under the Group Insurance Plan for Certain Employees of Anheuser-Busch Companies, Inc., the Anheuser-Busch Dependent Care Assistance Plan, the Anheuser-Busch Salaried Long-Term Disability Plan, or any other welfare benefit plan maintained by any Participating Employer; (iii) any payroll taxes, income taxes or any other taxes required to be withheld from the Participant's compensation which is subject to such taxes during the Year, including but not limited to FICA taxes and federal, state and local income taxes required to be withheld on the Participant's wages for the Year; and (iv) any amounts payable to a court or other individual or entity by court order. -4- 6 IV. ACCRUAL OF INTEREST 4.01. Participant Elections. ---- --------------------- (a) Before the beginning of each Year, the Company shall offer one or more combinations of interest rates (hereinafter "Rates") and time periods (hereinafter "Terms") which shall apply to amounts deferred for the Year and to all prior deferrals and interest accrued thereon as to which the previous Terms expired on December 31 of the prior Year. (b) The Rates and Terms for each Year shall be determined by the Chief Financial Officer of the Company and shall correspond generally to the borrowing rates and terms that will be available to the Company for the Year on the basis of market rates in effect prior to announcement to Eligible Employees of the Rates and Terms for the Year. (c) All Terms shall commence on a January 1 and expire on a December 31. For example, if before January 1, 1995, a Participant elects a combination of a 3-Year Term and a 3% Rate for the amounts deferred by the Participant for 1995, the 3% Rate shall apply to all amounts deferred for 1995 from the date of deferral through December 31, 1997. (d) The Terms elected by a Participant need not be limited to the deferral period for the amount subject to the Term elected. For example, a Participant may elect a 10- Year Term for an amount the Participant has elected to be distributed after 5 Years. (e) Each Participant shall elect the Rate/Term combinations which shall apply to amounts the Participant defers for the Year and to the Participant's prior deferrals an interest accrued thereon as to which the previous Terms expired on December 31 of the prior Year. 4.02. Accrual of Interest during Deferral Period. Interest ---- ------------------------------------------ shall accrue on the amounts deferred by a Participant for each Year in accordance with the Participant's elections from time to time as provided for in Section 4.01 until payment becomes due with respect to such amounts pursuant to Section V. 4.03. Accrual of Interest on Installment Payments. If any ---- ------------------------------------------- amount is paid in installments pursuant to a Participant's election in accordance with Section 3.01(d), interest shall accrue on any balance thereof remaining to be paid in installments from time to time at the Rate in effect with respect to such amount on the day prior to the due date of the first installment. -5- 7 4.04. If Payment Is Delayed. ---- --------------------- (a) In the event payment of an amount due a Participant occurs thirty (30) or fewer days after its due date, no interest shall accrue during the period between the due date and the date of payment. (b) In the event payment of any amount due a Participant occurs more than thirty (30) days after its due date, interest shall accrue during the period between the due date and the date of payment at an annual rate equal to the prime rate published by The Boatmen's National Bank of St. Louis as of the due date. 4.05. If Payment Is Accelerated. If payment of an amount ---- ------------------------- due a Participant is accelerated for any reason, no interest shall accrue with respect to the accelerated amount after the date scheduled for accelerated payment, notwithstanding that the Participant previously elected a longer term or a later payment date, except as provided for in Section 4.04(b). V. PAYMENTS TO PARTICIPANTS 5.01. Time Payment Begins. ---- ------------------- (a) Subject to the remaining provisions of this Section V, payment of amounts deferred for a Year and interest accrued thereon shall begin as of January 1 of the Year following expiration of the deferral period the Participant elected therefor in accordance with Section 3.01(b). (b) Notwithstanding Section 5.01(a), payment of a Participant's deferred amounts and interest thereon shall begin not later than the first day of the calendar month following termination of the Participant's employment with all Related Employers on account of retirement, death or any reason or the January 1 following the termination, as elected by the Participant pursuant to Section 3.01(e). 5.02. Form of Payment. ---- --------------- (a) If a Participant elects payment of any amount in a single sum pursuant to Section 3.01(d), such single sum amount shall be due and payable as of the date determined pursuant to Section 5.01. (b) If a Participant elects payment of any amount in five (5) installments pursuant to Section 3.01(d), the initial installment shall be paid as of the first day of the calendar month following termination of the Participant's -6- 8 employment with all Related Employers or as of the January 1 following the termination, as elected by the Participant pursuant to Section 3.01(e), and the remaining four (4) installments shall be paid as of January 1 of the next four (4) calendar years. (c) Notwithstanding Section 5.02(b): (i) if a Participant's employment with all Related Employers terminates before age fifty-five (55) for any reason other than the Participant's death or disability, or (ii) if a Participant's termination of employment with all Related Employers occurs before the end of the Participant's first Year of deferral under the Plan, the Company may determine that payment of the entire amount then accrued for the benefit of the Participant under the Plan shall be paid in a single sum, notwithstanding any election by the Participant to the contrary. 5.03. Set Off and Withholding. ---- ----------------------- (a) Any amount then due and payable by the Company to any Participant or the successor to any Participant under this Plan may be offset by any amounts owed to any Related Employer by the Participant and/or the successor for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 5.04. Determination of Installment Amounts. If payment of ---- ------------------------------------ a deferred amount occurs in installments, the amount of each installment shall be equal to the deferred amount and accrued interest thereon remaining unpaid as of the December 31 preceding payment, divided by the number of installments then remaining to be paid. For example, to determine the amount of the first installment, divide the total amount of the deferral and accrued interest as of the preceding December 31 by five (5); to determine the amount of the second installment, divide the amount of the deferral and accrued interest remaining to be paid as of the preceding December 31 by four (4), and so on. 5.05. Acceleration of Payment for Unforeseeable Emergency. ---- --------------------------------------------------- (a) The Company may determine that payment of any portion of the amount then accrued for the benefit of a Participant or beneficiary under the Plan shall be -7- 9 accelerated on application of the Participant or beneficiary on account of and subject to reasonable proof of unforeseeable emergency as provided for in this Section 5.05. (b) For purposes of this Section 5.05, an unforeseeable emergency is a severe financial hardship to the Participant or beneficiary resulting from a sudden and unexpected illness or accident of the Participant or beneficiary or of a dependent (as defined in section 152(a) of the Internal Revenue Code) of the Participant or beneficiary, loss of the Participant's or beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or beneficiary. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved-- (i) Through reimbursement or compensation by insurance or otherwise, (ii) By liquidation of the Participant's or beneficiary's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (iii) By cessation of deferrals under this Plan or by cessation of elective deferrals if and when possible under any other deferred compensation plan for which the Participant or beneficiary is eligible; provided that a Participant shall not be permitted to cease deferrals under this plan as of any date other than a January 1. Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant's or beneficiary's child to college or the desire to purchase a home. (c) Withdrawal of amounts because of an unforeseeable emergency shall be permitted only to the extent reasonably needed to satisfy the emergency need. (d) All determinations under this Section 5.05 shall be made by an Administrative Committee appointed pursuant to Section 6.01(c). (e) Notwithstanding any other provision of this Section 5.05, authorization of distribution on account of hardship under the Anheuser-Busch Deferred Income Stock Purchase and -8- 10 Savings Plan shall automatically terminate any deferral election of the Participant then in force with respect to Eligible Compensation and further deferrals under this Plan shall not be permitted for a period of twelve (12) months. 5.06. Change in Control. ---- ----------------- (a) If a Change in Control (as defined in Section 5.06(b)) shall occur, then, notwithstanding anything to the contrary herein, the entire amount accrued on behalf of a Participant under the Plan as of the Change in Control Date shall be paid in a single sum within 30 days after the Change in Control Date. (b) For purposes of this Plan, a "Change in Control" shall occur if: (i) Any Person (as defined herein) becomes the beneficial owner directly or indirectly (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934 as amended ("Act")) of more than 50% of the Company's then outstanding voting securities (measured on the basis of voting power); (ii) The shareholders of the Company approve a definitive agreement to merge or consolidate the Company with any other corporation, other than an agreement providing for (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; (iii) A change occurs in the composition of the Board of Directors of the Company during any period of twenty-four consecutive months such that individuals who at the beginning of such period were members of the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's -9- 11 shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or (iv) The shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. A Change in Control shall be deemed to have occurred on the date as of which any of the events described in clauses (i) through (iv) occur (such date being referred to as "Change in Control Date"). For purposes of this paragraph, "Person" shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (aa) the Company or any of its subsidiaries, (bb) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (cc) an underwriter temporarily holding securities pursuant to an offering of such securities, or (dd) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Company stock. (c) Following a Change in Control, the provisions of this Section 5.06 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to a Change in Control. (d) Following a Change in Control, this Plan may continue in effect, notwithstanding that payment of benefits shall have been made under Section 5.06(a). (e) If by reason of this Section 5.06 an excise or other special tax ("Excise Tax") is imposed on any payment under the Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment. 5.07. General Right to Accelerate Payment. Notwithstanding ---- ----------------------------------- Sections 5.01 and 5.02, the Company by its proper officers in its sole discretion may direct current payment of all amounts that all Participants have elected to defer pursuant to Section 3.01 and all interest then accrued thereon. -10- 12 5.08. Payments After Death. ---- -------------------- (a) Except as otherwise provided in this Section 5.08, any amount payable under this Plan as a result of or following the death of a Participant shall be applied only for the benefit of the beneficiary or beneficiaries designated by the Participant pursuant to this Section 5.08. Each Participant shall specifically designate, by name, on forms provided by the Company, the beneficiary(ies) to whom any such amounts shall be paid. A Participant may change or revoke a beneficiary designation without the consent of the beneficiary(ies) at any time by filing a new beneficiary designation form with the Company. The filing of a new form shall automatically revoke any forms previously filed with the Company. A beneficiary designation form not properly filed with the Company prior to the death of the Participant shall have no validity under the Plan. (b) Any such designation shall be contingent on the designated beneficiary surviving the Participant. If a designated beneficiary survives the Participant but dies before receiving the entire amount payable to the designated beneficiary hereunder, the amount which would otherwise have been so paid shall be paid to the estate of the deceased beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one beneficiary, and alternative or contingent beneficiaries, may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent beneficiaries, all of which must be satisfactory to the Company. (c) If no beneficiary designation is on file with the Company at the time of the Participant's death or no beneficiary designated by the Participant survives the Participant, the Participant's estate shall be deemed to be the beneficiary designated to receive any amounts then remaining payable under this Plan. (d) In determining any question concerning a Participant's beneficiary, the latest designation filed with the Company shall control and intervening changes in circumstances shall be ignored. For example, if a Participant's spouse is designated as beneficiary but thereafter is divorced from the Participant, such designation shall remain valid unless and until the Participant files a later beneficiary designation form with the Company. -11- 13 (e) Any check issued on or before the date of a Participant's death shall remain payable to the Participant, whether or not the check is received by the Participant prior to death. Any check issued after the date of the Participant's death shall be the property of the Participant's beneficiaries determined in accordance with this Section 5.08. (f) A Participant's election of payment in installments shall not be altered by reason of the Participant's death. 5.09. All Payments to be Made by the Company. All payments ---- -------------------------------------- due any Participant or beneficiary under this Plan shall be the sole responsibility of the Company. VI. ADMINISTRATION 6.01. Administrative Duties of the Company. ---- ------------------------------------ (a) The Company shall have sole responsibility for the administration of the Plan. (b) The Company shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Company shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Company deems proper. Any interpretation or construction placed upon any term or provision of the Plan by the Company, any decisions and determinations of the Company arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant and a Participant's status as such, and Eligible Compensation for any Year; (ii) the time, method and amounts of payments payable under the Plan; (iii) the rights of Participants; and any other action or determination or decision whatsoever taken or made by the Company in good faith shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. (c) The Chief Financial Officer of the Company shall appoint one or more Employees to carry out the Company's duties hereunder. -12- 14 (d) The Company may employ accountants, counsel, specialists, and other persons necessary to help carry out its duties and responsibilities under the Plan. The Company or any appointee shall be entitled to rely conclusively upon any opinions or reports which shall be furnished to it or him by such accountants, counsel, specialists, and other persons. (e) No Employee shall participate in determining his or her own entitlement under the Plan. 6.02. Claims Procedures. ---- ----------------- (a) The Company shall make all decisions and determinations respecting the right of any person to a payment under the Plan. (b) The following procedure shall be followed with respect to claims under the Plan: (i) Any claimant who believes he or she is entitled to a benefit under this Plan shall submit a claim for such benefit in writing to the Company. (ii) Any decision by the Company denying a claim in whole or in part shall be stated in writing by the Company and delivered or mailed to the claimant within ninety (90) days after receipt of the claim by the Company unless special circumstances require an extension of time for processing, but in any event within one hundred eighty (180) days after such receipt. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial ninety (90) day period, including the reasons therefor and the date by which the Company expects to render a decision. Any decision denying a claim shall set forth the specific reasons for the denial with specific references to Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and the reasons therefor, and an explanation of the Plan's claim review procedure as provided for in Section 6.02(b)(iii), all written in a manner calculated to be understood by the claimant. If the Company does not notify the claimant of denial of the claim or the need for an extension of time within the initial ninety (90) day period, the claim shall be deemed denied. (iii) If a claim is denied in whole or in part, the claimant or his or her duly authorized -13- 15 representative may request a review by the Company of the decision upon written application to the Company within sixty (60) days after notification of the decision. The claimant or his or her duly authorized representative may review pertinent documents and submit issues and comments in writing. The Company shall make its decision on review not later than sixty (60) days after receipt of the request for review unless special circumstances require an extension of time for processing, in which case its decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial sixty (60) day period. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant and specific references to the pertinent plan provisions on which the decision is based. If the Company does not notify the claimant of its decision on review within the period herein provided for, the claim shall be deemed denied on review. (c) The Company may adopt such rules as it deems necessary, desirable, or appropriate to carry out its duties under this Section 6.02. All rules, decisions and determinations of the Company under this Section 6.02 shall be uniformly and consistently applied. Any action or determination or decision whatsoever taken or made by the Company under this Section 6.02 in good faith shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. (d) The procedure provided for in this Section 6.02 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan. 6.03. Books and Records. ---- ----------------- (a) The Company shall keep such books, records, and other data as it deems necessary for proper administration of the Plan, including but not limited to records of each Participant's Eligible Compensation, elections, deferred amounts, Rates and Terms, interest accrued, amounts payable to each Participant from time to time, and amounts paid to each Participant or beneficiary from time to time. -14- 16 (b) The records of the Company shall be conclusive on all persons unless proved incorrect to the satisfaction of the Company. (c) The Company shall comply with all reporting and disclosure requirements of the law and shall maintain all records required by law. 6.04. Notices. ---- ------- (a) Any notice from the Company to any Participant shall be in writing and shall be given by delivery to the Participant, or by mailing to the last known residence address of the Participant. Any notice from a Participant to the Company shall be in writing and shall be given by delivery to the Pension Department of the Company at the Company's headquarters, except as otherwise designated by the Company. Notices shall be effective on the date of actual delivery. (b) Each Participant shall furnish all information, including post office address and each change of post office address, proofs, receipts and releases, as may be required by the Company. (c) Any communication, statement or notice addressed to any individual at the last post office address filed with the Company shall be binding for all purposes of the Plan, and the Company shall not be obligated to search for or ascertain the whereabouts of any such individual. (d) Except as provided in Section III, any notice required by the Plan may be waived by the Company or any Participant. VII. AMENDMENT AND TERMINATION The Chief Financial Officer of the Company shall have authority to amend or terminate the Plan on behalf of the Company in his sole discretion at any time, except as follows: (a) Amendments that provide for substantial increases in benefits shall require approval by the Compensation Committee of the Board of Directors of the Company. (b) No amendment shall reduce the amount accrued for the benefit of a Participant immediately prior to the effective date of the amendment. -15- 17 (c) No amendment shall reduce any Rate elected by a Participant before expiration of the Term provided therefor when the election was made unless the amount governed by the Rate and Term is distributed to the Participant in connection with termination of the Plan or otherwise pursuant to the Plan. VIII. PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY 8.01. Adoption. A Participating Employer other than the ---- -------- Company shall adopt this Plan by written instrument executed by its proper officers, subject to the written approval of the Company. Adoption of the Plan by a Participating Employer shall constitute automatic delegation of all rights and duties it might otherwise reserve to itself under the Plan to the Company, including full authority to amend or terminate the Plan. 8.02. Withdrawal. A Participating Employer shall ---- ---------- automatically withdraw from the Plan if and when the Company ceases to have an equity interest of at least fifty percent (50%) without the execution of any other instrument. A Participating Employer may voluntarily withdraw from the Plan on not less than thirty (30) days' written notice from its proper officers. 8.03. Succession. In the event of dissolution, merger, ---- ---------- consolidation, or spin-off involving a Participating Employer, the entity surviving the transaction shall succeed to the rights and duties of the affected Participating Employer without the execution of any other instrument. IX. MISCELLANEOUS 9.01. Company's Obligations Unsecured. It is the intention ---- ------------------------------- of the Company and all Participants that the Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time. Amounts payable to Participants under this Plan shall be paid solely from the general assets of the Company as they come due from time to time. No Participant and no successor of any Participant shall have any property interest whatsoever in any asset of the Company on account of participation in this Plan. Participants' rights under this Plan shall be no greater than the right of an unsecured general creditor of the Company. Nothing in this Plan shall require the Company to invest any amount in any asset or type of asset. 9.02. No Alienation. Except as required by law, amounts ---- ------------- payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, -16- 18 encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to payment hereunder shall be void, and the Company shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any Participant or other person. 9.03. No Waiver of Rights. Except as provided for in ---- ------------------- Section 6.02, no failure or delay by the Company or any Participant to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 9.04. Severability. The invalidity of any particular ---- ------------ clause, provision or covenant herein shall not invalidate all or any part of the remainder of this Plan, but such remainder shall be and remain valid in all respects as fully as the law will permit. 9.05. Legal Expenses. In any proceeding to enforce rights ---- -------------- and obligations hereunder, the unsuccessful party shall pay the successful party an amount equal to all reasonable out-of-pocket expenses (including reasonable legal expenses and court costs) incurred by the successful party. 9.06. Presumption of Competence. Every person receiving or ---- ------------------------- claiming amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age unless and until the Company receives proof satisfactory to the Company that the person is incompetent or is a minor or that a guardian or other person legally vested with the care of the person's estate has been appointed. 9.07. Facility of Payment. If any amount is payable ---- ------------------- hereunder to a minor or other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Company in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Company shall determine in its sole discretion: (i) Directly to said minor or other person; (ii) To a custodian for said minor or other person (whether designated by the Company or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any other jurisdiction; -17- 19 (iii) To the conservator of the estate of said minor or other person; or (iv) To some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Company shall not be required to see to the application of any payment so made, and payment to the person determined by the Company shall fully discharge the Company from any further accountability or responsibility with respect to the amount so paid. 9.08. No Guarantee of Employment or Compensation. No ---- ------------------------------------------ provision of this Plan shall restrict any Related Employer from discharging a Participant from employment or restrict any Participant from resigning from employment with any Related Employer. No provision of this Plan shall restrict any Related Employer from increasing or decreasing the compensation of any Employee. 9.09. Plan Provisions Binding. The provisions of the Plan ---- ----------------------- shall be binding upon the Company, all Participating Employers and all persons entitled to benefits under the Plan and their respective successors, heirs and legal representatives. 9.10. Rules of Interpretation. Words of gender shall ---- ----------------------- include persons and entities of any gender, the plural shall include the singular, and the singular shall include the plural. Captions are intended to assist in reference and shall not be interpreted as part of the Plan. 9.11. Missouri Law Controls. Subject to the applicable ---- --------------------- provisions of the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri and in Courts situated in that State. 9.12. Counterparts. This Plan may be executed in two or ---- ------------ more counterparts, any one of which shall constitute an original without reference to the others. IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. executed this Plan this 23rd day of November, 1993, effective as of the 1st day of January, 1994. ANHEUSER-BUSCH COMPANIES,INC. By s/JERRY E. RITTER ------------------------------ Jerry E. Ritter Chief Financial Officer WPPCGW/1025.nrl 20 TABLE OF CONTENTS ----------------- Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Eligible Compensation . . . . . . . . . . . . . . . . . . . . . . . 1 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . 1 Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Participating Employer. . . . . . . . . . . . . . . . . . . . . . . 2 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 II. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 III. DEFERRAL ELECTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2 3.01. Types of Election; Time of Election. . . . . . . . . . . . . 2 3.02. Special Rule for Non-deductible Amounts. . . . . . . . . . . 4 3.03. Termination of Deferrals on Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.04. Miscellaneous Limitations on Deferral. . . . . . . . . . . . 4 IV. ACCRUAL OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 5 4.01. Participant Elections. . . . . . . . . . . . . . . . . . . . 5 4.02. Accrual of Interest during Deferral Period . . . . . . . . . 5 4.03. Accrual of Interest on Installment Payments. . . . . . . . . 5 4.04. If Payment Is Delayed. . . . . . . . . . . . . . . . . . . . 6 4.05. If Payment Is Accelerated. . . . . . . . . . . . . . . . . . 6 V. PAYMENTS TO PARTICIPANTS. . . . . . . . . . . . . . . . . . . . . . 6 5.01. Time Payment Begins. . . . . . . . . . . . . . . . . . . . . 6 5.02. Form of Payment. . . . . . . . . . . . . . . . . . . . . . . 6 5.03. Set Off and Withholding. . . . . . . . . . . . . . . . . . . 7 5.04. Determination of Installment Amounts . . . . . . . . . . . . 7 5.05. Acceleration of Payment for Unforeseeable Emergency. . . . . . . . . . . . . . . . . . . . . . . . . . 7 5.06. Change in Control. . . . . . . . . . . . . . . . . . . . . . 9 5.07. General Right to Accelerate Payment. . . . . . . . . . . . . 10 5.08. Payments After Death . . . . . . . . . . . . . . . . . . . . 11 5.09. All Payments to be Made by the Company . . . . . . . . . . . 12 VI. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6.01. Administrative Duties of the Company . . . . . . . . . . . . 12 6.02. Claims Procedures. . . . . . . . . . . . . . . . . . . . . . 13 6.03. Books and Records. . . . . . . . . . . . . . . . . . . . . . 14 6.04. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 15 VII. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 15 -i- 21 VIII.PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY. . . . . . . . . . . 16 8.01. Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.02. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.03. Succession . . . . . . . . . . . . . . . . . . . . . . . . . 16 IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 9.01. Company's Obligations Unsecured. . . . . . . . . . . . . . . 16 9.02. No Alienation. . . . . . . . . . . . . . . . . . . . . . . . 16 9.03. No Waiver of Rights. . . . . . . . . . . . . . . . . . . . . 17 9.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . 17 9.05. Legal Expenses . . . . . . . . . . . . . . . . . . . . . . . 17 9.06. Presumption of Competence. . . . . . . . . . . . . . . . . . 17 9.07. Facility of Payment. . . . . . . . . . . . . . . . . . . . . 17 9.08. No Guarantee of Employment or Compensation . . . . . . . . . 18 9.09. Plan Provisions Binding. . . . . . . . . . . . . . . . . . . 18 9.10. Rules of Interpretation. . . . . . . . . . . . . . . . . . . 18 9.11. Missouri Law Controls. . . . . . . . . . . . . . . . . . . . 18 9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 18 -ii- EX-10 11 EXHIBIT 10.17 401(K) RESTORATION PLAN 1 EX-10.17 ANHEUSER-BUSCH 401(k) RESTORATION PLAN Effective January 1, 1994 2 TABLE OF CONTENTS ----------------- ARTICLE I ESTABLISHMENT OF PLAN --------------------- 1.1. Action By Company . . . . . . . . . . . . . . . . . . . . 1 1.2. Purpose of the Plan . . . . . . . . . . . . . . . . . . . 1 ARTICLE II DEFINITIONS ----------- 2.1. Account. . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.2. Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . 1 2.3. Company Contributions. . . . . . . . . . . . . . . . . . . 1 2.4. Compensation.. . . . . . . . . . . . . . . . . . . . . . . 1 2.5. Effective Date.. . . . . . . . . . . . . . . . . . . . . . 1 2.6. Election Date. . . . . . . . . . . . . . . . . . . . . . . 1 2.7. Eligible Employee. . . . . . . . . . . . . . . . . . . . . 2 2.9. Investment Fund. . . . . . . . . . . . . . . . . . . . . . 2 2.10. Match Rate.. . . . . . . . . . . . . . . . . . . . . . . . 2 2.11. Participant. . . . . . . . . . . . . . . . . . . . . . . . 2 2.12. Participating Employer.. . . . . . . . . . . . . . . . . . 2 2.13. Personal Salary Deferral Contributions.. . . . . . . . . . 2 2.14. Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . 2 2.15. Regular 401(k) Plan. . . . . . . . . . . . . . . . . . . . 2 2.16. Regular 401(k) Plan Matched Contributions. . . . . . . . . 2 2.17. Reporting Person.. . . . . . . . . . . . . . . . . . . . . 2 2.18. Reporting Person's HCSF Sub-Account. . . . . . . . . . . . 2 ARTICLE III ELIGIBILITY ----------- 3.1. Eligibility on Election Dates . . . . . . . . . . . . . . . 3 3.2. Eligibility Requirements. . . . . . . . . . . . . . . . . . 3 3.3. Participation . . . . . . . . . . . . . . . . . . . . . . . 3 3.4. Suspension. . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE IV PARTICIPANT DEFERRAL OF COMPENSATION ------------------------------------ 4.1. Election. . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.2. Time For Making Election. . . . . . . . . . . . . . . . . . 4 4.3. Special Rule for Reporting Persons. . . . . . . . . . . . . 4 4.4. Cessation of Personal Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . 4 i 3 ARTICLE V COMPANY CONTRIBUTIONS --------------------- ARTICLE VI ACCOUNTS -------- 6.1. Establishment of Accounts . . . . . . . . . . . . . . . . . 5 6.2. Crediting of Personal Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . 5 6.3. Crediting of Company Contributions. . . . . . . . . . . . . 5 6.4. Crediting or Debiting of Investment Returns . . . . . . . . 5 6.5. Debiting of Payments. . . . . . . . . . . . . . . . . . . . 5 ARTICLE VII HYPOTHETICAL INVESTMENTS ------------------------ 7.1. Election of Hypothetical Investments. . . . . . . . . . . . 6 7.2. Crediting of Investment Returns . . . . . . . . . . . . . . 6 ARTICLE VIII VESTING ------- 8.1. Personal Salary Deferral Contributions. . . . . . . . . . . 7 8.2. Company Contributions . . . . . . . . . . . . . . . . . . . 7 ARTICLE IX PAYMENT OF BENEFITS ------------------- 9.1. Election . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.2. Commencement of Payments . . . . . . . . . . . . . . . . . 7 9.3. Timing of Payments . . . . . . . . . . . . . . . . . . . . 8 9.4. Set Off and Withholding. . . . . . . . . . . . . . . . . . 8 9.5. Determination of Payment Amounts . . . . . . . . . . . . . 8 9.6. Unforeseeable Emergency. . . . . . . . . . . . . . . . . . 9 9.7. Change in Control. . . . . . . . . . . . . . . . . . . . . 10 9.8. General Right to Accelerate Payment. . . . . . . . . . . . 11 9.9. Payments After Death . . . . . . . . . . . . . . . . . . . 11 9.10. All Payments to be Made by the Company . . . . . . . . . . 13 9.11. Special Rule for Non-deductible Amounts. . . . . . . . . . 13 ARTICLE X PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY ---------------------------------------------- 10.1. Adoption . . . . . . . . . . . . . . . . . . . . . . . . . 13 10.2. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . 13 10.3. Succession . . . . . . . . . . . . . . . . . . . . . . . . 13 ii 4 ARTICLE XI ADMINISTRATION AND CLAIMS PROCEDURES ------------------------------------ 11.1. Administrative Duties of the Company . . . . . . . . . . . 14 11.2. Claims Procedures. . . . . . . . . . . . . . . . . . . . . 14 11.3. Books and Records. . . . . . . . . . . . . . . . . . . . . 16 11.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE XII AMENDMENT AND TERMINATION ------------------------- ARTICLE XIII MISCELLANEOUS ------------- 13.1. Company's Obligations Unsecured . . . . . . . . . . . . . 17 13.2. No Alienation . . . . . . . . . . . . . . . . . . . . . . 17 13.3. No Waiver of Rights . . . . . . . . . . . . . . . . . . . 18 13.4. Severability. . . . . . . . . . . . . . . . . . . . . . . 18 13.5. Legal Expenses. . . . . . . . . . . . . . . . . . . . . . 18 13.6. Presumption of Competence . . . . . . . . . . . . . . . . 18 13.7. Facility of Payment . . . . . . . . . . . . . . . . . . . 18 13.8. No Guarantee of Employment or Compensation. . . . . . . . 19 13.9. Plan Provisions Binding . . . . . . . . . . . . . . . . . 19 13.10. Rules of Interpretation . . . . . . . . . . . . . . . . . 19 13.11. Missouri Law Controls . . . . . . . . . . . . . . . . . . 19 13.12. Reporting Persons . . . . . . . . . . . . . . . . . . . . 19 13.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 19 iii 5 ANHEUSER-BUSCH 401(k) RESTORATION PLAN ----------------------- ARTICLE I ESTABLISHMENT OF PLAN --------------------- 1.1. Action By Company. Effective as of January 1, 1994, ----------------- Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), hereby establishes the Anheuser-Busch 401(k) Restoration Plan (the "Plan"). 1.2. Purpose of the Plan. The Plan is established and ------------------- maintained by the Company for the purpose of restoring certain benefits which are precluded from being provided under the Regular 401(k) Plan to a select group of management and highly compensated employees. ARTICLE II DEFINITIONS ----------- Except as otherwise expressly provided in this Plan, all capitalized terms used herein shall have the meaning ascribed to them in the Regular 401(k) Plan. 2.1. "Account." The separate record of the interest of ------- each Participant in this Plan which the Company will establish in accordance with Article VI. 2.2. "Beneficiary." The individual or individuals ----------- designated by a Participant to receive benefits under Section 9.9, or any other person deemed to be a Beneficiary under any other provision of this Plan or by law. 2.3. "Company Contributions." The amounts credited to the --------------------- Accounts of Participants pursuant to Article V hereof. 2.4. "Compensation." Base Pay under the Regular 401(k) ------------ Plan, except that no reduction shall be made to reflect the limitation under Section 401(a)(17) of the Code. 2.5. "Effective Date." January 1, 1994. -------------- 2.6. "Election Date." A date determined by the Company not ------------- later than which any election under the Plan must be made. 6 2.7. "Eligible Employee." An Employee of any Participating ----------------- Employer who is eligible to participate in the Plan in accordance with Article III hereof. 2.8. "Employee." A common-law employee of any -------- Participating Employer. 2.9. "Investment Fund." Any of the investment sub-funds --------------- which, from time to time, comprise the Fund under the Regular 401(k) Plan. At the time of the establishment of this Plan, the Investment Funds include the Company Stock Fund, the Equity Index Fund, the Medium-Term Fixed Income Fund and the Short-Term Fixed Income Fund. 2.10. "Match Rate." The applicable contribution rate for ---------- Company Matching Contributions under the Regular 401(k) Plan from time to time. 2.11. "Participant." Any Eligible Employee who has elected ----------- to participate in the Plan in accordance with Section 4.1 hereof and for whom an Account is maintained. 2.12. "Participating Employer." The Company and any other ---------------------- employer which is a Participating Employer under the Regular 401(k) Plan and employs any Eligible Employees. 2.13. "Personal Salary Deferral Contributions." A -------------------------------------- Participant's personal salary deferral contributions to this Plan. 2.14. "Plan Year." The fiscal year adopted for this Plan. --------- On the Effective Date, the Plan Year is the calendar year. 2.15. "Regular 401(k) Plan." The Anheuser-Busch Deferred ------------------- Income Stock Purchase and Savings Plan, as amended from time to time. 2.16. "Regular 401(k) Plan Matched Contributions." A ----------------------------------------- Participant's Personal Contributions to the Regular 401(k) Plan with respect to which Company Matching Contributions are made. 2.17. "Reporting Person." As of a given date, an Employee ---------------- who would be required to report an ordinary purchase or sale of the common stock of the Company occurring on such date to the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. 2.18. "Reporting Person's HCSF Sub-Account." That portion ----------------------------------- of an Account of a Reporting Person which is hypothetically invested in the Company Stock Fund. 2 7 ARTICLE III ELIGIBILITY ----------- 3.1. Eligibility on Election Dates. Any person who is an ----------------------------- Employee of a Participating Employer on the Effective Date or any subsequent Election Date is eligible to participate in the Plan as of such Effective Date or Election Date provided he or she satisfies the requirements of Section 3.2 on such date. 3.2. Eligibility Requirements. In order to be eligible to ------------------------ defer any portion of his Compensation under the Plan from time to time, an Employee must satisfy the following requirements: (a) Be a participant in the Regular 401(k) Plan; (b) Have Compensation exceeding the limit established under Section 401(a)(17) of the Code, determined on a ratable basis under the standards applied under the Regular 401(k) Plan; and (c) Be contributing to the Regular 401(k) Plan the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions. 3.3. Participation. Any Eligible Employee shall become a ------------- Participant in the Plan by electing to make Personal Salary Deferral Contributions pursuant to Article IV hereof, and shall remain a Participant as long as he or she shall continue to live and have an Account. 3.4. Suspension. ---------- (a) A Participant who reduces contributions to the Regular 401(k) Plan below the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions shall be suspended from making Personal Salary Deferral Contributions and from receiving Company Contributions under this Plan for period of twelve (12) months after the effective date of such withdrawal. (b) A Participant who makes a withdrawal pursuant to Section 9.6 or a hardship withdrawal under the Regular 401(k) Plan shall be suspended from making Personal Salary Deferral Contributions and receiving Company Contributions under this Plan for a period of twelve (12) months after the effective date of such withdrawal. (c) A Participant who is suspended from making Regular 401(k) Plan Matched Contributions for any other reason shall be suspended from making Personal Salary Deferral Contributions and receiving Company Contributions under this Plan 3 8 for the same period as the suspension period provided for in the Regular 401(k) Plan. (d) Any Participant suspended pursuant to this Section 3.4 may resume deferrals under this Plan only if the Participant satisfies the requirements of Section 3.2 at the time of resumption and makes an election described in Section 4.1 not later than the Election Date for the Plan Year in which deferrals are resumed, whether the Participant's suspension period expires as of January 1 or on a later date during the Plan Year. ARTICLE IV PARTICIPANT DEFERRAL OF COMPENSATION ------------------------------------ 4.1. Election. An Eligible Employee who wishes to begin or -------- resume Personal Salary Deferral Contributions under the Plan must execute and deliver the appropriate Company form properly completed. Execution and delivery of such form to the Company shall be an irrevocable direction by the Participant to his or her Participating Employer to defer payment of an amount which is equal to (a) the difference between the Participant's Compensation and the applicable annual compensation limit under Section 401(a)(17) of the Code, times (b) the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions until the earlier of the date the Participant's employment with all Participating Employers ends, the date of suspension of the Participant's contributions pursuant to Section 3.4 or the date of cessation of the Participant's Personal Salary Deferral Contributions pursuant to Section 4.4. 4.2. Time For Making Election. In general, the election ------------------------ described in Section 4.1 must be made not later than the Election Date which immediately precedes the Plan Year in which the Participant wishes to begin or resume making Personal Salary Deferral Contributions. In the case of an Employee who becomes an Eligible Employee after the Effective Date, the election to begin making Personal Salary Deferral Contributions described in Section 4.1 must be made not later than the Election Date which coincides with such Employee's initial eligibility, and will apply to defer amounts attributable to services performed after such Election Date. 4.3. Special Rule for Reporting Persons. Notwithstanding ---------------------------------- anything, an election described in Section 4.1 by a Reporting Person shall not be effective as to Compensation payable prior to the first day of the month following the calendar month in which the election is executed and delivered. 4.4. Cessation of Personal Salary Deferral Contributions. --------------------------------------------------- A Participant may cease making Personal Salary Deferral Contributions as of the first day of any Plan Year, provided that 4 9 the Participant executes and delivers the appropriate form promulgated by the Company not later than the Election Date which immediately precedes the Plan Year. An election under this Section 4.4 does not constitute a termination of participation in the Plan. ARTICLE V COMPANY CONTRIBUTIONS --------------------- Each Participant's Account will be credited with a Company Matching Contribution which is equal to (a) the amount of such Participant's Personal Salary Deferral Contribution, times (b) the Match Rate, all as determined from time to time. Each Participant's Account will be credited with a Supplemental Contribution for each Plan Year at the same rate as the Supplemental Contribution under the Regular 401(k) Plan for the Regular 401(k) Plan's plan year within which the Plan Year of this Plan ends. ARTICLE VI ACCOUNTS -------- 6.1. Establishment of Accounts. The Company will establish ------------------------- an Account for the benefit of each Participant. 6.2. Crediting of Personal Salary Deferral Contributions. --------------------------------------------------- Each Participant's Account shall be credited with his or her Personal Salary Deferral Contributions at the same time as accounts under the Regular 401(k) Plan are credited with Personal Contributions. 6.3. Crediting of Company Contributions. Each ---------------------------------- Participant's Account will also be credited with Company Matching Contributions and Supplemental Contributions in accordance with Article V, at the same times as accounts under the Regular 401(k) Plan are credited therewith. 6.4. Crediting or Debiting of Investment Returns. The ------------------------------------------- Company shall credit or debit, as the case may be, each Participant's Account to reflect the return on hypothetical investments provided in Article VII. 6.5. Debiting of Payments. Each Participant's Account -------------------- shall be debited by the amount of any payments of benefits pursuant to Article IX at the time of any such payments. 5 10 ARTICLE VII HYPOTHETICAL INVESTMENTS ------------------------ 7.1. Election of Hypothetical Investments. Prior to ------------------------------------ becoming a Participant, each Participant must (and at such times as the Company may thereafter allow, each Participant may) select the combination of Investment Funds in which he or she wishes hypothetically to invest, subject to the following limitations: (a) The portion of each Participant's Account which is attributable to Company Contributions, including earnings thereon, shall be hypothetically invested at all times in the Company Stock Fund. (b) At least 50% of the portion of each Participant's Account which is attributable to Personal Salary Deferral Contributions, including earnings thereon, shall be hypothetically invested in the Company Stock Fund for at least one complete Plan Year after the Plan Year of contribution. (c) Notwithstanding (b) above, no part of the value of a Reporting Person's Account which is attributable to Personal Salary Deferral Contributions shall be hypothetically invested in the Company Stock Fund at any time. (d) A Participant's elections respecting hypothetical investment of future deferrals and hypothetical investment of the Participant's existing Account shall be made separately and independently in accordance with the rules and regulations of the Regular 401(k) Plan. (e) If a Participant dies before distribution of the Participant's entire Account is complete, the Participant's Beneficiary shall have the right to make the elections reserved to the Participant in the foregoing subsections of this Section 7.1 from the date the Employee Stock Plans Department of the Company receives written notice of the Participant's death through the date of final distribution; provided: (i) if a deceased Participant has two or more Beneficiaries, the Beneficiaries shall have the right to make such elections with respect to the portions of the Participant's Account to which they are respectively entitled; and (ii) if the Beneficiary is a minor or otherwise legally incompetent, a parent or legal guardian of the Beneficiary, as the case may be, shall exercise such right on behalf of the Beneficiary. 7.2. Crediting of Investment Returns. The Company shall, ------------------------------- at such times and in such manner as it in its sole discretion determines to be appropriate, credit or debit each Participant's Account, as the case may be, with the appropriate amount of income, gain or loss, as if such Account had been invested in the 6 11 combination of Investment Funds he or she has selected in accordance with Section 7.1. ARTICLE VIII VESTING ------- 8.1. Personal Salary Deferral Contributions. The portion -------------------------------------- of a Participant's Account which is attributable to the Participant's Personal Salary Deferral Contributions, together with all earnings thereon, shall be fully vested and non- forfeitable at all times. 8.2. Company Contributions. The portion of a Participant's --------------------- Account which is attributable to Company Contributions, together with all earnings thereon, shall vest and become non-forfeitable when the portion of such Participant's Regular 401(k) Plan account which is attributable to Company Matching Contributions and Supplemental Contributions vests and becomes non-forfeitable. ARTICLE IX PAYMENT OF BENEFITS ------------------- 9.1. Election. -------- (a) At the time an Eligible Employee makes the initial election to participate in the Plan which is described in Section 4.1, he or she shall also irrevocably elect whether amounts deferred under the Plan during the initial Plan Year and subsequent Plan Years shall be made in a single sum, or five (5) installments, and whether payment shall begin as of the first day of the calendar month following termination of the Participant's employment with all Employing Companies or as of the January 1 following the termination, all subject to acceleration as provided for in Sections 9.6, 9.7 and 9.8. (b) A Participant may change any prior election made pursuant to Section 9.1(a) or any election pursuant to this Section 9.1(b), effective as to the value of the Participant's Account which is attributable to contributions made on and after the first day of any succeeding Plan Year. Notice of any such change shall be filed by the Election Date for such Plan Year on a form prescribed by the Company. 9.2. Commencement of Payments. Subject to the remaining ------------------------ provisions of this Article IX, payments under the Plan shall begin as of the first day of the calendar month following the Participant's termination of employment with all Employing 7 12 Companies or as of the January 1 following the termination, as elected by the Participant. 9.3. Timing of Payments. ------------------ (a) If a Participant has elected payment of any portion of the Participant's Account in a single sum pursuant to Section 9.1, such single sum amount shall be due and payable as of the first day of the calendar month following termination of the Participant's employment with all Employing Companies or as of the January 1 following the termination, as elected by the Participant. (b) If a Participant has elected payment of any portion of the Participant's Account in installments pursuant to Section 9.1, the initial installment shall be due and payable as of the first day of the calendar month following the Participant's termination of employment with all Employing Companies or as of the January 1 following the termination, as elected by the Participant, and the remaining four (4) installments shall be due and payable as of January 1 of the next four (4) Plan Years. (c) Notwithstanding Section 9.3(b), if the Participant's employment with all Employing Companies terminates before age fifty-five (55) for any reason other than the Participant's death or disability, the Company may determine that payment of the Participant's entire Account balance shall be paid in a single sum, notwithstanding any election by the Participant to the contrary. 9.4. Set Off and Withholding. ----------------------- (a) Any amount then due and payable by the Company to any Participant and/or Beneficiary under this Plan may be offset by any amount owed to any Employing Company by the Participant and/or Beneficiary for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their Beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 9.5. Determination of Payment Amounts. -------------------------------- (a) If payment to a Participant or Beneficiary occurs in a single sum, the amount of such single sum shall be equal to the Participant's vested Account balance as of the Plan's valuation date immediately preceding the payment date. 8 13 (b) If payment to a Participant or Beneficiary occurs in annual installments, the amount of each installment shall be equal to the Participant's vested Account balance as of the Plan's valuation date immediately preceding the payment date, divided by the number of installments then remaining to be paid. For example, to determine the amount of the first installment, divide the Participant's vested Account balance by five (5); to determine the amount of the second installment, divide the Participant's vested Account balance by four (4), and so on. 9.6. Unforeseeable Emergency. ----------------------- (a) Notwithstanding Sections 9.1, 9.2 and 9.3 above, the Company may determine that payment of any portion of the amount then due a Participant or Beneficiary under the Plan shall be accelerated on application of the Participant or Beneficiary on account of and subject to reasonable proof of unforeseeable emergency. (b) For purposes of this Section 9.6, an unforeseeable emergency is a severe financial hardship to the Participant or Beneficiary resulting from a sudden and unexpected illness or accident of the Participant or Beneficiary or of a dependent (as defined in section 152(a) of the Internal Revenue Code) of the Participant or Beneficiary, loss of the Participant's or Beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved-- (i) Through reimbursement or compensation by insurance or otherwise, (ii) By liquidation of the Participant's or Beneficiary's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (iii) By cessation of Personal Salary Deferral Contributions under the Plan if and when possible under the remaining provisions of the Plan, or by cessation of elective deferrals if and when possible under any other deferred compensation plan for which the Participant or Beneficiary is eligible. Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant's or Beneficiary's child to college or the desire to purchase a home. (c) Withdrawal of amounts because of an unforeseeable emergency shall be permitted only to the extent 9 14 reasonably needed to satisfy the emergency. If the Company determines that an unforeseeable emergency requires and can be satisfied by cessation of deferrals under this Plan and any other deferred compensation plan without withdrawal under this Plan, the Company shall direct cessation of such deferrals under this Plan and any other such plan if and to the extent permitted under the provisions thereof, and shall not direct acceleration of payment under this Section 9.6. (d) All determinations under this Section 9.6 shall be made by an Administrative Committee appointed pursuant to Section 11.1(c). 9.7. Change in Control. ----------------- (a) If a Change in Control (as defined in Section 9.7(b)) shall occur, then, notwithstanding anything to the contrary herein, the entire amount accrued on behalf of a Participant under the Plan as of the Change in Control Date shall be paid in a single sum within 30 days after the Change in Control Date. (b) For purposes of this Plan, a "Change in Control" shall occur if: (i) Any Person (as defined herein) becomes the beneficial owner directly or indirectly (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934 as amended ("Act")) of more than 50% of the Company's then outstanding voting securities (measured on the basis of voting power); (ii) The shareholders of the Company approve a definitive agreement to merge or consolidate the Company with any other corporation, other than an agreement providing for (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; (iii) A change occurs in the composition of the Board of Directors of the Company during any period of twenty- four consecutive months such that individuals who at the beginning of such period were members of the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the 10 15 Company's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or (iv) The shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. A Change in Control shall be deemed to have occurred on the date as of which any of the events described in clauses (i) through (iv) occur (such date being referred to as "Change in Control Date"). For purposes of this paragraph, "Person" shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (aa) the Company or any of its subsidiaries, (bb) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (cc) an underwriter temporarily holding securities pursuant to an offering of such securities, or (dd) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Company stock. (c) Following a Change in Control, the provisions of this Section 9.7 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to a Change in Control. (d) Following a Change in Control, this Plan may continue in effect, notwithstanding that payment of benefits shall have been made under Section 9.7(a). (e) If, by reason of this Section 9.7, an excise or other special tax ("Excise Tax") is imposed on any payment under the Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax on such additional amount, will equal such Excise Tax on the Required Payment. 9.8. General Right to Accelerate Payment. ----------------------------------- Notwithstanding Sections 9.2 and 9.3, the Company by its proper officers in its sole discretion may direct current payment of all amounts then credited to all Participants' Accounts under the Plan. 9.9. Payments After Death. -------------------- (a) Except as otherwise provided in this Section 9.9, any amount payable under this Plan as a result of or 11 16 following the death of a Participant shall be applied only for the benefit of the Beneficiary or Beneficiaries designated by the Participant pursuant to this Section 9.9 or any other person deemed to be a Beneficiary under any other provision of this Plan or by law. Each Participant shall specifically designate, by name, on forms provided by the Company, the Beneficiary(ies) to whom any such amounts shall be paid. A Participant may change or revoke a Beneficiary designation without the consent of the Beneficiary(ies) at the time by filing a new Beneficiary designation form with the Company. The filing of a new form shall automatically revoke any forms previously filed with the Company. A Beneficiary designation form not properly filed with the Company prior to the death of the Participant shall have no validity under the Plan. (b) Any such designation shall be contingent on the designated Beneficiary surviving the Participant. If the designated Beneficiary survives the Participant but dies before receiving the entire amount payable to the designated Beneficiary hereunder, the amount which would otherwise have been so paid shall be paid to the estate of the deceased Beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one Beneficiary, and alternative or contingent Beneficiaries may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent Beneficiaries, all of which must be satisfactory to the Company. (c) If no Beneficiary designation is on file with the Company at the time of the Participant's death, the beneficiary(ies) for purposes of the Regular 401(k) Plan shall be deemed to be the Beneficiary designated to receive any amounts then remaining payable under this Plan. (d) If no Beneficiary designated by the Participant under this Plan or the Regular 401(k) Plan survives the Participant, the Participant's estate shall be deemed to be the Beneficiary designated to receive any amounts then remaining payable under this Plan. (e) In determining any question concerning a Participant's Beneficiary, the latest designation filed with the Company shall control and intervening changes in circumstances shall be ignored. For example, if a Participant's spouse is designated as Beneficiary but thereafter is divorced from the Participant, such designation shall remain valid until and unless the Participant files a later Beneficiary designation form with the Company. (f) Any check issued on or before the date of a Participant's death shall remain payable to the Participant whether or not the check is received by the Participant prior to 12 17 death. Any check issued after the date of the Participant's death shall be the property of the Participant's Beneficiaries determined in accordance with this Section 9.9. (g) A Participant's election of payment in installments shall not be altered by reason of the Participant's death. 9.10. All Payments to be Made by the Company. All payments -------------------------------------- due any Participant or Beneficiary under this Plan shall be the sole responsibility of the Company. 9.11. Special Rule for Non-deductible Amounts. Any amount --------------------------------------- otherwise payable under the Plan in a Plan Year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code shall not be paid until such Plan Year as the Company determines that the amount has ceased to be non- deductible by any Participating Employer under section 162(m) of the Internal Revenue Code. In the case of any inconsistency between this Section 9.11 and any other provision of the Plan, this Section 9.11 shall govern, except in the case of Section 9.7. ARTICLE X PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY ---------------------------------------------- 10.1. Adoption. A Participating Employer other than the -------- Company shall adopt this Plan by written instrument executed by its proper officers, subject to the written approval of the Company by its proper officers or their delegates. Adoption of the Plan by a Participating Employer shall constitute automatic delegation of all rights and duties it might otherwise reserve to itself under the Plan to the Company, including full authority to amend or terminate the Plan. 10.2. Withdrawal. A Participating Employer shall ---------- automatically withdraw from the Plan if and when it ceases to be a Participating Employer under the Regular 401(k) Plan, without the execution of any other instrument. A Participating Employer may voluntarily withdraw from the Plan on not less than thirty (30) days' written notice from its proper officers. 10.3. Succession. In the event of dissolution, merger, ---------- consolidation, or spin-off involving a Participating Employer, the entity surviving the transaction shall succeed to the rights and duties of the affected Participating Employer without the execution of any other instrument. 13 18 ARTICLE XI ADMINISTRATION AND CLAIMS PROCEDURES ------------------------------------ 11.1. Administrative Duties of the Company. ------------------------------------ (a) The Company shall have sole responsibility for the administration of the Plan. (b) The Company shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Company shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Company deems proper. Any interpretation or construction placed upon any term or provision of the Plan by the Company, any decisions and determinations of the Company arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant, a Participant's status as such and the amount of a Participant's Compensation for any Plan Year, (ii) the time, method and amounts of payments payable under the Plan; (iii) the rights of Participants; and (iv) any other action or determination or decision whatsoever taken or made by the Company in good faith, shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and Beneficiaries. (c) The Chief Financial Officer of the Company shall appoint one or more Employees to carry out the Company's duties hereunder. (d) The Company may employ accountants, counsel, specialists, and other persons necessary to help carry out its duties and responsibilities under the Plan. The Company or any appointee shall be entitled to rely conclusively upon any opinions or reports which shall be furnished to it or him by such accountants, counsel, specialists, and other persons. (e) No Employee shall participate in determining his or her own entitlement under the Plan. 11.2. Claims Procedures. ----------------- (a) The Company shall make all decisions and determinations respecting the right of any person to a payment under the Plan. (b) The following procedure shall be followed with respect to claims under the Plan: 14 19 (i) Any claimant who believes he or she is entitled to a payment under this Plan shall submit a claim for such payment in writing to the Company. (ii) Any decision by the Company denying a claim in whole or in part shall be stated in writing by the Company and delivered or mailed to the claimant within ninety (90) days after receipt of the claim by the Company unless special circumstances require an extension of time for processing, but in any event within one hundred eighty (180) days after such receipt. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial ninety (90) day period, including the reasons therefor and the date by which the Company expects to render a decision. Any decision denying a claim shall set forth the specific reasons for the denial with specific references to Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and the reasons therefor, and an explanation of the Plan's claim review procedure as provided for in Section 11.2(b)(iii), all written in a manner calculated to be understood by the claimant. If the Company does not notify the claimant of denial of the claim or the need for an extension of time within the initial ninety (90) day period, the claim shall be deemed denied. (iii) If a claim is denied in whole or in part, the claimant or his or her duly authorized representative may request a review by the Company of the decision upon written application to the Company within sixty (60) days after notification of the decision. The claimant or his or her duly authorized representative may review pertinent documents and submit issues and comments in writing. The Company shall make its decision on review not later than sixty (60) days after receipt of the request for review unless special circumstances require an extension of time for processing, in which case its decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial sixty (60) day period. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant and specific references to the pertinent plan provisions on which the decision is based. If the Company does not notify the claimant of its decision on review within the period herein provided for, the claim shall be deemed denied on review. (c) The Company may adopt such rules as it deems necessary, desirable, or appropriate to carry out its duties under this Section 11.2. All rules, decisions and determinations of the Company under this Section 11.2 shall be uniformly and consistently applied. Any action or determination or decision 15 20 whatsoever taken or made by the Company under this Section 11.2 in good faith shall be final, conclusive and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers, and all Participants and Beneficiaries. (d) The procedure provided for in this Section 11.2 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan. 11.3. Books and Records. ----------------- (a) The Company shall keep such books, records, and other data as it deems necessary for proper administration of the Plan, including but not limited to records of each Participant's Personal Salary Deferral Contributions, hypothetical Investment Fund and payment elections, Account balance and payment record. (b) The records of the Company shall be binding on all persons unless proved incorrect to the satisfaction of the Company. (c) The Company shall comply with all reporting and disclosure requirements of the law and shall maintain all records required by law. 11.4. Notices. ------- (a) Any notice from the Company to any Participant shall be in writing and shall be given by delivery to the Participant, or by mailing to the last known residence address of the Participant. Any notice from a Participant to the Company shall be in writing and shall be given by delivery to the Employee Stock Plans Department of the Company at the Company's headquarters, except as otherwise designated by the Company. Notices shall be effective on the date of actual delivery. (b) Each Participant shall furnish all information, including post office address and each change of post office address, proofs, receipts and releases, as may be required by the Company. (c) Any communication, statement or notice addressed to any individual at the last post office address filed with the Company shall be binding for all purposes of the Plan, and the Company shall not be obligated to search for or ascertain the whereabouts of any such individual. (d) Except as provided for in Article IV, any notice required by the Plan may be waived by the Company or any Participant. 16 21 (e) Notwithstanding any other provision of this Section 11.4, in the event and to the extent permitted under the Regular 401(k) Plan, notices may be made by electronic means. ARTICLE XII AMENDMENT AND TERMINATION ------------------------- The Chief Financial Officer of the Company shall have authority to amend or terminate the Plan on behalf of the Company in his or her sole discretion at any time, except as follows: (a) Any amendments that affect the Contribution Rate shall require approval by the Compensation Committee of the Board of Directors of the Company; and (b) No amendment shall retroactively reduce any Participant's Account under the Plan, except as provided for in Section 13.12. All Participants shall be bound by any amendment to the Plan without the execution of any other instrument. ARTICLE XIII MISCELLANEOUS ------------- 13.1. Company's Obligations Unsecured. It is the intention ------------------------------- of the Company and all Participants that the Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974. Amounts payable to Participants under this Plan shall be paid solely from the general assets of the Company as they come due from time to time. No Participant or Beneficiary shall have any property interest whatsoever in any asset of the Company on account of participation in this Plan. Participants' rights under this Plan shall be no greater than the right of an unsecured general creditor of the Company. Nothing in this Plan shall require the Company to invest any amount in any asset or type of asset. 13.2. No Alienation. Except as required by law, amounts ------------- payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to payment hereunder shall be void, and the Company shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any Participant or other person. 17 22 13.3. No Waiver of Rights. Except as provided for in ------------------- Section 11.2, no failure or delay by the Company or any Participant to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 13.4. Severability. The invalidity of any particular ------------ clause, provision or covenant herein shall not invalidate all or any part of the remainder of this Plan, but such remainder shall be and remain valid in all respects as fully as the law will permit. 13.5. Legal Expenses. In any proceeding to enforce rights -------------- and obligations hereunder, the unsuccessful party shall pay the successful party an amount equal to all reasonable out-of-pocket expenses (including reasonable legal expenses and court costs) incurred by the successful party. 13.6. Presumption of Competence. Every person receiving or ------------------------- claiming amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age unless and until the Company receives proof satisfactory to the Company that the person is incompetent or is a minor or that a guardian or other person legally vested with the care of the person's estate has been appointed. 13.7. Facility of Payment. If any amount is payable ------------------- hereunder to a minor or other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Company in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Company shall determine in its sole discretion: (a) directly to said minor or other person; (b) to a custodian for said minor or other person (whether designated by the Company or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any jurisdiction; (c) to the conservator of the estate of said minor or other person; or (d) to some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Company shall not be required to see to the application of any payment so made, and payment to the person determined by the Company shall fully discharge the Company from any further 18 23 accountability or responsibility with respect to the amount so paid. 13.8. No Guarantee of Employment or Compensation. No ------------------------------------------ provision of this Plan shall restrict any Employing Company from discharging a Participant from employment or restrict any Participant from resigning from employment with any Participating Employer. No provision of this Plan shall restrict any Employing Company from increasing or decreasing the compensation of any Employee. 13.9. Plan Provisions Binding. The provisions of the Plan ----------------------- shall be binding upon the Company, all Participating Employers and all persons entitled to benefits under the Plan and their respective successors, heirs and legal representatives. 13.10. Rules of Interpretation. Words of gender shall ----------------------- include persons and entities of any gender, the plural shall include the singular, and the singular shall include the plural. Captions are intended to assist in reference and shall not be interpreted as part of the Plan. 13.11. Missouri Law Controls. Subject to the applicable --------------------- provisions of the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri and in Courts situated in that State. 13.12. Reporting Persons. It is intended that the ----------------- interests of Reporting Persons in the Plan qualify for exclusion from the definition of "derivative securities" contained in Rule 16a-1(c) of the Securities and Exchange Commission; the Plan shall be interpreted in a manner consistent with that intent. Moreover, the Chief Financial Officer of the Company may amend the Plan, retroactively if deemed prudent, as such Officer deems appropriate to ensure the continuation of such qualification. 13.13. Counterparts. This Plan may be executed in two or ------------ more counterparts, any one of which shall constitute an original without reference to the others. IN WITNESS WHEREOF, the Company has executed this Plan this 23rd day of November, 1993, effective as of the 1st day of January, 1994. ANHEUSER-BUSCH COMPANIES, INC. BY: s/JERRY E. RITTER ------------------------------ Jerry E. Ritter Chief Financial Officer wppcgw\401krest.sto 19 EX-10 12 EXHIBIT 10.18 INDEMNIFICATION AGREEMENT 1 EX-10.18 INDEMNIFICATION AGREEMENT ------------------------- AGREEMENT, effective as of --------------, 19----, between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and --------------- (the "Indemnitee"). WHEREAS, it is essential to the Company to retain and attract as directors [and executive officers] the most capable persons available; WHEREAS, Indemnitee is a [director/executive officer] of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors of public companies in today's environment; WHEREAS, the Restated Certificate of Incorporation and the By-laws of the Company require the Company to indemnify and advance expenses to its directors to the full extent permitted by law and the Indemnitee has been serving and continues to serve as a director [or executive officer] of the Company in part in reliance on such Restated Certificate of Incorporation and By-laws; 2 WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in Order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the aforesaid Restated Certificate of Incorporation and By-laws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Restated Certificate of Incorporation and By-laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Restated Certificate of Incorporation and By-laws or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), and in order to induce Indemnitee to continue to provide services to the Companyias a director [or executive officer] thereof, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the full extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; 2 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 EX-10 13 EXHIBIT 10.19 INVESTMENT AGREEMENT GRUPO MODELO 1 EX-10.19 EXECUTION COPY - - - ----------------------------------------------------------------- INVESTMENT AGREEMENT By and Among ANHEUSER-BUSCH COMPANIES, INC., ANHEUSER-BUSCH INTERNATIONAL, INC. and ANHEUSER-BUSCH INTERNATIONAL HOLDINGS, INC. and GRUPO MODELO, S.A. DE C.V., DIBLO, S.A. DE C.V. and CERTAIN SHAREHOLDERS THEREOF Dated as of June 16, 1993 - - - ---------------------------------------------------------------- 2 TABLE OF CONTENTS ----------------- I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 2 II. TERMS OF THE SUBSCRIPTION OF SERIES P-C SHARES AND THE PURCHASE AND SALE OF INITIAL DIBLO COMMON SHARES 2.1 Subscription of Series P-C Shares and Purchase and Sale of the Initial Diblo Common Shares. . . . . . . . . . . . . 7 2.2 The Closing. . . . . . . . . . . . . . . . . 8 2.3 Purchase Price . . . . . . . . . . . . . . . 8 2.4 Deliveries at the Closing. . . . . . . . . . 8 III. REPRESENTATIONS AND WARRANTIES OF THE G-MODELO SIGNATORIES 3.1 Capital Stock of G-Modelo. . . . . . . . . . 11 3.2 Capital Stock of Diblo and the G-Modelo Corporations . . . . . . . . . . . . . . . . 13 3.3 USA Export . . . . . . . . . . . . . . . . . 15 3.4 Power and Authority; Effect of Agreement . . 16 3.5 Investments. . . . . . . . . . . . . . . . . 17 3.6 Organization; Assets . . . . . . . . . . . . 17 3.7 Financial Information. . . . . . . . . . . . 18 3.8 Undisclosed Liabilities; Absence of Certain Changes. . . . . . . . . . . . . . . 19 3.9 Title and Related Matters. . . . . . . . . . 20 3.10 Patents, Trademarks, Etc.. . . . . . . . . . 20 3.11 Litigation . . . . . . . . . . . . . . . . . 22 3.12 Compliance with Laws . . . . . . . . . . . . 22 3.13 Tax Matters. . . . . . . . . . . . . . . . . 23 3.14 Shareholder Agreements . . . . . . . . . . . 24 3.15 Consents . . . . . . . . . . . . . . . . . . 25 3.16 Environmental Matters. . . . . . . . . . . . 25 3.17 Absence of Certain Changes or Events . . . . 26 3.18 Material Contracts . . . . . . . . . . . . . 26 3.19 Employee Benefits; Employment Contracts. . . 27 3.20 Real Property. . . . . . . . . . . . . . . . 28 3.21 Tied House Prohibitions. . . . . . . . . . . 29 3.22 Insurance. . . . . . . . . . . . . . . . . . 29 i 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 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 5 13.3 Successors and Assigns . . . . . . . . . . . 78 13.4 Counterparts . . . . . . . . . . . . . . . . 79 13.5 Interpretation . . . . . . . . . . . . . . . 79 13.6 Amendment and Modification . . . . . . . . . 79 13.7 Waiver of Compliance; Consents . . . . . . . 79 13.8 Broker's Fees. . . . . . . . . . . . . . . . 80 13.9 Expenses . . . . . . . . . . . . . . . . . . 80 13.10 Notices. . . . . . . . . . . . . . . . . . . 80 13.11 Governing Law. . . . . . . . . . . . . . . . 82 13.12 Public Announcements . . . . . . . . . . . . 82 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 83 EXHIBIT A -- Capital Stock of G-Modelo as of Closing EXHIBIT B -- Calculation of G-Modelo Free Cash Flow EXHIBIT C -- Procermex Pricing Policies EXHIBIT D -- Opinion of Santamarina Y Steta, S.C. EXHIBIT E -- Opinion of Stephen J. Volland, Esq., Senior Associate General Counsel of Anheuser-Busch Companies, Inc. EXHIBIT F -- Opinion of Skadden, Arps, Slate, Meagher & Flom EXHIBIT G -- Opinion of Creel, Garcia-Cuellar y Muggenburg SCHEDULES - - - --------- Schedule 3.2(a) Schedule 3.2(c) Schedule 3.10 Schedule 3.11 Schedule 3.17 Schedule 3.18 Schedule 3.19 iv 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- 7 C Shares"), of G-Modelo, representing all of the autho- rized Series PC Shares of GModelo, which Series P-C Shares represent in excess of 10 percent of the total outstanding capital stock of G-Modelo and which shall be part of G-Modelo's Class II capital stock, and (ii) to purchase from Banco Nacional de Mexico, S.A., as Trustee of the Trust (the "Banamex Trust") established under the Trust Agreement dated as of November 28, 1991, as amended and restated on June 11, 1993 (the "Banamex Trust Agree- ment"), among the Controlling Shareholders and the Trust- ee of the Banamex Trust, and the Trustee of the Banamex Trust desires to sell to the Investor, 24,329,922 shares (the "Initial Diblo Shares") of Series B Common Stock, no par value (the "Diblo Series B Shares"), of Diblo, which Initial Diblo Shares represent in excess of 10 percent of the total outstanding capital stock of Diblo and which shall be part of Diblo's Class II capital stock; NOW, THEREFORE, in consideration of the forego- ing premises and the respective representations, warran- ties, covenants and agreements, and upon the terms and subject to the conditions hereinafter set forth, and intending to be legally bound hereby the parties do hereby agree as follows: ARTICLE I DEFINITIONS ----------- Capitalized terms used herein shall have the meaning ascribed to them in this Article I unless such terms are defined elsewhere in this Agreement. 1.1. A-B. "A-B" shall have the meaning set --- forth in the first paragraph of this Agreement. 1.2. A-BI. "A-BI" shall have the meaning set ---- forth in the first paragraph of this Agreement. 1.3. Amended Diblo By-laws. "Amended Diblo --------------------- By-laws" shall mean the By-laws of Diblo as amended and provided to the Investor pursuant to Section 2.4(b)(v). 1.4. Amended G-Modelo By-laws. "Amended ------------------------ G-Modelo By-laws" shall mean the By-laws of G-Modelo as amended and provided to the Investor pursuant to Section 2.4(b)(v). 2 8 1.5. Banamex Trust. "Banamex Trust" shall ------------- have the meaning set forth in the fourth preamble of this Agreement. 1.6. Banamex Trust Agreement. "Banamex Trust ----------------------- Agreement" shall have the meaning set forth in the fourth preamble of this Agreement. 1.7. Closing. "Closing" shall mean the com- ------- pletion of the purchase and sale of the Series P-C Shares and the Initial Diblo Shares. 1.8. Closing Date. "Closing Date" shall mean ------------ the date on which the Closing occurs. 1.9. C&L. "C&L" shall mean Despacho Roberto --- Casas Alatriste, S.C., the Mexican affiliate of Coopers & Lybrand, independent certified public accountants for G-Modelo and the G-Modelo Corporations or such other Mexican affiliate of a "Big 6" international accounting firm appointed by the G-Modelo Board of Directors to audit the accounts of G-Modelo and the G-Modelo Corpora- tions. 1.10. Consorcio. "Consorcio" shall have the --------- meaning set forth in the second preamble of this Agreement. 1.11. Controlling Shareholders. "Controlling ------------------------ Shareholders" shall have the meaning set forth in the first preamble of this Agreement. 1.12. Control Trust. "Control Trust" shall ------------- mean the trust established under the Control Trust Agree- ment. 1.13. Control Trust Agreement. "Control Trust ----------------------- Agreement" shall mean the agreement dated as of June 11, 1993, among the Controlling Shareholders, A-B and Banco Nacional de Mexico, S.A., as Trustee for the Control Trust. 1.14. Diblo. "Diblo" shall have the meaning ----- set forth in the first preamble of this Agreement. 1.15. Diblo Series A Shares. "Diblo Series A --------------------- Shares" shall be the Class I authorized shares of Series A Common Stock, no par value, of Diblo. 3 9 1.16. Diblo Series B Shares. "Diblo Series B --------------------- Shares" shall have the meaning set forth in the fourth preamble of this Agreement. 1.17. Diblo P-C Shares. "Diblo P-C Shares" ---------------- shall mean the Class II authorized shares of Series P-C Convertible Preferred Stock, no par value, of Diblo. 1.18. Encumbrances. "Encumbrances" shall mean ------------ all liens, claims, options, security interests or other encumbrances of any character whatsoever. 1.19. Expansion. "Expansion" shall have the --------- meaning set forth in the second preamble of this Agree- ment. 1.20. Free Exchange Rate. "Free Exchange ------------------ Rate" shall mean the average of the U.S. dollar/Mexican Peso free exchange rates for the sale of U.S. dollars based on the amount of money to be converted quoted by Banco Nacional de Mexico, S.A. and Bancomer, S.A. at 10:00 a.m. on the date of payment for which such free exchange rate is being used. 1.21. G-Modelo. "G-Modelo" shall have the -------- meaning set forth in the first preamble of this Agree- ment. 1.22. G-Modelo Corporations. "G-Modelo Corpo- --------------------- rations" shall mean Diblo and the other Subsidiaries of G-Modelo. 1.23. G-Modelo Signatories. "G-Modelo Signa- -------------------- tories" shall have the meaning set forth in the first paragraph of this Agreement. 1.24. Heads of Agreement. "Heads of Agree ------------------ ment" shall mean the Heads of Agreement dated as of March 24, 1993, among A-B, A-BI, G-Modelo, Diblo and certain Controlling Shareholders. 1.25. HSR Act. "HSR Act" shall mean the ------- Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 4 10 1.26. Initial Diblo Shares. "Initial Diblo -------------------- Shares" shall have the meaning set forth in the fourth preamble of this Agreement. 1.27. Internacionales. "Internacionales" --------------- shall mean Cervezas Internacionales, S.A. de C.V., a Mexican corporation and a Subsidiary of Diblo. 1.28. Investor. "Investor" shall have the -------- meaning set forth in the first paragraph of this Agree- ment. 1.29. LRMI. "LRMI" shall mean the Law and ---- Regulations to Promote Mexican Investment and Regulate Foreign Investment. 1.30. Mexican GAAP. "Mexican GAAP" shall ------------ mean Mexican generally accepted accounting principles. 1.31. Mexican Pesos. "Mexican Pesos" shall ------------- mean New Mexican pesos as of the date of this Agreement. 1.32. Option Shares. "Option Shares" shall ------------- have the meaning set forth in Section 6.3. 1.33. Option Trust. "Option Trust" shall mean ------------ the trust established under the Option Trust Agreement. 1.34. Option Trust Agreement. "Option Trust ---------------------- Agreement" shall mean the agreement dated as of June 11, 1993, among the Controlling Shareholders and Banco Nacional de Mexico, S.A., as Trustee for the Option Trust. 1.35. Person. The term "person" shall mean ------ and include an individual, a partnership, a joint ven- ture, a corporation, a trust, an unincorporated organiza- tion and a government or any department or agency there- of. 1.36. Prime Rate. "Prime Rate" shall mean the ---------- rate published by the New York City Branch of Citibank, N.A. as its prime rate on the date on which interest is to begin to accrue. 5 11 1.37. PW. "PW" shall mean Price Waterhouse, -- independent certified public accountants for A-B and its Subsidiaries or such other "Big 6" international account- ing firm appointed by the A-B Board of Directors to audit the accounts of A-B and its Subsidiaries. 1.38. Real Estate Trust. "Real Estate Trust" ----------------- shall mean the trust established under the Real Estate Trust Agreement. 1.39. Real Estate Trust Agreement. "Real --------------------------- Estate Trust Agreement" shall mean the agreement dated as of January 22, 1993, among Diblo and Banco Nacional de Mexico, S.A., as Trustee of the Real Estate Trust. 1.40. Related Person. "Related Person" shall -------------- mean when used in reference to any other Person any Person who owns or holds ten percent or more of the outstanding capital stock of such other Person or is an officer, director or sole administrator of such other Person or in the case of a natural Person, his spouse, his or his spouse's children (including by adoption), his siblings (including half and step siblings), his estate and any trust entirely for the benefit of any one or more of himself or any of the foregoing individuals. 1.41. Series A Shares. "Series A Shares" --------------- shall mean the Class I and Class II authorized shares of Series A Common Stock, no par value, of G-Modelo. 1.42. Series B Shares. "Series B Shares" --------------- shall mean the 71,376,124 Class II shares of Series B Common Stock, no par value, of G-Modelo authorized for issuance upon conversion of shares of G-Modelo capital stock as provided in the Amended G-Modelo By-laws. 1.43. Series C Shares. "Series C Shares" --------------- shall mean the 40,646,995 authorized Class II shares of Series C Non-Voting Stock, no par value, of G-Modelo. 1.44. Series P-C Shares. "Series P-C Shares" ----------------- shall have the meaning set forth in the fourth preamble of this Agreement. 1.45. Subsidiary. The term "Subsidiary" when ---------- used in reference to any other Person shall mean (x) any corporation of which 50 percent or more of the outstand- 6 12 ing capital stock is owned, directly or indirectly, by such other Person, or (y) any corporation of which out- standing securities having ordinary voting power to elect a majority of the members of the Board of Directors of such corporation are owned, directly or indirectly, by such other Person, or (z) any Person or entity, directly or indirectly, controlling, controlled by or under common control with such other Person. 1.46. USA Export. "USA Export" shall mean ---------- Extrade, S.A. de C.V., a Mexican corporation formed by certain Controlling Shareholders prior to Closing as con- templated in Section 2.4(b)(ii). 1.47. U.S. GAAP. "U.S. GAAP" shall mean --------- United States generally accepted accounting principles. 1.48. Other Definitional Provisions. Whenever ----------------------------- the context so requires, each of the neuter, masculine or feminine forms of any pronoun shall include all such forms. When used in this Agreement, the phrase "to the Controlling Shareholders' best knowledge after due inqui- ry" shall mean the collective knowledge of all of the Controlling Shareholders after at least one of the Con- trolling Shareholders has made due inquiry of one or more employees or representatives of G-Modelo or a G-Modelo Corporation who has access to or knowledge of the infor- mation being sought. When used in this Agreement, the phrase "consolidated after-tax net earnings" of G-Modelo calculated in accordance with Mexican GAAP shall mean "utilidad neta consolidada." ARTICLE II TERMS OF THE SUBSCRIPTION OF SERIES P-C SHARES AND THE PURCHASE AND SALE OF INITIAL DIBLO COMMON SHARES --------------------------------------- 2.1. Subscription of Series P-C Shares and ------------------------------------- Purchase and Sale of the Initial Diblo Common Shares. ---------------------------------------------------- Upon the terms and subject to the conditions of this Agreement, at the Closing (i) G-Modelo shall sell to the Investor, and the Investor shall subscribe and purchase from G-Modelo, the Series P-C Shares and (ii) the Trustee of the Banamex Trust shall sell to the Investor, and the Investor shall purchase from the Banamex Trust, the 7 13 Initial Diblo Shares (which shall be "ex" the previously declared dividend that is referred to in clause (iv) of paragraph (b) of Section 2.04). 2.2. The Closing. The Closing of the transac- ----------- tions contemplated by this Article II shall take place at the offices of G-Modelo, Campos Eliseos 400, 19th Floor, Colonia Lomas de Chapultepec, 11000 Mexico, D.F., com- mencing at 11:00 a.m. (Mexico time) on the date hereof provided that all of the conditions to the parties' obligations set forth in Articles VIII and IX have been satisfied or waived or such other place, time and date as the Controlling Shareholders and the Investor may mutual- ly agree upon. All matters at Closing shall be consid- ered to take place simultaneously and no delivery of any document shall be deemed complete until all transactions and deliveries of documents are completed. 2.3. Purchase Price. The aggregate purchase -------------- price to be paid by the Investor for the Series P-C Shares (the "Series P-C Purchase Price") shall be 207.225 million United States dollars and the aggregate purchase price to be paid by the Investor for the Initial Diblo Shares (the "Diblo Purchase Price") shall be 270 million United States dollars. Payment of the Series P-C Pur- chase Price and the Diblo Purchase Price shall be made at the Closing by the Investor in immediately available United States funds. 2.4. Deliveries at the Closing. ------------------------- (a) Deliveries by the Investor. At the -------------------------- Closing, the Investor or A-B shall deliver or cause to be delivered the following: (i) the Series P-C Purchase Price to G-Modelo and the Diblo Purchase Price to the Banamex Trust; (ii) copies of a duly executed amendment to the Distribution Agreement dated as of the Closing Date between A-B and Interna cionales (the "Internacionales Distribution Agreement"), providing, among other things, that, subject to the terms and conditions ther- eof, for so long as the Investor owns ten per- cent or more of the total outstanding shares of 8 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 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 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 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 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 19 and marketable title to the Diblo Common Shares and, in the case of G-Modelo, the Diblo P-C Shares owned by it, and at the Closing the Investor will receive good and marketable title to the Initial Diblo Shares, free and clear of all Encumbrances, except as set forth in this Agreement. (b) Upon the purchase of the Diblo Option Shares at the Diblo Option Closing (as such terms are defined in Section 6.4) pursuant to Section 6.4, the Investor or its authorized designee, if any, will receive good and marketable title to the Diblo Option Shares free and clear of all Encumbrances, except as set forth in this Agreement. (c) For each of the G-Modelo Corpora- tions, Schedule 3.2(c) identifies (i) the names of the directors or sole administrator, as the case may be, (ii) the authorized capital for such corporation, divided between minimum fixed capital and variable capital, (iii) the number of such shares which are issued and outstand- ing, together with the number of treasury shares, if any, and (iv) the names of all record holders of such issued and outstanding shares (indicating the number of shares owned). Each of the G-Modelo Corporations has good and marketable title to the shares of capital stock of the G- Modelo Corporations owned by it, free and clear of all Encumbrances. All of the shares of capital stock of the G-Modelo Corporations are duly and validly authorized and issued, fully paid and nonassessable. Except as provided in this Agreement, there is no subscription, option, war- rant, call, right, contract, agreement, commitment, understanding or arrangement with respect to the issu- ance, sale, delivery or transfer of any of the shares of the capital stock of the G-Modelo Corporations, including any right of conversion or exchange under any security or other instrument. As promptly as practicable, the Con- trolling Shareholders agree to identify the relationship, if any, of the shareholdrs, the directors or the sole administrator of the G-Modelo Corporations identified on Schedule 3.2(c) to Srs. Antonino Fernandez R., Pablo Aramburuzabala, Nemesio Diez R., Juan Sanchez-Navarro y P. or Valentin Diez M. and to provide such information to A-B. (d) Except as provided in this Agreement and the Banamex Trust Agreement, the Banamex Trust is not 14 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 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 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 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 24 stockholders equity and changes in the financial position (including the related notes) of G-Modelo and subsidiar- ies for the fiscal years ended December 31, 1992 and December 31, 1991 and of the G-Modelo Corporations for each of the four fiscal years ended December 31, 1991, December 31, 1990, December 31, 1989 and December 31, 1988 accompanied by the auditor reports thereon (collec- tively, the "Audited Consolidated Financial Statements"), and (b) the unaudited consolidated balance sheet and the related unaudited consolidated statements of income of G-Modelo and subsidiaries for the two months ended Febru- ary 28, 1993 (collectively, the "Unaudited Consolidated Financial Statements" and together with the Audited Consolidated Financial Statements, the "Consolidated Financial Statements"). The audited consolidated balance sheet of G-Modelo and subsidiaries for the fiscal year ended December 31, 1992 is hereinafter referred to as the "G-Modelo Balance Sheet." The Consolidated Financial Statements (i) were prepared from the (A) books and records of G-Modelo and the G-Modelo Corporations in the case of the Audited Consolidated Financial Statements for the fiscal year ended December 31, 1992 and the Unaudited Consolidated Financial Statements and (B) from the books and records of the G-Modelo Corporations in the case of the Audited Consolidated Financial Statements for other four fiscal years, which books and records accurately reflect in all material respects the accounts and trans- actions recorded therein, (ii) present fairly the finan- cial position, results of operations, changes in stock- holders equity and changes in financial position of G-Modelo and its subsidiaries as of and for the periods in which they relate, and (iii) have been prepared in accordance with Mexican GAAP consistently applied throug- hout the periods covered, except as otherwise noted therein and except that the Unaudited Consolidated Finan- cial Statements are subject to any normal and recurring adjustments which may arise from the audit of the fiscal year ended December 31, 1993. The consolidated books and records of G-Modelo and its subsidiaries reflect that as of December 31, 1992, G-Modelo and the G-Modelo Corpora- tions had cufine (Cuenta De Utilidad Fiscal Neta) in an aggregate amount equal to 2,216,147,495 Mexican Pesos. 3.8. Undisclosed Liabilities; Absence of ----------------------------------- Certain Changes. Neither G-Modelo nor any G-Modelo --------------- Corporation has any liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contin- 19 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 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 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 28 3.13. Tax Matters. ----------- (a) All Tax Returns (as hereinafter defined) required to be filed by G-Modelo or the G-Modelo Corporations (collectively, the "Taxpayers") have been filed on a timely basis and are in all material respects true, complete and correct; (b) All Taxes (as hereinafter defined) that are due and payable or claimed or asserted to be due and payable by the Taxpayers by any tax authority for all periods up to and including the Closing Date have been paid or provided for, except for Taxes which are the subject of customary challenges by the Ministry of Trea- sury and the aggregate amount of which claimed by the Ministry to be due does not exceed 3,500,000 Mexican Pesos in any year; (c) There are no liens for Taxes upon the assets of any of the Taxpayers; (d) The Taxpayers have complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes pursuant to all applicable tax provisions concern- ing tax withholding or similar provisions and have, within the time and in the manner prescribed by law, paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all appli- cable laws; (e) (i) Except for the tax years 1988 through 1992, the statute of limitations for the assess- ment of all Taxes under the Mexican income tax and the United States federal income tax laws have expired for all applicable returns of the Taxpayers or an audit of those returns has been completed by the appropriate taxing authorities for all periods ending on or before the Closing Date, (ii) no deficiency for any Taxes has been proposed, asserted or assessed which has not been finally resolved, (iii) neither the Controlling Share- holders nor the Taxpayers know of any facts that are likely to result in any assertion or assessment of a Tax with respect to any past taxable period, and (iv) no taxing authority has successfully asserted any issue concerning the liability of the Taxpayers for Taxes that by application of similar principles could result in any 23 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 EX-10 14 EXHIBIT 10.20 LETTER AGREEMENT 1 EX-10.20 January 24, 1994 Antonino Fernandez R. Grupo Modelo, S.A. de C.V. Campos Eliseos 400 11000 Mexico, D.F. Dear Don Antonino: This letter shall serve to confirm the understanding and agreement between A-B and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement, which reads as follows: "5.5 Election of A-B Director. The Controlling Shareholders shall be ------------------------ entitled to designate a G-Modelo director for election to the A-B Board of Directors. Following such designation, A-B will use its best efforts to nominate and cause such designee to be elected to the A-B Board of Directors at the Annual Meeting of Shareholders of A-B next succeeding such designation and to continue to nominate and cause such a designee to be elected for so long as the Investor owns ten percent or more of the total outstanding shares of G-Modelo capital stock." It is acknowledged and agreed that Anheuser-Busch fulfilled its obligations under Section 5.5 when Pablo Aramburuzabala was appointed to the A-B Board as a Class 1 Director, with a term continuing until the Annual Meeting of Shareholders in 1995. A-B will use its best efforts to cause Pablo Aramburuzabala (or another designee of the Controlling Shareholders) to be nominated and elected to the A-B Board at the Annual Meeting of Shareholders in 1995 and future years as long as the Investor owns ten percent or more of the total outstanding shares of G-Modelo capital stock. Capitalized terms used in this letter shall have the meaning given such terms in the Investment Agreement. Please indicate the Controlling Shareholders' agreement with the foregoing by signing and returning the attached copy. Sincerely, ANHEUSER-BUSCH COMPANIES, INC. S/JOHN H. PURNELL - - - -------------------------------------------- John H. Purnell, Vice President and Group Executive ACKNOWLEDGED AND AGREED as of the date above. s/ANTONINO FERNANDEZ R. - - - --------------------------------------------- Antonino Fernandez R., on behalf of the Controlling Shareholders EX-13 15 EXHIBIT 13 ANNUAL REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION INTRODUCTION This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity/cash flows of Anheuser-Busch Companies, Inc. during the three-year period ended December 31, 1993. This discussion should be read in conjunction with the Letter to Shareholders, financial statements and financial statement footnotes included in this annual report. Two unusual occurrences had negative impacts on the THE PROFITABILITY company's 1993 earnings. In September 1993, the company PROGRAM IS EXPECTED announced a Profitability Enhancement Program which TO GENERATE COST includes significant organizational and operational SAVINGS OF MORE changes to improve sales and profitability. The Program THAN $100 MILLION includes the following elements: A YEAR BY 1997. - An enhanced retirement program for salaried employees - The write-down of underperforming assets and investments - The restructuring and reorganization of the company This Program is expected to generate cost savings of more than $100 million in 1994 and $400 million a year by 1997. The restructuring and reorganization element of the Program includes the following initiatives designed to increase efficiencies and reduce operating costs: - Brewery modernization programs based on the successful practices employed at the company's newer breweries. Such Programs include increased employee involvement to improve quality and efficiency throughout the entire 13-brewery system. - Relocation of the company's food products operations to St. Louis. Additionally, bakery facilities will be modernized and consolidated. The Program is also designed to improve sales of the company's premium beer products through aggressive advertising and the introduction of new products. The company's newest product, Ice Draft from Budweiser, was rolled out nationwide in January 1994. As a result of the Program, the company recognized a $565 million ($1.26 per share) restructuring charge during the third quarter 1993. Further information concerning the details of the restructuring charge is included in Note 2 to the Consolidated Financial Statements. Additionally, the Revenue Reconciliation Act of 1993, signed into law during the third quarter 1993, increased the corporate federal statutory income tax rate by one percentage point retroactive to January 1, 1993. This retroactive income tax rate increase resulted in a $33 million, or $.12 per share, non- recurring after-tax, non-cash charge related to revaluation of the deferred tax liability in accordance with Financial Accounting Standard No. 109 (FAS 109)- Accounting for Income Taxes. The non-recurring restructuring charge and the non- recurring deferred tax revaluation charge distort comparability of 1993 and 1992 reported financial results. To facilitate evaluation and understanding of the company's 1993 financial results, key financial comparisons affected by these charges are disclosed in this discussion both including and excluding the charges. Earnings for 1992 were impacted by the adoption of new accounting principles. Effective January 1, 1992 as discussed in Note 3 to the Consolidated Financial Statements, the company adopted the financial accounting standards for postretirement benefits (FAS 106) and income taxes (FAS 109). The company elected to immediately recognize the cumulative effect of adoption of FAS 106/109 pertaining to years prior to 1992 through a one-time cumulative effect adjustment which decreased 1992 net income and earnings per share by $76.7 million and $.26, respectively. These amounts are separately identified in the company's consolidated 1992 income statement. Implementation of FAS 106 in 1992 was based on benefit levels in effect at the time of adoption. Certain changes to these benefit levels were implemented in 1993, thereby reducing the FAS 106 pretax expense amount in 1993 as compared to 1992 by $27.0 million to $48.3 million. 32 2 OPERATIONS SALES Anheuser-Busch Companies, Inc. achieved record gross sales during 1993 of $13.19 billion, an increase of $123 million or nine-tenths of one percent (.9%) over 1992 gross sales of $13.06 billion. Gross sales for 1992 were 3.4% higher than 1991. Gross sales for 1991 were $12.63 billion, an increase of 8.8% over 1990. However, gross sales for 1991 are not comparable [PHOTO] to 1990 as a result of the 100% increase in the federal excise tax on beer effective January 1, 1991. Gross sales includes $1.68 billion, $1.67 billion and $1.64 billion, respectively, in federal and state excise taxes for 1993, 1992 and 1991. Net sales for 1993 were also a record $11.51 billion, an increase of $111.6 million or one percent (1.0%) over 1992 net sales of $11.39 billion. Net sales for 1992 were 3.6% higher than 1991. Net sales during 1991 were $11.0 billion, an increase of 2.4% over 1990. The increase in gross and net sales in 1993 as compared to 1992 was due to higher beer volume sales as well as higher sales by the company's entertainment subsidiaries. Net revenue per barrel declined approximately 1% in 1993 due primarily to competitive pricing, brand and packaging mix shifts and geographic trends. Additionally, beer pricing was very competitive in 1993 as competitive promotional activity increased due to modest industry growth and efforts to protect volume impacted by a weak economy in key beer-selling states. Anheuser-Busch, Inc., the company's brewing subsidiary and largest contributor to consolidated sales and profits, sold an industry record of 87.3 million barrels of beer in 1993, an increase of one- half of one percent (.5%) compared to 1992 beer volume of 86.8 million barrels. The company's 1993 beer volume gains, built from the largest volume base in the industry, were achieved despite the continued severe economic weakness in key selling areas along the West Coast. [SALES GRAPH] In April 1993, the company instituted the "Proud To Be Your Bud" campaign featuring new advertising and merchandising programs and a wholesaler sales incentive program designed to increase premium beer sales. The success of this campaign has contributed to an overall beer sales-to-retailers increase of more than 1.5% from May through December versus the same period last year. Considering the competitive conditions in the beer industry, the company's premium beer brands performed well during 1993. Budweiser continues to dominate across all demographic segments. Bud Light had another excellent year in 1993 with double-digit growth. Bud Light continues to outpace its major competitor and is well-positioned to become the leading light-beer brand in the United States. In October 1993, Anheuser-Busch introduced a new premium product-Ice Draft from Budweiser-to consumers in the western United States. The company completed the national rollout of Ice Draft in January 1994. During 1993, the company's sales and volume growth was impacted by slower regional economic recovery which generated more intensive price competition in key markets. During 1994, the company plans to enhance premium brand volume growth through aggressive marketing, the national rollout of Ice Draft and price increases below the consumer price index. The company's 1994 quarterly beer sales volume growth is not expected to follow a consistent pattern. First quarter beer volume will increase more significantly compared to 1993 due to the rollout of Ice Draft and higher planned inventory levels. Consistent with past practice, wholesaler inventory levels will be raised prior to the February 28 expiration of the labor contract affecting the majority of the company's beer production employees. Negotiations are progressing, and the company expects to reach final agreement with the union soon. 33 3 FINANCIAL REVIEW The increase in gross and net sales in 1992 as compared to 1991 was due to higher beer volume, higher revenue per barrel and higher sales by the company's food products and entertainment subsidiaries. The increase in gross and net sales in 1991 as compared to 1990 was due to higher revenue per barrel and higher sales by the company's food products subsidiaries. Beer volume sales for 1992 were a one percent increase over 1991 beer volume of 86.0 million ANHEUSER-BUSCH, INC. barrels. This increase was achieved despite poor MAINTAINED ITS MARKET economic conditions and the second-coolest summer SHARE IN 1993, WITH in two decades. SALES VOLUME REPRESENT- The company's 1991 beer sales volume was ING APPROXIMATELY 44.3% 86.0 million barrels, a slight decrease of OF TOTAL BREWING 462,000 barrels, or five-tenths of a percent, INDUSTRY SALES IN THE compared to 1990 beer volume of 86.5 million U.S. barrels. The sales volume decline was due to higher beer prices to consumers reflecting the 100% increase in the federal excise tax effective January 1, 1991. The company's sales volume decline in 1991 was considerably less than the 2.0% volume decline for the brewing industry as a whole. Anheuser-Busch, Inc. maintained its market share in 1993, with sales volume representing approximately 44.3% of total brewing industry sales in the U.S. (including imports and nonalcohol brews), as estimated based on information provided by The Beer Institute. The 1992 market share amount was four-tenths of one percent (.4%) of a share point higher than 1991. Market share for 1991 was 43.9%, a five-tenths of one percent (.5%) share point increase over 1990. Anheuser-Busch has led the brewing industry in market share every year since 1957. The company began production at its 13th brewery in the spring of 1993 in Cartersville, Ga. The Cartersville brewery is the most modern and efficient of the company's breweries and is currently operating at approximately one-half its ultimate capacity. When fully operational, the Cartersville brewery will be able to provide up to 6.5 million barrels of capacity. [TOTAL PAYROLL COST GRAPH] COST OF PRODUCTS AND SERVICES Cost of products and services for 1993 was $7.42 billion, a 1.5% increase over the $7.31 billion amount reported for 1992. This increase follows a 2.2% and .8% increase in 1992 and 1991, respectively. These increases primarily relate to higher production costs for the company's brewing subsidiary and other beer-related operations, higher attendance at the company's entertainment operations in 1993 and higher sales of the company's food products subsidiaries. The increase in 1992 over 1991 is also due to the 1992 adoption of FAS 106. Such increases, however, have been partially offset by the company' ongoing productivity improvement and cost reduction programs as well as favorable packaging costs. As a percent of net sales, cost of products and services was 64.5% in 1993 as compared to 64.2% in 1992 and 65.0% in 1991. MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES Marketing, distribution and administrative expenses for 1993 were $2.31 billion, even with 1992 levels. Expenses for 1993 benefited from lower postretirement medical costs and the divestiture of the company's Newark wholesale operation. The 1993 level compares to increases of 8.6% for 1992 and 3.7% for 1991. Marketing, distribution and administrative expenses increased in 1992 and 1991 as a result of the higher level of marketing activity, continuing development of new products and beer brands together with related new advertising and marketing programs, the intro- 34 4 duction of new entertainment attractions, and the adoption of FAS 106 in 1992. Areas significantly affected by these factors since 1990 include media advertising, point-of-sale materials and developmental expenses associated with new advertising and marketing programs for established as well as new products, payroll and related costs, business taxes, depreciation, supplies, and general operating expenses. [PHOTO] TAXES AND PAYROLL COSTS The company is significantly impacted by federal, state and local taxes. Taxes applicable to 1993 operations (not including the many indirect taxes included in materials and services purchased) totaled $2.41 billion and highlight the burden of taxation on the company and the brewing industry in general. Taxes for 1993 decreased $149.3 million or 5.8% over 1992 taxes of $2.56 billion. This decrease follows increases of 3.5% in 1992 and 53.1% in 1991. The decrease in total taxes for 1993 is due primarily to the company's lower earnings level as a result of the restructuring charge offset partially by an increase in beer sales volume, the FAS 109 deferred tax revaluation adjustment and the 1% increase in the federal statutory income tax rate effective January 1, 1993. The increase for 1992 over 1991 results principally from the company's increase in beer sales volume and higher earnings level. The increase in total taxes for 1991 over 1990 substantially results from increased beer excise taxes related to the 100% increase in the federal excise tax on beer effective January 1, 1991. Payroll costs during 1993 totaled $2.48 billion, an increase of $46.2 million or 1.9% over 1992 payroll costs of $2.44 billion. Payroll costs increased 6.7% in 1992 and 4.4% in 1991. The increase in payroll costs reflects the 1992 adoption of FAS 106 and normal increases in salary and wage rates and benefit costs. Payroll costs for 1993 exclude severance pay and other costs associated with the company's enhanced retirement program. [OPERATING INCOME Salaries and wages paid during 1993 totaled $1.97 GRAPH] billion. Pension, life insurance and health care benefits amounted to $333.8 million and payroll taxes were $174.7 million. Employment at December 31, 1993 was 43,345 compared to 44,790 at December 31, 1992, reflecting approximately 1,200 employees who accepted the enhanced retirement program. At the time of publication of this annual report, the company's national labor contract with the Brewery Conference of the International Brotherhood of Teamsters, representing the majority of brewery workers, was scheduled to expire February 28, 1994. The company and union representatives have been negotiating the terms of a new labor contract for the past several months, substantive progress has been made, and the company anticipates that a final agreement with the union will be reached. OPERATING INCOME Operating income, the measure of the company's financial performance before interest costs and other non-operating items, was impacted by the $565 million restructuring charge. Therefore, operating income was $1.21 billion for 1993, a decline of 31.8% compared to 1992 operation income of $1.78 billion. Excluding the restructuring charge, operating income for 1993 and 1992 was $1.78 billion. Operating income for 1992 was $1.78 billion, an increase of 3.1% over 1991. Operating income was $1.72 billion in 1991, representing an increase of 7.7% over the previous year. Operating income as a percent of net sales was 10.5% in 1993 (15.4% excluding the restructuring charge) as compared to 15.6% in 1992 and 15.7% in 1991. 35 5 FINANCIAL REVIEW [NET INCOME/DIVIDENDS ON COMMON STOCK NET INTEREST COST/INTEREST CAPITALIZED GRAPH] Net interest cost, or interest expense less interest income, was $202.6 million in 1993, an increase of $10.1 million (or 5.3%) when compared to 1992 net interest cost of $192.5 million. Net interest cost in 1991 was $229.3 million. The increase in net interest cost during 1993 is due primarily to higher average debt balances outstanding during the year ended December 31, 1993, primarily as a result of financing international brewing investments. The decrease in net interest cost in 1992 and 1991 is due primarily to lower average debt balances out- standing each year and a $502.2 million, or 16.0%, reduction in total debt during the year ended December 31, 1991. Specific information regarding company financing (including the level of debt activity and the leveraged ESOP) and the company's capital expenditure program is presented in the Liquidity and Capital Resources section of this discussion. Interest capitalized declined $11.0 million in 1993 as compared to 1992. The decline in interest capitalized in 1993 is primarily related to the 1993 start-up of the company's new brewery in Cartersville, Ga., which resulted in the cessation of interest capitalization on the completed phase of this major capital investment. It is anticipated that capitalized interest in 1994 will be below 1993 levels as a result of the Cartersville brewery start- up and continued low interest rates. Interest capitalized increased $1.2 million in 1992 as compared to 1991. This compares to an $8.1 million decline in 1991 compared to 1990. Interest capitalized fluctuates from year to year depending upon the level of qualified construction-in-progress and the weighted-average interest capitalization rate. OTHER INCOME/(EXPENSE), NET Other income/(expense), net, includes numerous items of a non-operating nature which do not have a material impact on the company's consolidated results of operations (either individually or in the aggregate). This category provided income in 1993 of [EARNINGS PER SHARE- $4.4 million compared to expense of $15.7 million FULLY DILUTED GRAPH] in 1992 and expense of $18.1 million in 1991. The favorable 1993 situation results from the initial recognition of $8.1 million of dividend income from an international investment accounted for under the cost method and several non-recurring gains related to asset disposals. NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES Because of the $565 million pretax restructuring charge and the $33 million after-tax deferred tax revaluation adjustment, the company reported net income of $594.5 million in 1993, a decline of 35.2% compared to 1992. Excluding these one-time charges, the company would have reported net income of $980.6 million, a decline of 1.4% compared to 1992. Net income before cumulative effect for 1992 was $994.2 million, an increase of 5.8% compared with $939.8 million for 1991. Net income for 1991 was 11.6% higher than 1990. The effective tax rate for 1993 of 43.4% is not comparable to 1992, due to the impact of the restructuring charge and the FAS 109 deferred tax revaluation adjustment. Excluding these non-recurring items, the effective tax rate for 1993 was 39.3%, reflecting the retroactive impact of the 1% federal tax rate increase signed into law during 1993. The effective income tax rate was 38.4% in 1992 and 38.2% in 1991. EARNINGS PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES As with net income, 1993 earnings per share were impacted by the special non-recurring adjustments. Including these adjustments, fully diluted earnings per share for 1993 were $2.17, a decrease of 32.2% compared to 1992. Excluding the 1993 adjustments, fully diluted earnings per share would have been $3.55, an increase of 2.6% compared to 1992. 36 6 Fully diluted earnings per share before cumulative effect were $3.46 for 1992, an increase of 6.5% compared with $3.25 for 1991. Fully diluted earnings per share for 1990 were $2.95. The difference between the company's year-to-year percentage change in net income and earnings per share is due to share repurchases. EXCLUDING THE Fully diluted earnings per share assume the ADJUSTMENTS FOR conversion (as of January 1, 1991) of THE PROFITABILITY the company's 8% Convertible Debentures due 1996. ENHANCEMENT In calculating fully diluted earnings per share, PROGRAM AND THE weighted average shares outstanding are increased by FAS 109 IMPACT the assumed conversion of the debentures and net RELATED TO THE income is increased by the after-tax interest REVENUE RECONCILIA- expense on the debentures. ACT OF 1993, FULLY DILUTED EARNINGS FINANCIAL POSITION PER SHARE WOULD LIQUIDITY AND CAPITAL RESOURCES HAVE BEEN $3.55 The company's primary sources of liquidity are FOR THE YEAR, AN cash provided from operating activities and certain INCREASE OF 2.6% financing activities. Information on the company's COMPARED TO 1992. consolidated cash flows (operating activities, financing activities and investing activities) for the past three years is set forth in the Consolidated Statement of Cash Flows in this annual report. Working capital at December 31, 1993 was $(20.4) million as compared to $356.0 million at December 31, 1992. During 1993, the company issued the following debt: - $489.4 million increase in commercial paper; - $200 million, 7 3/8% debentures due 2023; and - $10 million medium-term notes. During 1993, the company reduced long-term debt as follows: - Redeemed $53.5 million, 8% dual currency notes; - Redeemed $100 million, 8% notes; and - Redeemed $49.1 million, 10% sinking fund debentures. During 1992, the company issued the following debt: - $150 million medium-term notes; and - $200 million, 6.9% 10-year notes. [CASH FLOW FROM During 1992, the company reduced long-term debt as OPERATIONS GRAPH] follows: - Redeemed $100 million, 8 7/8% notes; - Redeemed $86 million, 8.55% sinking fund debentures; - Redeemed $25 million, 7.95% sinking fund debentures; and - Lowered commercial paper borrowings by $24.7 million. Gains/losses on debt reduction activities (either individually or in the aggregate) were not material to the company's consolidated financial statements during 1993 or 1992. At December 31, 1993 and 1992 there were $569.1 million and $79.7 million, respectively, of commercial paper borrowings outstanding classified as long-term debt. The commercial paper is intended to be maintained on a long-term basis, with ongoing credit provided by the company's revolving credit agreements (discussed below). The company had fully hedged its foreign currency exposure for debt service payments on foreign currency denominated debt through agreements with various lending institutions. The company believes its strong beer wholesaler network is a major factor in its long-term growth. Therefore, the company believes that affording beer wholesalers the opportunity to invest in the company will further this goal. In 1989, the company registered with the Securities and Exchange Commission (SEC) a total of $300 million of seven- year convertible debentures (ultimately convertible into common stock) as part of its Wholesaler Investment Program. A total of $241.7 million of the debentures were issued. The debentures are subject to mandatory redemption at the end of seven years, optional redemption/repurchase at the company's or holder's discretion after three years, and special redemption/repurchase based on the occurrence of certain redemption events with respect to particular holders. 37 7 FINANCIAL REVIEW The company utilizes SEC shelf registration statements to provide financing flexibility. At December 31, 1992 a total of $550 million was available for debt issuance under shelf registration statements. In 1993, the company issued $210 million in debt as previously described. As of December 31, 1993, the company had a total of $340 million remaining available for issuance under shelf registration statements. During the next five years, the company plans to continue capital expenditure programs DURING THE NEXT FIVE designed to take advantage of growth and YEARS, THE COMPANY productivity improvement opportunities for its beer PLANS TO CONTINUE and beer-related, food products and entertainment CAPITAL EXPENDITURE segments. Cash flow from operating activities will PROGRAMS DESIGNED TO provide the principal support for these capital TAKE ADVANTAGE OF investments. GROWTH AND However, a capital expenditure program of this PRODUCTIVITY IMPROVE- magnitude (as well as possible business acquisitions) MENT OPPORTUNITIES may require external financing from time to time. FOR ITS BEER AND The nature and timing of external financing will BEER-RELATED, FOOD vary depending upon the company's evaluation of PRODUCTS AND existing market conditions and other economic ENTERTAINMENT factors. SEGMENTS. In addition to its long-term debt financing, the company has access to the short-term capital market utilizing its bank credit agreements and commercial paper. The company has formal bank credit agreements which are discussed in Note 6 to the Consolidated Financial Statements. These agreements provide the company with immediate and continuing sources of liquidity. The company's ratio of total debt to total capitalization was 41.6% including the 1993 non- recurring special charges, 36.4% and 37.3% at December 31, 1993, 1992 and 1991, respectively. The company's fixed charge coverage ratio was 7.6x for the year ended December 31, 1993 (5.2x including the 1993 non- recurring special charges) and 7.8x and 6.4x for the years ended December 31, 1992 and 1991, respectively. As more fully described in Note 9 to the Con- solidated Financial Statements, the company [CAPITAL added an employee stock ownership plan (ESOP) EXPENDITURES/ feature to its existing Deferred Income Stock DEPRECIATION AND Purchase and Savings Plans in 1989. Approximately AMORTIZATION 60% of total salaried and hourly employees GRAPH] are eligible for participation in the ESOP. In 1989, the ESOP borrowed $500 million, guaranteed by the company, and used the proceeds to buy approximately 11.3 million shares of common stock from the company. The ESOP shares are being allocated to participants over 15 years as contributions are made to the plan. Through the various company stock ownership plans, employees of Anheuser-Busch control approximately 10% of the company's outstanding common stock. In accordance with generally accepted accounting principles, the unpaid principal portion of the ESOP debt is reflected on the company's balance sheet as long-term debt with an equal, offsetting reduction to Shareholders Equity. In addition, total ESOP expense is allocated to interest expense and operating expense based upon the ratio of interest and principal payments on the debt. CAPITAL EXPENDITURES The company has a formalized and intensive review procedure for all capital expenditures. The most important measure of acceptability of a capital project is its projected discounted cash flow return on investment. Capital expenditures in 1993 amounted to $776.9 million as compared with $737.2 million in 1992. During the past five years, capital expenditures totaled $4.2 billion. Capital expenditures for 1993 for the company's beer and beer-related operations were $529.7 million. Major expenditures by the company's brewing subsidiary included continuing construction of the company's new brewery in Cartersville, Ga., and numerous modernization projects designed to improve productivity at all breweries. The remaining 1993 capital expenditures totaling $247.2 million were made by the company's food products and entertainment operations. Major expenditures included numerous Campbell Taggart and Eagle Snacks modernization and productivity improvement projects, as well as new Busch Entertainment attractions. 38 8 The company expects its capital expenditures in 1994 to approximate $800 million. Capital expenditures during the five-year period 1994-1998 are expected to approximate $4 billion. ENVIRONMENTAL MATTERS [PHOTO] The company is subject to federal, state and local environmental protection laws and regulations and is operating within such laws or is taking action aimed at assuring compliance with such laws and regulations. Compliance with these laws and regulations is not expected to materially affect the company's competitive position. The company has not been identified as a Potentially Responsible Party (PRP) at an Environmental Protection Agency designated clean-up site which could have a material impact on the company's consolidated financial statements. In recognition of the importance of environmental laws and regulations, the company has established an Environmental Policy Committee. This committee, which reports directly to the Audit Committee of the Board of Directors, is comprised of senior company executives. The mission of the committee is to (a) monitor and interpret environmental policies to insure high standards of corporate responsibility; (b) establish a framework to assure strict compliance in the operations of all of the company's businesses with all environmental regulations; (c) provide adequate resources-human, financial and physical-required to assure compliance with all environmental laws and policies; and (d) exercise oversight responsibilities of company environmental programs. OTHER MATTERS In June 1993, the company purchased a 17.7% equity interest in Grupo Modelo, Mexico's largest brewer, and its subsidiaries for $477 million. The company is accounting for its investment in Modelo under the cost method. The investment is included in the balance sheet within the caption "Investments in and advances to affiliated companies." In connection with the purchase, three Anheuser-Busch representatives have been elected to the Modelo board and a Modelo representative has been elected to serve on the Anheuser-Busch board. The agreement gives Anheuser-Busch options to increase its investment to a minority position in Modelo of approximately 35% and to acquire an additional minority interest in Modelo's subsidiaries. These options may be exercised between mid-1995 and the end of 1997. Under certain circumstances involving the non-exercise of such options by Anheuser-Busch, at either party's election, Modelo may repurchase approximately half of Anheuser-Busch's investment at cost and repurchase the remainder at prevailing market rates. In July 1993, the company purchased a 5% interest in China's largest brewer, Tsingtao Brewery Co., Ltd., for $16.4 million. The purchase occurred in conjunction with Tsingtao's initial public offering of shares on the Stock Exchange of Hong Kong. This public offering represented approximately 35% of the company, including the 5% purchased by Anheuser-Busch. The initial 5% purchase by Anheuser-Busch (which will be accounted for under the cost method and is included in the balance sheet within the caption "Investments in and advances to affiliated companies") is a strategic investment which may lead to additional commercial or investment relationships between the two companies. In December 1993, the company acquired the remaining 50% of International Label Company for $19.2 million. The acquisition was accounted for using the purchase method of accounting, and the excess cost of the acquisition over the assets acquired is being amortized on a straight-line basis over 40 years. DIVIDENDS Cash dividends paid to common shareholders were $370.0 million in 1993 and $338.3 million in 1992. Dividends on common stock are paid in the months of March, June, 39 9 FINANCIAL REVIEW September and December of each year. In the second quarter of 1993, effective with the September dividend, the Board of Directors increased the quarterly dividend rate by 12.5% from $.32 to $.36 per share. Annual dividends per common share increased 13.3% in 1993 to $1.36 per share compared to $1.20 per share in 1992. In 1993, dividends were $.32 for each of the first two quarters and $.36 for the last two quarters, as compared to $.28 for the first two quarters and $.32 for the last two quarters of 1992. The company has paid dividends in each of the THE COMPANY HAS past 61 years. During that time, the company's PAID DIVIDENDS IN stock has split on seven different occasions and EACH OF THE PAST 61 stock dividends were paid three times. YEARS. DURING THAT TIME, THE COMPANY'S At December 31, 1993, common shareholders of STOCK HAS SPLIT ON record numbered 67,612 compared with 67,273 SEVEN DIFFERENT at the end of 1992. OCCASIONS AND STOCK DIVIDENDS WERE PAID THREE TIMES. PRICE RANGE OF COMMON STOCK The company's common stock is listed on the New York Stock Exchange (NYSE) under the symbol "BUD". The table below summarizes the high and low closing prices on the NYSE.
- - - --------------------------------------------------------------- PRICE RANGE OF COMMON STOCK - - - --------------------------------------------------------------- 1993 1992 - - - --------------------------------------------------------------- QUARTER HIGH LOW HIGH LOW - - - --------------------------------------------------------------- First............... 60 50-3/4 60-1/2 54-7/8 Second.............. 53-3/4 47-3/8 56-7/8 52-1/8 Third............... 48-1/4 44-1/8 57-3/4 53 Fourth.............. 50-5/8 45-1/2 60 53-5/8 - - - ------------------------------------------------------------------
The closing price of the company's common stock at December 31, 1993 and 1992 was $49.125 and $58.50, respectively. COMMON STOCK AND OTHER SHAREHOLDERS EQUITY [SHAREHOLDERS Shareholders equity was $4.26 billion at EQUITY/LONG- December 31, 1993, as compared with $4.62 billion TERM DEBT GRAPH] at December 31, 1992. The decrease in shareholders equity during the year is primarily related to 1993 special charges, the share repurchase program and dividends. The book value of each common share of stock at December 31, 1993 was $15.94, as compared to $16.60 at December 31, 1992. In 1993, the return on shareholders equity was 13.4% as compared to 22.0% in 1992. Excluding the non- recurring special charges, return on shareholders equity for 1993 would have been 21.2%. The Board of Directors has approved various resolutions in recent years authorizing the company to repurchase shares of its common stock for investment purposes and to meet the requirements of the company's various stock purchase and savings plans. In June 1992 the board authorized the repurchase of 20 million shares. The company has acquired 12.6 million, 9.6 million and 23,500 shares of common stock in 1993, 1992 and 1991 for $639.8 million, $518.7 million and $1.1 million, respectively. At December 31, 1993, approximately five million shares were available for repurchase under the June 1992 authorization. INFLATION General inflation has not had a significant impact on the company over the past three years and is not expected to have a significant impact in the foreseeable future. 40 10 RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Anheuser-Busch Companies, Inc. is responsible for the financial statements and other information included in this annual report. Management has selected those generally accepted accounting principles it considers appropriate to prepare the financial statements and other data contained herein. The company maintains accounting and reporting systems, supported by an internal control system, which management believes are adequate to provide reasonable assurances that assets are safeguarded against loss from unauthorized use or disposition and financial records are reliable for preparing financial statements. During 1993, the company's internal auditors, in conjunction with Price Waterhouse, its independent accountants, performed a comprehensive review of the adequacy of the company's internal accounting control system. Based on the comprehensive review, it is management's opinion that the company has an effective system of internal accounting control. The Audit Committee of the Board of Directors, which consists of six non- management directors, oversees the company's financial reporting and internal control systems, recommends selection of the company's public accountants and meets with the public accountants and internal auditors to review the overall scope and specific plans for their respective audits. The committee held four meetings during 1993. A more complete description of the functions performed by the Audit Committee can be found in the company's proxy statement. The report of Price Waterhouse on its examinations of the consolidated financial statements of the company appears below. REPORT OF INDEPENDENT ACCOUNTANTS - - - --------------------------------------------------------------------------- PRICE WATERHOUSE February 7, 1994 To the Shareholders and Board of Directors of One Boatmen's Plaza Anheuser-Busch Companies, Inc. St. Louis, MO 63101 We have audited the accompanying Consolidated Balance Sheet of Anheuser- Busch Companies, Inc. and its subsidiaries as of December 31, 1993 and 1992, and the related Consolidated Statements of Income, Changes in Shareholders Equity and Cash Flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of Anheuser-Busch Companies, Inc. and its subsidiaries at December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. As discussed in Note 3 to the financial statements, the company changed its method of accounting for postretirement benefits other than pensions and income taxes in 1992. PRICE WATERHOUSE 41 11 CONSOLIDATED BALANCE SHEET Anheuser-Busch Companies, Inc., and Subsidiaries
ASSETS (In millions) - - - ----------------------------------------------------------------------------------------- DECEMBER 31, 1993 1992 - - - ----------------------------------------------------------------------------------------- CURRENT ASSETS: Cash and marketable securities ............................... $ 127.4 $ 215.0 Accounts and notes receivable, less allowance for doubtful accounts of $6.7 in 1993 and $4.9 in 1992................... 751.1 649.8 Inventories Raw materials and supplies.................................. 385.5 417.7 Work in process............................................. 99.4 88.7 Finished goods.............................................. 141.8 154.3 Total inventories......................................... 626.7 660.7 Other current assets.......................................... 290.0 290.3 -------- -------- Total current assets........................................ 1,795.2 1,815.8 - - - ----------------------------------------------------------------------------------------- INVESTMENTS AND OTHER ASSETS: Investments in and advances to affiliated companies........... 629.5 171.6 Investment properties......................................... 151.9 164.8 Deferred charges and other non-current assets................. 310.7 356.3 Excess of cost over net assets of acquired businesses, net.... 495.9 505.7 -------- ------- 1,588.0 1,198.4 - - - ----------------------------------------------------------------------------------------- PLANT AND EQUIPMENT: Land.......................................................... 281.9 273.3 Buildings..................................................... 3,445.5 3,295.2 Machinery and equipment....................................... 7,656.5 7,086.9 Construction in progress...................................... 343.2 729.7 -------- --------- 11,727.1 11,385.1 Accumulated depreciation...................................... (4,230.0) (3,861.4) -------- --------- 7,497.1 7,523.7 -------- --------- $10,880.3 $10,537.9 --------- --------- - - - ----------------------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 47-59 of this report.
42 12
LIABILITIES AND SHAREHOLDERS EQUITY (In millions) - - - ---------------------------------------------------------------------------------------- DECEMBER 31, 1993 1992 - - - ---------------------------------------------------------------------------------------- CURRENT LIABILITIES: Accounts payable............................................ $ 812.5 $ 737.4 Accrued salaries, wages and benefits........................ 243.9 257.3 Accrued interest payable.................................... 54.9 52.4 Due to customers for returnable containers.................. 50.3 48.2 Accrued taxes, other than income taxes...................... 121.7 117.0 Estimated income taxes...................................... 91.0 38.8 Restructuring accrual....................................... 189.2 - Other current liabilities................................... 252.1 208.7 -------- -------- Total current liabilities................................. 1,815.6 1,459.8 - - - ---------------------------------------------------------------------------------------- POSTRETIREMENT BENEFITS....................................... 607.1 538.3 - - - ---------------------------------------------------------------------------------------- LONG-TERM DEBT................................................ 3,031.7 2,642.5 - - - ---------------------------------------------------------------------------------------- DEFERRED INCOME TAXES......................................... 1,170.4 1,276.9 - - - ---------------------------------------------------------------------------------------- COMMON STOCK AND OTHER SHAREHOLDERS EQUITY: Common stock, $1.00 par value, authorized 800,000,000 shares........................................ 342.5 341.3 Capital in excess of par value.............................. 808.7 762.9 Retained earnings........................................... 6,023.4 5,794.9 Foreign currency translation adjustment..................... (33.0) (1.4) -------- -------- 7,141.6 6,897.7 Treasury stock, at cost..................................... (2,479.6) (1,842.9) ESOP debt guarantee offset.................................. (406.5) (434.4) -------- -------- 4,255.5 4,620.4 - - - ---------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES................................. - - $10,880.3 $10,537.9 ========= ========= - - - ----------------------------------------------------------------------------------------
43 13
CONSOLIDATED STATEMENT OF INCOME Anheuser-Busch Companies, Inc., and Subsidiaries (In millions, except per share data) - - - -------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1993 1992 1991 - - - -------------------------------------------------------------------------------------------------------- Sales................................................... $13,185.1 $13,062.3 $12,634.2 Less federal and state excise taxes................... 1,679.8 1,668.6 1,637.9 --------- --------- --------- Net sales............................................... 11,505.3 11,393.7 10,996.3 Cost of products and services......................... 7,419.7 7,309.1 7,148.7 --------- -------- --------- Gross profit............................................ 4,085.6 4,084.6 3,847.6 Marketing, distribution and administrative expenses... 2,308.7 2,308.9 2,126.1 Restructuring charge.................................. 565.0 - - --------- --------- --------- Operating income........................................ 1,211.9 1,775.7 1,721.5 Other income and expenses: Interest expense...................................... (207.8) (199.6) (238.5) Interest capitalized.................................. 36.7 47.7 46.5 Interest income....................................... 5.2 7.1 9.2 Other income/(expense), net........................... 4.4 (15.7) (18.1) --------- --------- --------- Income before income taxes.............................. 1,050.4 1,615.2 1,520.6 --------- --------- --------- Provision for income taxes: Current............................................... 562.4 561.9 479.1 Deferred.............................................. (139.5) 59.1 101.7 Revaluation of deferred tax liability (FAS 109)....... 33.0 - - --------- --------- --------- 455.9 621.0 580.8 --------- --------- --------- Net income, before cumulative effect of accounting changes.................................... 594.5 994.2 939.8 Cumulative effect of changes in the method of accounting for postretirement benefits (FAS 106) and income taxes (FAS 109), net of tax benefit of $186.4 million..................................... - (76.7) - --------- --------- --------- NET INCOME.............................................. $ 594.5 $ 917.5 $ 939.8 ========= ========= ========= - - - --------------------------------------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE: Net income, before cumulative effect.................. $ 2.17 $ 3.48 $ 3.26 Cumulative effect of accounting changes............... - (.26) - --------- --------- --------- Net income............................................ $ 2.17 $ 3.22 $ 3.26 ========= ========= ========= FULLY DILUTED EARNINGS PER SHARE: Net income, before cumulative effect.................. $ 2.17 $ 3.46 $ 3.25 Cumulative effect of accounting changes............... - (.26) - --------- --------- --------- Net income............................................ $ 2.17 $ 3.20 $ 3.25 ========= ========= ========= - - - --------------------------------------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 47-59 of this report.
44 14
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Anheuser-Busch Companies, Inc., and Subsidiaries SHAREHOLDERS EQUITY (In millions, except per share data) - - - ------------------------------------------------------------------------------------------------------------------------ ESOP FOREIGN CAPITAL IN DEBT CURRENCY COMMON EXCESS OF RETAINED TREASURY GUARANTEE TRANSLATION STOCK PAR VALUE EARNINGS STOCK OFFSET ADJUSTMENT - - - ------------------------------------------------------------------------------------------------------------------------ BALANCE AT DECEMBER 31, 1990............ $335.7 $558.9 $4,563.3 $(1,323.1) $(485.0) $ 29.3 Net income.............................. 939.8 Common dividends ($1.06 per share)..................... (301.1) Shares issued under stock plans........................... 2.7 92.2 7.8 Conversion of Convertible Debentures............................ .1 3.4 Reduction of ESOP debt guarantee............................. 23.8 Treasury stock acquired................. (1.1) Foreign currency translation adjustment............................ (8.6) - - - ------------------------------------------------------------------------------------------------------------------------ BALANCE AT DECEMBER 31, 1991............ 338.5 654.5 5,209.8 (1,324.2) (461.2) 20.7 Net income.............................. 917.5 Common dividends ($1.20 per share)..................... (338.3) Shares issued under stock plans........................... 2.8 107.6 5.9 Conversion of Convertible Debentures............................ .8 Reduction of ESOP debt guarantee............................. 26.8 Treasury stock acquired................. (518.7) Foreign currency translation adjustment............................ (22.1) - - - ------------------------------------------------------------------------------------------------------------------------ BALANCE AT DECEMBER 31, 1992............ 341.3 762.9 5,794.9 (1,842.9) (434.4) (1.4) Net income.............................. 594.5 Common dividends ($1.36 per share)..................... (370.0) Shares issued under stock plans........................... 1.2 44.2 4.0 Reduction of ESOP debt guarantee............................. 27.9 Treasury stock acquired net of treasury shares issued............. 1.6 (636.7) Foreign currency translation adjustment............................ (31.6) - - - ----------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1993............ $342.5 $808.7 $6,023.4 $(2,479.6) $(406.5) $(33.0) - - - ----------------------------------------------------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 47-59 of this report.
45 15
CONSOLIDATED STATEMENT OF CASH FLOWS Anheuser-Busch Companies, Inc., and Subsidiaries (In millions) - - - -------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1993 1992 1991 - - - -------------------------------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income............................................ $ 594.5 $ 917.5 $ 939.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 608.3 567.0 534.1 (Decrease)/increase in deferred income taxes.................................... (106.5) 62.0 104.5 Restructuring charge ($565 million less cash payments of $65.1 million)............ 499.9 - - Cumulative effect of accounting changes.............................. - 76.7 - Decrease/(increase) in non-cash working capital................................. 99.6 (13.4) (208.5) Other, net........................................ 56.7 18.9 24.8 -------- -------- --------- Cash provided by operating activities................... 1,752.5 1,628.7 1,394.7 - - - --------------------------------------------------------------------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures.................................. (776.9) (737.2) (702.5) Business acquisitions................................. (524.3) (41.4) (15.7) -------- -------- --------- Cash (used for) investing activities.................... (1,301.2) (778.6) (718.2) - - - ---------------------------------------------------------------------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase in long-term debt............................ 689.2 351.3 .6 Decrease in long-term debt............................ (267.7) (343.8) (479.1) Dividends paid to shareholders........................ (370.0) (338.3) (301.1) Acquisition of treasury stock......................... (639.8) (518.7) (1.1) Shares issued under stock plans and conversion of Convertible Debentures................ 49.4 117.1 106.2 -------- -------- --------- Cash (used for) financing activities.................. (538.9) (732.4) (674.5) - - - --------------------------------------------------------------------------------------------------------- Net increase/(decrease) in cash and marketable securities during the year................. (87.6) 117.7 2.0 Cash and marketable securities at beginning of year..................................... 215.0 97.3 95.3 -------- -------- --------- Cash and marketable securities at end of year........................................... $ 127.4 $ 215.0 $ 97.3 -------- -------- --------- - - - --------------------------------------------------------------------------------------------------------- The accompanying statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing on pages 47-59 of this report.
46 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - - --------------------------------------------------------------------------- 1. SUMMARY OF This summary of significant accounting principles and SIGNIFICANT policies of Anheuser-Busch Companies, Inc. and its ACCOUNTING subsidiaries is presented to assist the reader in PRINCIPLES evaluating the company's financial statements included AND POLICIES in this report. These principles and conform to generally accepted accounting principles. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the company and all its subsidiaries. All significant intercompany transactions have been eliminated. FOREIGN CURRENCY TRANSLATION Adjustments resulting from foreign currency transactions are recognized in income, whereas adjustments resulting from the translation of financial statements are reflected as a separate component of shareholders equity. EXCESS OF COST OVER NET ASSETS OF ACQUIRED BUSINESSES The excess of the cost over the net assets of acquired businesses is amortized on a straight-line basis over a period of 40 years. Accumulated amortization at December 31, 1993 and 1992 was $74.2 million and $63.0 million, respectively. INVENTORIES AND PRODUCTION COSTS Inventories are valued at the lower of cost or market. Cost is determined under the last-in, first-out method (LIFO) for substantially all brewing inventories and under the first-in, first-out method (FIFO) for substantially all food product inventories. PLANT AND EQUIPMENT Plant and equipment is carried at cost and includes expenditures for new facilities and those which substantially increase the useful lives of existing facilities. Maintenance, repairs and minor renewals are expensed as incurred. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are eliminated from the respective accounts and any gain or loss on disposition is reflected in income or expense. Depreciation is provided principally on the straight- line method over the estimated useful lives of the assets, resulting in depreciation rates on buildings ranging from 2% to 10% and on machinery and equipment ranging from 4% to 25%. CAPITALIZATION OF INTEREST Interest relating to the cost of acquiring certain fixed assets is capitalized. The capitalized interest is included as part of the cost of the related asset and is amortized over its estimated useful life. INCOME TAXES The provision for income taxes is based on the income and expense amounts as reported in the Consolidated Statement of Income. The company has elected to utilize certain provisions of federal income tax laws and regulations to reduce current taxes payable. Effective in 1992, deferred income taxes are recognized for the effect of temporary differences between financial and tax reporting in accordance with the requirements of Statement of Financial Accounting Standards No. 109. Prior to 1992, deferred taxes were recognized for the effect of timing differences between financial and tax reporting in accordance with the requirements of Accounting Principles Board Opinion No. 11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF CREDIT RISK The company is party to certain financial instruments with off-balance-sheet risk incurred in the normal course of business. These financial instruments include financial guarantees, foreign currency forward and option contracts designated as hedges, foreign currency payment swaps and interest rate swaps. The company's exposure to credit loss in the event of non-performance by the counterparty to these financial instruments (either individually or in the aggregate) is not material. The company does not have a material concentration of accounts receivable or credit risk. 47 17 FINANCIAL REVIEW FAIR VALUE OF FINANCIAL INSTRUMENTS Long-term debt is the only significant financial instrument of the company with a fair value different than its recorded value. As of December 31, 1993, the fair value of long-term debt was $3.1 billion compared to its recorded value of $3.0 billion. The fair value of long-term debt was estimated based on the quoted market values for the same or similar debt issues, or rates currently available for debt with similar terms. RESEARCH AND DEVELOPMENT, ADVERTISING, PROMOTIONAL COSTS AND INITIAL PLANT COSTS Research and development, advertising, promotional costs and initial plant costs are expensed in the year in which these costs are incurred. EARNINGS PER SHARE Earnings per share of common stock are based on the weighted average number of shares of common stock outstanding during the respective years as shown below (in millions):
- - - -------------------------------------------------------------------------- 1993 1992 1991 - - - -------------------------------------------------------------------------- Primary weighted average shares............ 274.3 285.8 287.9 Fully diluted weighted average shares...... 279.3 290.8 292.9 - - - --------------------------------------------------------------------------
Fully diluted earnings per share of common stock assume the conversion of the company's 8% convertible debentures due 1996 and the elimination of the related after-tax interest expense. - - - --------------------------------------------------------------------------- In September 1993, the company announced a 2-PROFITABILITY Profitability Enhancement Program to improve sales ENHANCEMENT and profitability. The Program, which involves PROGRAM significant organizational and operational changes, includes the following elements: - An enhanced retirement program for salaried employees - The write-down of under-performing assets and investments - Restructuring and reorganization of the company As a result of the Program, the company recognized a $565 million restructuring charge during third quarter 1993. The Program includes a 10% reduction in the salaried workforce (approximately 1,200 employees). This reduction was achieved through an enhanced retirement program. The enhanced retirement program offered salaried employees age 53 or older certain incentives and the opportunity to retire effective December 31, 1993. Incentives included pension credits for an additional five years of service and five years of age. The total cost of the enhanced retirement program was $142 million and is discussed in more detail in Note 10. In addition, as part of the Program, the company plans to restructure and reorganize certain operations at a cost of $278 million. The restructuring and reorganization portion of the Program includes relocation of the company's Campbell Taggart, Inc. and Eagle Snacks, Inc. corporate offices to St. Louis; the closing of several smaller non-beer manufacturing operations; and the rationaliza- tion of brewing operations based on the successful practices employed at its newer breweries. Also included in the Program is $145 million for the write-down of under-performing assets and investments to their net realizable (economic) values. - - - -------------------------------------------------------------------------- Effective January 1, 1992, the company adopted 3-ADOPTION Statements of Financial Accounting Standards No. 106 IMPACT OF NEW (FAS 106), "Employers' Accounting for Postretirement ACCOUNTING Benefits Other Than Pensions," and No. 109 (FAS 109), PRONOUNCEMENTS "Accounting for Income Taxes." The company elected to immediately recognize the cumulative effect of adoption of FAS 106/109 pertaining to years prior to 1992 through a one-time adjustment which impacted 1992 net income as follows (in millions):
- - - --------------------------------------------------------------------------- 1992 Net Income Increase (Decrease) - - - --------------------------------------------------------------------------- Postretirement benefits (FAS 106).................... $(319.5) Accounting for income taxes (FAS 109)................ 242.8 ------- Net income impact.................................... $ (76.7) ======= Fully diluted earnings per share impact.............. $ (.26) ======== - - - ---------------------------------------------------------------------------
48 18 Implementation of FAS 106 in 1992 was based on benefit levels in effect at the time of adoption. Certain changes to these benefit levels were implemented in 1993, thereby reducing the pretax expense level in 1993 by $27.0 million to $48.3 million. Assuming constant statutory tax rates, FAS 109 is not expected to have a significant ongoing financial impact on the company. However, statutory tax rate changes, as occurred in August 1993, require revaluation of the deferred tax liability, with the net change recognized in the income statement in the year the tax rate change is enacted. - - - -------------------------------------------------------------------------- 4-ACQUISITIONS In March 1993, the company announced the AND BUSINESS establishment of a joint venture with Japan's largest INVESTMENTS brewer, Kirin Brewery, to market and sell Budweiser in Japan. The joint venture replaces a prior license-brewing contract in Japan and is 90% owned by the company and 10% owned by Kirin. The joint venture began operations in September 1993. In June 1993, the company announced the purchase of a 17.7% equity interest in Grupo Modelo, Mexico's largest brewer, and its subsidiaries for $477 million. This investment is accounted for under the cost method and included in the balance sheet within the caption "Investments in and advances to affiliated companies." During 1993, the company recorded $8.1 million in dividends related to this investment. The agreement gives the company options to increase its investment in Grupo Modelo to a minority position of approximately 35% and to acquire an additional minority interest in its subsidiaries. These options are exercisable between mid-1995 and the end of 1997. Under certain circumstances involving the non- exercise of these options by the company at either party's election, Grupo Modelo may repurchase approximately half of the company's investment at cost and repurchase the remainder at prevailing market rates. In July 1993, the company purchased a 5% interest in China's largest brewer, Tsingtao Brewery Company Limited, for $16.4 million. The purchase occurred in conjunction with Tsingtao's initial public offering on the Stock Exchange of Hong Kong. This initial 5% purchase by the company, accounted for under the cost method and included in the balance sheet within the caption "Investments in and advances to affiliated companies," is a strategic investment which may lead to additional commercial or investment relationships between the two companies. In December 1993, the company acquired the remaining 50% of International Label Company for $19.2 million. The acquisition was accounted for using the purchase method of accounting and the excess cost of the acquisition over the assets acquired is being amortized on a straight-line basis over 40 years. - - - -------------------------------------------------------------------------- 5-INVENTORY Approximately 66.5% and 69.0% of total inventories VALUATION at December 31, 1993 and 1992, respectively, are stated on the last-in, first-out (LIFO) inventory valuation method. Had average-cost (which approximates replacement cost) been used with respect to such inventories at December 31, 1993 and 1992, total inventories would have been $105.5 million and $107.1 million higher, respectively. - - - ------------------------------------------------------------------------- 6-CREDIT The company's revolving credit agreements totaling AGREEMENTS $500 million were terminated January 31, 1993. The company's new credit agreements totaling $800 million expire in January 1995 ($400 million) and February 1996 ($400 million). The agreements provide that the company may select among various loan arrangements with differing maturities and among a variety of interest rates, including a negotiated rate. At December 31, 1993 and 1992 the company had no outstanding borrowings under these agreements. Fees under these agreements amounted to $.9 million in 1993, $.6 million in 1992 and $.7 million in 1991. 49 19 FINANCIAL REVIEW
- - - --------------------------------------------------------------------------- Long-term debt at December 31 consisted of the follow- 7-LONG-TERM ing (in millions): DEBT - - - --------------------------------------------------------------------------- 1993 1992 - - - --------------------------------------------------------------------------- Commercial paper.........................................$ 569.1 $ 79.7 Medium-term Notes Due 1993 to 2002(interest from 4.6% to 9.0%)............................................ 225.0 285.0 8% Dual Currency Japanese Yen/U.S. Dollar Notes Due 1995. - 53.5 8-3/4% Notes Due July 15, 1995........................... 100.0 100.0 8% Notes Due October 1, 1996............................. - 100.0 8% Convertible Debentures Due 1996....................... 237.1 237.2 8-3/4% Notes Due 1999.................................... 250.0 250.0 6.9% Notes Due 2002...................................... 200.0 200.0 9% Debentures Due 2009................................... 350.0 350.0 7-3/8% Debentures Due 2023............................... 200.0 - ESOP Debt Guarantee...................................... 406.5 434.4 Sinking Fund Debentures.................................. 364.6 413.7 Industrial Revenue Bonds................................. 110.3 115.6 Other Long-term Debt..................................... 19.1 23.4 -------- -------- $3,031.7 $2,642.5 - - - --------------------------------------------------------------------------- The company's sinking fund debentures at December 31 are as follows (in millions): - - - --------------------------------------------------------------------------- 1993 1992 - - - --------------------------------------------------------------------------- 8-5/8% Debentures maturing 1997 to 2016.................. $150.0 50.0 8-1/2% Debentures maturing 1998 to 2017.................. 150.0 150.0 10% Debentures maturing 1999 to 2018..................... 150.9 200.0 Less: Debentures held in treasury........................ (86.3) (86.3) ------ ------ $364.6 $413.7 - - - ---------------------------------------------------------------------------
The company utilizes SEC shelf registration statements to provide financing flexibility. At December 31, 1992, a total of $550 million was available for debt issuance under shelf registra- tion statements. In 1993, the company issued $210 million in debt. As of December 31, 1993, the company had a total of $340 million remaining available for issuance under shelf registration statements. In 1989 the company registered with the SEC $300 million of convertible debentures as part of its Beer Wholesaler Investment Program, $241.7 million of which were issued to Qualified Holders. The debentures may only be held by a qualified, independently owned beer wholesaler (and certain related parties) and may be converted into a 5% convertible preferred stock, par value $1.00, at a conversion price of $47.60 per share. Each share of the convertible preferred stock may be converted into one share of the company's common stock. The convertible debentures and convertible preferred stock are subject to mandatory redemption at the end of seven years, optional redemption/repurchase at the company's or holder's discretion after three years, and special redemption/repurchase options based upon the occurrence of certain events with respect to particular holders. During 1993, the company redeemed the following long-term debt: - $53.5 million, 8.0% Dual Currency Notes; - $100 million, 8.0% Notes; and - $49.1 million, 10% Sinking Fund Debentures Gains/losses on these redemptions (either individually or in the aggregate) were not material to the company's Consolidated Financial Statements. At December 31, 1993 and 1992, there were $569.1 million and $79.7 million, respectively, of commercial paper borrowings outstanding classified as long-term debt. The commercial paper is intended to be maintained on a long-term basis with ongoing credit provided by the company's revolving credit agreements. 50 20 The company's Dual Currency Japanese Yen/U.S. Dollar Notes were issued at a discount from the redemption value and subsequently converted into a U.S. dollar liability resulting in an effective interest rate of 10%, as compared to a stated rate of 8%. This debt was redeemed during 1993. The company had fully hedged its foreign currency exposure for interest payments related to this debt through an agreement with an international lending institution. During 1992 the company entered into a financial fixed-rate swap agreement on a notional amount of $200 million. The company is obligated to pay a fixed rate of 6.54% per year for the four-year period beginning January 1, 1994. In return, the company will receive a floating interest rate based on commercial paper rates. The aggregate maturities on all long-term debt are $31, $287, $270, $50 and $76 million, respectively, for each of the years ending December 31, 1994 through 1998. These aggregate maturities do not include the future maturities of the ESOP debt guarantee. - - - --------------------------------------------------------------------------- 8-STOCK The company had an Incentive Stock Option/Non- OPTION PLANS Qualified Stock Option Plan and a Non-Qualified Stock Option Plan for certain qualified employees which expired on December 21, 1991. Under the terms of the plans, options were granted at not less than the fair market value of the shares at the date of grant. The Non-Qualified Stock Option Plan provided that optionees could be granted Stock Appreciation Rights (SARs) in tandem with stock options. The exercise of a SAR cancels the related option and the exercise of an option cancels the related SAR. At December 31, 1993 and 1992, a total of 2,778,824 and 3,350, 952 shares, respectively, were reserved for possible future issuance under these plans. In April 1990, the shareholders approved an Incentive Stock Plan for certain qualified employees. The plan (as amended) provides for the grant of options and SARs. Under the terms of the plan, options may be granted at not less than the fair market value of the shares at the date of grant. At December 31, 1993 and 1992, a total of 19,051,066 and 9,908,929 shares, respectively, were reserved for future issuance under this plan. Presented below is a summary of activity for the plans for the years ended December 31:
------------------------------------------------------------------------------------------ 1993 1992 1991 ------------------------------------------------------------------------------------------ Options outstanding at beginning of the year. 10,887,085 12,285,133 15,224,650 Options granted during the year.............. 2,023,400 2,213,026 668,516 Options and SARs exercised during the year... (1,399,573) (3,464,070) (3,390,645) Options cancelled during the year............ (147,703) (147,004) (217,388) ------------ ------------- ------------- Options outstanding at end of the year....... 11,363,209 10,887,085 12,285,133 ------------ ------------- ------------- Options exercisable at end of the year....... 8,009,951 8,298,103 8,859,962 ------------- ------------- ------------- Option price range per share................. $12.28-$58.56 $10.31-$58.56 $10.31-$56.00 ------------------------------------------------------------------------------------------
The plans provide for acceleration of exercisability of the options upon the occurrence of certain events relating to a change of control, merger, sale of assets or liquidation of the company (Acceleration Events). The Non-Qualified Plan and the Incentive Stock Plan also provide that optionees may be granted Limited Stock Appreciation Rights (LSARs). LSARs become exercisable, in lieu of the option or SAR, upon the occurrence, six months following the date of grant, of an Acceleration Event. These LSARs entitle the holder to a cash payment per share equivalent to the excess of the share value (under terms of the LSAR) over the grant price. As of December 31, 1993 and 1992, there were 1,411,379 and 1,618,278 respectively, of LSARs outstanding. - - - --------------------------------------------------------------------------- 9-EMPLOYEE In 1989, the company added an Employee Stock STOCK Ownership Plan (ESOP) to its existing Deferred Income OWNERSHIP Stock Purchase and Savings Plans. Approximately 60% of PLAN all salaried and hourly employees are eligible for participation in the ESOP. The ESOP borrowed $500 million for a term of 15 years at an interest rate of 8.3% and used the proceeds to buy approximately 11.3 million shares of common stock from the company. The ESOP debt is guaranteed by the company and ESOP shares are being allocated to participants over 15 years as contributions are made to the plans. ESOP cash contributions and ESOP expense accrued during the calendar year are determined by several factors including the market price and number of shares allocated to participants, ESOP debt service, dividends on unallocated shares and the company's matching contribution. Over the 15-year life of the ESOP, total expense will equal the total cash contributions made by the company. 51 21 FINANCIAL REVIEW ESOP cash contributions are made in March and September, based on the plan year which ends March 31. A summary of ESOP cash contributions and dividends on unallocated ESOP shares for the three years ended December 31 is presented below (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Cash contributions.......................................... $ 39.4 $ 33.1 $ 32.6 ====== ====== ====== Dividends................................................... $ 10.6 $ 10.4 $ 10.2 ====== ====== ====== - - - -------------------------------------------------------------------------------------------
Total ESOP expense is allocated to operating expense and interest expense based upon the ratio of principal and interest payments on the debt. ESOP expense for each of the three years ended December 31 is presented below (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Operating expenses......................................... $ 18.6 $ 14.2 $ 13.2 Interest expenses.......................................... 21.8 18.8 19.9 ------ ------ ------ Total expense.............................................. $ 40.4 $ 33.0 $ 33.1 - - - -------------------------------------------------------------------------------------------
- - - ---------------------------------------------------------------------- As discussed in Note 2, in September 1993 the 10-RETIREMENT company announced a Profitability Enhancement Program BENEFITS that included an enhanced retirement program. Total costs related to the enhanced retirement program were $142 million. Included in this cost was $90 million in special pension benefits, offset by $35 million in curtailment gains (for a net cost of $55 million). Additionally, a $23.5 million charge for postretirement benefits other than pensions is included in the total cost. The remaining portion of the cost relates to severance benefits and other expenses of implementing the plan. PENSION PLANS The company has pension plans covering substantially all of its employees. Total pension expense for each of the three years ended December 31 is presented below (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Single-employer defined benefit plans........................ $ (2.5) $ (3.9) $ (3.5) Multi-employer plans......................................... 48.4 47.4 47.6 Defined contribution plans................................... 13.2 12.6 11.6 ------- ------ ------ $ 59.1 $ 56.1 $ 55.7 - - - -------------------------------------------------------------------------------------------
Net pension benefit for single-employer defined benefit plans was comprised of the following for the three years ended December 31 (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Service cost (benefits earned during the year)............... $ 45.7 $ 42.0 $ 34.0 Interest cost on projected benefit obligation................ 65.1 60.0 54.1 Assumed return on assets..................................... (99.5) (92.3) (76.6) Amortization of prior service cost, actuarial gains/losses and the excess of market value of plan assets over projected benefit obligation at January 1, 1986......................................... (13.8) (13.6) (15.0) ------ ------ ------ Net pension benefit...................................... $ (2.5) $ (3.9) $ (3.5) - - - ------------------------------------------------------------------------------------------
52 22 The key actuarial assumptions used in determining pension expense for single-employer defined benefit plans were as follows for each of the years ended December 31:
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Discount rate............................................... 9.0% 9.0% 10.0% Long-term rate of return on plan assets..................... 10.0% 10.0% 9.0% Weighted-average rate of compensation increase.............. 6.5% 6.5% 6.5% - - - -------------------------------------------------------------------------------------------
The actual gain on pension assets was $120.4 million, $102.2 million and $145.7 million in 1993, 1992 and 1991, respectively. The following tables set forth the funded status of all company single-employer defined benefit plans at December 31 (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 - - - ------------------------------------------------------------------------------------------- Plan assets at fair market value-primarily corporate equity securities and publicly traded bonds...........................$ 1,020.0 $1,117.4 --------- -------- Accumulated benefit obligation: Vested benefits................................................ (721.2) (576.1) Nonvested benefits............................................. (58.2) (40.3) --------- -------- Accumulated benefit obligation................................... (779.4) (616.4) Effect of projected compensation increases....................... (135.1) (152.8) --------- -------- Projected benefit obligation..................................... (914.5) (769.2) --------- -------- Plan assets in excess of projected benefit obligation............$ 105.5 $ 348.2 - - - ------------------------------------------------------------------------------------------- - - - ------------------------------------------------------------------------------------------- 1993 1992 - - - ------------------------------------------------------------------------------------------- Plan assets in excess of projected benefit obligation consist of the following components: Unamortized excess of market value of plan assets over projected benefit obligation at January 1, 1986 being amortized over 15 years......................................$ 70.9 $ 119.1 Unrecognized net actuarial gains/(losses)...................... (70.9) 73.9 Prior service costs............................................ (43.7) (27.8) Prepaid pension................................................ 149.2 183.0 ------ ------- $105.5 $ 348.2 - - - ------------------------------------------------------------------------------------------
The assumptions used in determining the funded status of these plans as of December 31 were as follows:
- - - ------------------------------------------------------------------------------------------- 1993 1992 - - - ------------------------------------------------------------------------------------------- Discount rate....................................................... 7.5% 9.0% Weighted-average rate of compensation increase ..................... 5.5% 6.5% - - - -------------------------------------------------------------------------------------------
The decline in the funded status of the plans in 1993 is due to assets paid to retirees in conjunction with the enhanced retirement program and the lower discount rate. Contributions to multi-employer plans in which the company and its subsidiaries participate are determined in accordance with the provisions of negotiated labor contracts and are based on employee-hours worked. POSTRETIREMENT BENEFITS As discussed in Note 3, the company adopted FAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," effective January 1, 1992. The company provides certain health care and life insurance benefits to eligible retired employees. Salaried participants generally become eligible for retiree health care benefits after reaching age 55 with 10 years of service or after reaching age 65. Bargaining unit employees generally become eligible for retiree health care benefits after reaching age 55 with 10-15 years of service or after reaching age 65. 53 23 FINANCIAL REVIEW The following table sets forth the accumulated postretirement benefit obligation (APBO) and the total postretirement benefit liability for all single-employer defined benefit plans at December 31 (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 - - - ------------------------------------------------------------------------------------------- Retirees............................................................$191.7 $ 110.6 Fully eligible active plan participants............................. 139.0 146.0 Other active plan participants...................................... 232.6 304.4 ------ -------- Accumulated postretirement benefit obligation (APBO)................ 563.3 561.0 Unrecognized prior service benefits................................. 109.8 - Unrecognized net actuarial (losses)................................. (51.2) - ------ -------- Total postretirement benefit liability..............................$621.9 $ 561.0 ====== ======== - - - -------------------------------------------------------------------------------------------
As of December 31, 1993 and 1992, $607.1 million and $538.3 million of this obligation was classified as a long-term liability and $14.8 million and $22.7 million was classified as a current liability, respectively. Net periodic postretirement benefits expense for single-employer defined benefit plans for 1993 and 1992 was comprised of the following (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 - - - ------------------------------------------------------------------------------------------- Service cost (benefits attributed to service during the year).......$ 21.1 $ 29.8 Interest cost on accumulated postretirement benefit obligation...... 39.2 45.5 Amortization of prior service (benefit)............................. (6.5) - Amortization of curtailment loss/(gain)............................. (4.5) - Amortization of actuarial loss/(gain)............................... (1.0) - ------ -------- Net periodic postretirement benefits expense........................$ 48.3 $ 75.3 ====== ======== - - - ------------------------------------------------------------------------------------------
In measuring the APBO, a 12.5% annual trend rate for health care costs was assumed for 1993. This rate is assumed to decline ratably over the next 12 years to 6.5% and remain at that level thereafter. The weighted average discount rate used in determining the APBO was 8% and 9%, respectively, at December 31, 1993 and 1992. If the assumed health care cost rate changed by 1%, the APBO as of December 31, 1993 would change by 13.4%. The effect of a 1% change in the cost trend rate on the service and interest cost components of net periodic postretirement benefits expense would be a change of 17.4%. - - - -------------------------------------------------------------------------- The provision for income taxes consists of the 11-INCOME TAXES following for the three years ended December 31 (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Current Tax Provision: Federal......................................................$459.5 $460.6 $386.7 State and foreign............................................ 102.9 101.3 92.4 ------ ------ ------ 562.4 561.9 479.1 ------ ------ ------ Deferred Tax Provision: Federal..................................................... (126.2) 50.3 93.3 State and foreign........................................... (13.3) 8.8 8.4 ------ ------ ------ (139.5) 59.1 101.7 ------ ------ ------ $422.9 $621.0 $580.8 ====== ====== ====== - - - ------------------------------------------------------------------------------------------
The deferred tax provision results from differences in the recognition of income and expense for tax and financial reporting purposes. The primary differences are related to fixed assets (tax effect of $51.5 million in 1993, $67.6 million in 1992 and $75.9 million in 1991) and the restructuring charge benefit ($184 million) in 1993. Under the liability method, at December 31, 1993 the company had deferred tax liabilities of $1,759 million and deferred tax assets of $588 million. The principal temporary differences included in deferred tax liabilities are related to fixed assets ($1,548 million). The principal temporary differences included in deferred tax assets are related to accrued postretirement benefits ($232.2 million) and other accruals and temporary differences ($355.9 million) which are not deductible for tax purposes until paid or utilized. 54 24 On August 10, 1993, the Revenue Reconciliation Act of 1993 was signed into law. As a result, the federal statutory income tax rate was retroactively increased, effective January 1, 1993, by 1% to 35%. This resulted in a $33 million non-recurring, after-tax, non-cash charge related to revaluation of the deferred tax liability in accordance with FAS 109. The company's effective tax rate was 43.4% in 1993, 38.4% in 1992 and 38.2% in 1991. A reconciliation between the statutory rate and the effective rate is presented below:
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Statutory rate..................................................35.0% 34.0% 34.0% State income taxes, net of federal benefit...................... 4.7 3.9 3.8 Revaluation of deferred tax liability........................... 3.1 - - Other........................................................... .6 .5 .4 ---- ---- ---- Effective tax rate.............................................. 43.4% 38.4% 38.2% - - - ------------------------------------------------------------------------------------------- - - - ---------------------------------------------------------------------------------------------------------------------------- 12-CASH FLOWS For purposes of the Statement of Cash Flows, all short-term investments with maturities of 90 days or less are considered cash equivalents. Such amounts include marketable securities of $4.8 million in 1993 and $104.6 million in 1992. The effect of foreign currency exchange rate fluctuations was not material for 1993, 1992 and 1991. Supplemental information with respect to the Statement of Cash Flows is presented below (in millions):
CAPTION> - - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Interest paid, net of capitalized interest...................$ 168.6 $ 158.0 $ 205.8 Income taxes paid............................................ 510.2 552.3 480.0 Excise taxes paid............................................ 1,673.4 1,663.0 1,606.6 - - - ------------------------------------------------------------------------------------------- CHANGES IN NON-CASH WORKING CAPITAL Decrease/(increase) in non-cash current assets: Accounts receivable........................................$ (101.3) $ 5.0 $ (92.2) Inventories................................................ 34.0 (25.1) (68.4) Other current assets....................................... .3 (50.3) (38.8) Increase/(decrease) in current liabilities: Accounts payable........................................... 75.1 27.6 (1.4) Accrued salaries, wages and benefits....................... (13.4) 34.0 (24.0) Accrued interest payable................................... 2.5 (6.1) (13.8) Due to customers for returnable containers................. 2.1 3.7 (.1) Accrued taxes, other than income taxes..................... 4.7 6.1 39.4 Estimated income taxes..................................... 52.2 (6.4) (34.0) Other current liabilities.................................. 43.4 (1.9) 24.8 ------- ------ ------- Decrease/(increase) in non-cash working capital.............. $ 99.6 $ (13.4) $(208.5) - - - -------------------------------------------------------------------------------------------
55 25 FINANCIAL REVIEW - - - ---------------------------------------------------------------------- STOCK ACTIVITY 13-PREFERRED Activity in the company's stock categories for AND COMMON each of the three years ended December 31 is STOCK summarized below:
- - - ---------------------------------------------------------------------------------- Common Stock Common Stock Issued In Treasury - - - ---------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1990....................... 335,683,313 (53,377,060) Shares issued under stock plan................... 2,696,554 Conversions of Convertible Debentures............ 72,477 Treasury stock acquired.......................... (23,500) - - - ---------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1991....................... 338,452,344 (53,400,560) Shares issued under stock plans.................. 2,931,179 Conversions of Convertible Debentures............ 16,805 Treasury stock acquired.......................... (9,597,492) - - - ---------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1992....................... 341,400,328 (62,998,052) Shares issued under stock plans.................. 1,180,011 Conversions of Convertible Debentures............ 2,100 Treasury stock acquired.......................... (12,643,125) Treasury stock issued............................ 95,413 - - - ---------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1993....................... 342,582,439 (75,545,764) - - - ----------------------------------------------------------------------------------
At December 31, 1993 and 1992, 40,000,000 shares of $1.00 par value preferred stock were authorized and unissued. STOCK REPURCHASE PROGRAMS The Board of Directors has approved various resolutions authorizing the company to purchase shares of its common stock for investment purposes and to meet the requirements of the company's various stock purchase and incentive plans. In June 1992 the board authorized the repurchase of 20 million shares. The company has acquired 12.6 million, 9.6 million and 23,500 shares of common stock in 1993, 1992 and 1991 for $639.8 million, $518.7 million and $1.1 million, respectively. At December 31, 1993, approximately 5.0 million shares were available for repurchase under the 1992 authorization. STOCKHOLDER RIGHTS PLAN In 1985, the Board of Directors adopted a Stockholder Rights Plan pursuant to which the board declared a dividend of one preferred stock purchase right on each outstanding share of common stock of the company. The rights have subsequently been amended in certain respects, and the description below reflects the terms of the rights as amended. After the rights become exercisable and until such time as the rights expire or are redeemed, they will entitle the holder to purchase one one-hundredth of a share of a new Series B Junior Participating Preferred Stock, par value $1.00 per share (4,000,000 shares were reserved for issuance at December 31, 1993 and 1992), at a purchase price of $50 per one one-hundredth of a share. The rights will become exercisable on the earlier to occur of (i) the tenth calendar day following a public announcement that a person or group (an "Acquiring Person") has acquired 20% or more of the common stock of the company, or (ii) the tenth business day following the commencement of a tender offer or exchange offer by a third party which, upon consummation, would result in such party's control of 30% or more of the common stock of the company. If, at any time after the rights have become non- redeemable, the company is the surviving corporation in a merger with an Acquiring Person and its common stock is not changed or exchanged, or an Acquiring Person becomes the beneficial owner of more than 30% of the then outstanding shares of common stock, each right will entitle the holder, other than the Acquiring Person, to purchase that number of shares of common stock of the company which has a market value of twice the exercise price of the right. If, at any time after the rights have become non- redeemable, the company is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power is sold, each right will entitle its holder to purchase that number of shares of common stock of the acquiring company which has a market value of twice the exercise price of the right. 56 26 The rights, which do not have voting rights, expire on December 27, 1995, and may be redeemed by the company at a price of 2-1/2 cents per right at any time prior to expiration or the date on which the company's Board of Directors permits the rights to become non-redeemable (subject to reinstatement in certain circumstances). - - - --------------------------------------------------------------------------- 14-COMMITMENTS In connection with plant expansion and improvement AND programs, the company had commitments for capital CONTINGENCIES expenditures of approximately $315.9 million at December 31, 1993. Obligations under capital and operating leases are not material. The company and certain of its subsidiaries are involved in certain claims and legal proceedings in which monetary damages and other relief are sought. The company is vigorously contesting these claims. However, resolution of these claims is not expected to occur quickly, and their ultimate outcome cannot presently be predicted. In any event, it is the opinion of management that any liability of the company or its subsidiaries for claims or proceedings will not materially affect its financial position. - - - --------------------------------------------------------------------------- 15-BUSINESS The company's principal business segments are beer SEGMENTS and beer-related, food products and entertainment. The beer and beer-related segment produces and sells the company's beer products. Included in this segment are the company's raw material acquisition, malting, can manufacturing, recycling, communications and transportation operations. The food products segment consists of the company's food and food-related operations which include the company's baking and snack food subsidiaries and certain rice operations. The entertainment segment consists of the company's theme parks, baseball, stadium and real estate development operations. Sales between segments, export sales and non-United States sales are not material. The company's equity in earnings of affiliated companies has been included in other income and expense. No single customer accounted for more than 10% of sales. Summarized below is the company's business segment information for 1993, 1992 and 1991 (in millions). Intra-segment sales have been eliminated from each segment's reported net sales.
- - - ------------------------------------------------------------------------------------------- Net Sales Operating Income (1) (2) - - - ------------------------------------------------------------------------------------------- 1993 1992 1991 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Beer and Beer-Related........$ 8,668.9 $ 8,609.6 $ 8,323.5 $1,339.6 $1,645.4 $1,581.5 Food Products................ 2,123.2 2,131.1 2,068.7 (84.9) 75.4 95.0 Entertainment................ 741.8 684.3 617.9 (42.8) 54.9 45.0 Eliminations................. (28.6) (31.3) (13.8) - - - --------- --------- --------- -------- -------- -------- Consolidated.................$11,505.3 $11,393.7 $10,996.3 $1,211.9 $1,775.7 $1,721.5 ========= ========= ========= ======== ======== ======== - - - ------------------------------------------------------------------------------------------- (1) Operating income excludes other expense, net, which is not allocated among segments. For 1993, 1992 and 1991 other expense, net of $161.5 million, $160.5 million and $200.9 million, respectively, includes net interest expense, other income and expense, and equity in earnings of affiliated companies. (2) Operating income for 1993 includes the impact of the one-time, pretax restructuring charge of $565 million as a result of the company's Profitability Enhancement Program. The one-time charge relates to business segments as follows: $267.5 million for the beer and beer-related segment; $165.9 million for the food products segment; and $131.6 million for the entertainment segment. /TABLE
- - - ------------------------------------------------------------------------------------------- Depreciation and Identifiable Assets Amortization Expense (4) - - - ------------------------------------------------------------------------------------------- 1993 1992 1991 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Beer and Beer-Related....... $ 7,515.0 $ 6,864.8 $6,660.6 $429.2 $395.1 $381.4 Food Products............... 1,510.4 1,584.1 1,359.7 103.0 100.9 89.5 Entertainment............... 1,470.5 1,588.2 1,565.7 76.1 71.0 63.2 Corporate (3)............... 384.4 500.8 400.5 - - - --------- --------- --------- ------ ------- ------- Consolidated................ $10,880.3 $10,537.9 $9,986.5 $608.3 $567.0 $534.1 ========= ========= ======== ====== ======= ======= - - - ------------------------------------------------------------------------------------------- (3) Corporate assets principally include cash, marketable securities, investment in affiliated companies and certain fixed assets. (4) Consolidated depreciation and amortization expenses include $17.4 million, $15.8 million and $16.0 million of depreciation expense related to corporate assets for 1993, 1992 and 1991, respectively.
57 27 FINANCIAL REVIEW
----------------------------------------------- CAPITAL EXPENDITURES - - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Beer and Beer-Related......................... $529.7 $490.4 $511.5 Food Products................................. 122.7 109.5 82.5 Entertainment................................. 124.5 137.3 108.5 ------ ------ ------ Consolidated.................................. $776.9 $737.2 $702.5 ====== ====== ====== - - - ------------------------------------------------------------------------------------------- - - - ----------------------------------------------------------------------------------------------------------------- Additional income statement information (in millions): 16-ADDITIONAL - - - ------------------------------------------------------------------------------------------- INFORMATION 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Maintenance....................... $415.5 $403.0 $405.4 ====== ====== ====== Advertising costs................. $701.6 $747.6 $682.6 ====== ====== ====== - - - -------------------------------------------------------------------------------------------
Summarized below is selected financial information for Anheuser-Busch, Inc. (a wholly owned subsidiary of Anheuser-Busch Companies, Inc.) as of and for the years ended December 31 (in millions):
- - - ------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ------------------------------------------------------------------------------------------- Income Statement Information: Net sales.................... $ 7,624.0 $7,669.9 $7,475.4 Gross profit................. 2,844.8 2,875.6(2) 2,707.5 Net income (1)............... 712.7(3) 860.5(2) 829.4 Balance Sheet Information: Current assets............... 670.6 667.8 Non-current assets........... 11,185.6 9,945.4 Current liabilities.......... 813.2 693.7 Non-current liabilities (1).. 3,431.4 3,020.6 - - - ------------------------------------------------------------------------------------------- (1) Anheuser-Busch, Inc. is co-obligor for all outstanding Anheuser-Busch Companies, Inc. indebtedness. Accordingly, all such debt is included as an element of non-current liabilities and the interest thereon is included in the determination of net income. (2) Gross profit and net income for 1992 reflect the January 1, 1992 adoption of FAS 106. Excluding the adoption of FAS 106, gross profit would have been $2,907.7 million and net income would have been $883.1 million, respectively. (3) Net income for 1993 reflects $89.6 million representing Anheuser-Busch, Inc.'s share of the $565 million pretax restructuring charge.
58 28 - - - --------------------------------------------------------------------------- 17-QUARTERLY Summarized quarterly financial data for 1993 and FINANCIAL 1992 (in millions, except per share data) DATA appears below. Gross profit, net income and (UNAUDITED) earnings per share for each quarter of 1992 have been retroactively restated to reflect the company's adoption, as of January 1, 1992, of FAS 106 and FAS 109.
------------------------- EARNINGS/(LOSS) PER SHARE ------------------------------------------------------------------------------------------------------- - - - - NET SALES GROSS PROFIT NET INCOME/(LOSS) PRIMARY FULLY DILUTED - - - -------------------------------------------------------------------------------------------------------- 1993 1992 1993 1992 1993 1992 1993 1992 1993 1992 - - - ------------------------------------------------------------------------------------------------------- First quarter $ 2,503.4 $ 2,621.1 $ 850.3 $ 930.9 $194.1 $138.4 $ .69 $ .48 $ .69 $ .48 Second quarter 2,990.8 2,953.4 1,092.9 1,092.8 308.6 308.4 1.12 1.07 1.11 1.06 Third quarter 3,156.7 3,091.6 1,179.3 1,139.4 (75.0) 309.1 (.28) 1.09 (.28) 1.08 Fourth quarter 2,854.4 2,727.6 963.1 921.5 166.8 161.6 .62 .58 .62 .58 - - - -------------------------------------------------------------------------------------------------------- Annual $11,505.3 $11,393.7 $4,085.6 $4,084.6 $594.5 $917.5 $2.17 $3.22 $2.17 $3.20 - - - --------------------------------------------------------------------------------------------------------
For accounting purposes, the net impact of the one-time cumulative effect adjustment of $76.7 million ($.26 per share) for years prior to 1992, for both FAS 106 and FAS 109, is reflected entirely in net income and earnings per share of the first quarter of 1992. Third quarter 1993 net income and earnings per share include the impact of the one-time pretax restructuring charge of $565 million related to the company's Profitability Enhancement Program and the $33 million deferred tax liability revaluation charge due to the 1% tax rate increase. Excluding these items, third quarter 1993 net income and fully diluted earnings per share would have been $311.1 million and $1.13, respectively, and net income and fully diluted earnings per share for the year would have been $980.6 million and $3.55, respectively. 59 29
FINANCIAL SUMMARY-OPERATIONS Anheuser-Busch Companies, Inc., and Subsidiaries (In millions, except per share data) - - - ---------------------------------------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ---------------------------------------------------------------------------------------------------------------------------- CONSOLIDATED SUMMARY OF OPERATIONS Barrels sold....................................................................... 87.3 86.8 86.0 Sales.............................................................................. $13,185.1 $13,062.3 $12,634.2 Federal and state excise taxes................................................... 1,679.8 1,668.6 1,637.9 - - - ---------------------------------------------------------------------------------------------------------------------------- Net sales.......................................................................... 11,505.3 11,393.7 10,996.3 Cost of products and services.................................................... 7,419.7 7,309.1 7,148.7 - - - ---------------------------------------------------------------------------------------------------------------------------- Gross profit....................................................................... 4,085.6 4,084.6 3,847.6 Marketing, distribution and administrative expenses.............................. 2,308.7 2,308.9 2,126.1 Restructuring charge............................................................. 565.0 - - - - - ---------------------------------------------------------------------------------------------------------------------------- Operating income................................................................... 1,211.9(1) 1,775.7(2) 1,721.5 Interest expense................................................................. (207.8) (199.6) (238.5) Interest capitalized............................................................. 36.7 47.7 46.5 Interest income.................................................................. 5.2 7.1 9.2 Other income/(expense), net...................................................... 4.4 (15.7) (18.1) - - - ---------------------------------------------------------------------------------------------------------------------------- Income before income taxes......................................................... 1,050.4(1) 1,615.2(2) 1,520.6 Income taxes (current/deferred).................................................. 422.9 621.0 580.8 Revaluation of deferred tax liability 33.0 - - --------- -------- --------- Net income, before cumulative effect of accounting changes......................... 594.5(1) 994.2(2) 939.8 Cumulative effect of changes in the method of accounting for postretirement benefits (FAS 106) and income taxes (FAS 109), net of tax benefit of $186.4 million.................................. - (76.7) - --------- -------- --------- NET INCOME......................................................................... $ 594.5(1) $ 917.5 $ 939.8 ========= ======== ========= - - - ---------------------------------------------------------------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE: Net income before cumulative effect................................................ $ 2.17$ 3.48(2) $ 3.26 Cumulative effect of accounting changes............................................ - (.26) - --------- -------- --------- Net income......................................................................... $ 2.17(1)$ 3.22 $ 3.26 ========== ======== ========= FULLY DILUTED EARNINGS PER SHARE: Net income before cumulative effect................................................ $ 2.17 $ 3.46(2) $ 3.25 Cumulative effect of accounting changes............................................ - (.26) - --------- --------- --------- Net income......................................................................... $ 2.17(1) $ 3.20 $ 3.25 ========= ========= ========= Cash dividends paid: Common stock..................................................................... 370.0 338.3 301.1 Per share...................................................................... 1.36 1.20 1.06 Preferred stock.................................................................. - - - Per share...................................................................... - - - Average number of common shares: Primary.......................................................................... 274.3 285.8 287.9 Fully diluted.................................................................... 279.3 290.8 292.9 - - - ---------------------------------------------------------------------------------------------------------------------------- NOTES TO FINANCIAL SUMMARY-OPERATIONS Note: All per share information and average number of common shares data reflect the September 12, 1986 two-for-one stock split and the June 14, 1985 three-for-one stock split. All amounts reflect the acquisition of Sea World as of December 1, 1989. Financial information prior to 1988 has been restated to reflect the adoption in 1988 of Financial Accounting Standards No. 94, Consolidation of Majority-Owned Subsidiaries.
60 30
- - - ---------------------------------------------------------------------------------------------------------------------------- 1990 1989 1988 1987 1986 1985 1984 1983 - - - ---------------------------------------------------------------------------------------------------------------------------- 86.5 80.7 78.5 76.1 72.3 68.0 64.0 60.5 $11,611.7 $10,283.6 $9,705.1 $9,110.4 $8,478.8 $7,756.7 $7,218.8 $6,714.7 868.1 802.3 781.0 760.7 724.5 683.0 657.0 624.3 - - - ---------------------------------------------------------------------------------------------------------------------------- 10,743.6 9,481.3 8,924.1 8,349.7 7,754.3 7,073.7 6,561.8 6,090.4 7,093.5 6,275.8 5,825.5 5,374.3 5,026.5 4,729.8 4,464.6 4,161.0 - - - ---------------------------------------------------------------------------------------------------------------------------- 3,650.1 3,205.5 3,098.6 2,975.4 2,727.8 2,343.9 2,097.2 1,929.4 2,051.1 1,876.8 1,834.5 1,826.8 1,709.8 1,498.2 1,338.5 1,226.4 - - - - - - - - ---------------------------------------------------------------------------------------------------------------------------- 1,599.0 1,328.7 1,264.1 1,148.6 1,018.0 845.7 758.7 703.0 (283.0) (177.9) (141.6) (127.5) (99.9) (96.5) (106.0) (115.4) 54.6 51.5 44.2 40.3 33.2 37.2 46.8 32.9 7.0 12.6 9.8 12.8 9.6 21.3 22.8 12.5 (25.5) 11.8 (16.4) (9.9) (13.6) (23.3) (29.6) (14.8) - - - ---------------------------------------------------------------------------------------------------------------------------- 1,352.1 1,226.7 1,160.1 1064.3 947.3(3) 784.4 692.7 618.2 509.7 459.5 444.2 449.6 429.3 340.7 301.2 270.2 - - - - - - - - - - - --------- --------- -------- -------- -------- -------- -------- -------- 842.4 767.2 715.9 614.7 518.0(3) 443.7 391.5 348.0 - - - - - - - - - - - --------- --------- -------- -------- -------- -------- -------- -------- $ 842.4 $ 767.2 $ 715.9 $ 614.7 $ 518.0(3) $ 443.7 $ 391.5 $ 348.0 ========= ========= ======== ======== ======== ======== ======== ======== - - - ----------------------------------------------------------------------------------------------------------------------------- $ 2.96 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08 - - - - - - - - - - - --------- --------- -------- -------- -------- -------- -------- -------- $ 2.96 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08 ========= ========= ======== ======== ======== ======== ======== ======== $ 2.95 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08 - - - - - - - - - - - --------- --------- -------- -------- -------- -------- -------- -------- $ 2.95 $ 2.68 $ 2.45 $ 2.04 $ 1.69(3) $ 1.42 $ 1.23 $ 1.08 ========= ========= ======== ======== ======== ======== ======== ======== 265.0 226.2 188.6 148.4 120.2 102.7 89.7 78.3 .94 .80 .66 .54 .44 .36 2/3 .31 1/3 .27 - - - 20.1 26.9 27.0 27.0 29.7 - - - 3.23 3.60 3.60 3.60 3.60 284.6 286.2 292.2 301.5 306.6 312.6 317.4 321.0 289.7 286.2 292.2 301.5 306.6 312.6 317.4 321.0 - - - ---------------------------------------------------------------------------------------------------------------------------- (1) 1993 results include the impact of two non-recurring special charges. These charges are (1) a restructuring charge ($565 million pretax) and (2) a revaluation of the deferred tax liability due to the 1% increase in federal tax rates ($33 million after-tax). Excluding these non-recurring special charges, operating income, pretax income, net income and fully diluted earnings per share would have been $1,776.9 million, $1,615.4 million, $980.6 million and $3.55 , respectively. (2) 1992 operating income, income before income taxes, net income and earnings per share reflect the 1992 adoption of the new Financial Accounting Standards pertaining to Postretirement Benefits (FAS 106) and Income Taxes (FAS 109). Excluding the financial impact of these Standards, 1992 operating income, income before income taxes, net income and fully diluted earnings per share would have been $1,830.8 million, $1,676.0 million, $1,029.2 million and $3.58, respectively. (3) Effective January 1, 1986, the company adopted the provisions of Financial Accounting Standards No. 87 (FAS 87), Employers' Accounting For Pensions. The financial effect of FAS 87 adoption was to increase 1986 income before income taxes $45 million, net income $23 million and earnings per share $.08.
61 31
FINANCIAL SUMMARY-BALANCE SHEET AND OTHER INFORMATION Anheuser-Busch Companies, Inc., and Subsidiaries (In millions, except per share and statistical data) - - - ---------------------------------------------------------------------------------------------------------- 1993 1992 1991 - - - ---------------------------------------------------------------------------------------------------------- BALANCE SHEET INFORMATION Working capital (deficit).......................... $ (20.4) $ 356.0 $ 224.9 Current ratio...................................... 1.0 1.2 1.2 Plant and equipment, net........................... 7,497.1 7,523.7 7,196.5 Long-term debt..................................... 3,031.7 2,642.5 2,644.9 Total debt to total capitalization................. 41.6% 36.4% 37.3% Deferred income taxes.............................. 1,170.4 1,276.9 1,500.7 Convertible redeemable preferred stock............. - - - Shareholders equity................................ 4,255.5 4,620.4 4,438.1 Return on shareholders equity...................... 13.4%(4) 22.0%(2) 23.2% Book value per share............................... 15.94 16.60 15.57 Total assets....................................... 10,880.3 10,537.9 9,986.5 - - - ---------------------------------------------------------------------------------------------------------- OTHER INFORMATION Capital expenditures............................... 776.9 737.2 702.5 Depreciation and amortization...................... 608.3 567.0 534.1 Effective tax rate................................. 43.4% 38.4% 38.2% Price/earnings ratio............................... 22.6(4) 16.9(3) 18.9 Percent of pretax profit on net sales.............. 9.1% 14.2% 13.8% Market price range of common stock (high/low)...... 60-44 1/860 1/2-52 1/8 61 1/2-39 5/8 - - - ---------------------------------------------------------------------------------------------------------- NOTES TO FINANCIAL SUMMARY-BALANCE SHEET AND OTHER INFORMATION Note: All per share information reflects the September 12, 1986 two-for-one stock split and the June 14, 1985 three-for-one stock split. All amounts reflect the acquisition of Sea World as of December 1, 1989. Financial information prior to 1988 has been restated to reflect the adoption in 1988 of Financial Accounting Standards No. 94, Consolidation of Majority-Owned Subsidiaries. (1) This percentage has been calculated by including convertible redeemable preferred stock as part of equity because it was convertible into common stock and was trading primarily on its equity characteristics. (2) This percent has been calculated based on net income before the cumulative effect of accounting changes. (3) This ratio has been calculated based on fully diluted earnings per share before the cumulative effect of accounting changes. (4) These ratios have been calculated based on reported net income. Excluding the two non-recurring 1993 charges ($565 million pretax restructuring charge and $33 million after-tax FAS 109 charge) return on shareholders equity would have been 21.2% and the price/earnings ratio would have been 13.8.
62 32
- - - ------------------------------------------------------------------------------------------------------------------------------ 1990 1989 1988 1987 1986 1985 1984 1983 - - - ------------------------------------------------------------------------------------------------------------------------------ $ 14.4 $ (25.7) $ 15.2 $ 75.8 $ (3.7) $ 116.0 $ 71.5 $ 173.1 1.0 1.0 1.0 1.1 1.0 1.1 1.1 1.2 7,063.8 6,671.3 5,467.7 4,994.8 4,494.9 3,960.8 3,579.5 3,269.8 3,147.1 3,307.3 1,615.3 1,422.6 1,164.0 904.7 879.5 1,003.1 46.1% 52.4% 34.2% 33.0% 31.6%(1) 26.9%(1) 28.2%(1) 32.8%(1) 1,396.2 1,315.9 1,212.5 1,164.3 1,094.0 964.7 757.9 574.3 - - - - 286.9 287.6 286.9 286.0 3,679.1 3,099.9 3,102.9 2,892.2 2,313.7 2,173.0 1,951.0 1,766.5 24.9% 24.7% 23.9% 22.4% 20.5%(1) 18.9%(1) 18.2%(1) 18.0%(1) 13.03 10.95 10.95 9.87 8.61 7.84 6.91 6.09 9,634.3 9,025.7 7,109.8 6,547.9 5,898.1 5,192.9 4,592.5 4,386.8 - - - ------------------------------------------------------------------------------------------------------------------------------ 898.9 1,076.7 950.5 841.8 796.2 611.3 532.3 441.3 495.7 410.3 359.0 320.1 281.2 240.0 207.9 191.3 37.7% 37.5% 38.3% 42.2% 45.3% 43.4% 43.5% 43.7% 14.6 14.4 12.9 16.4 15.5 14.9 9.8 9.6 12.6% 12.9% 13.0% 12.7% 12.2% 11.1% 10.6% 10.2% 45-34 1/4 45 7/8-30 5/8 34 1/8-29 1/8 39 3/4-26 3/8 28 5/8-20 22 7/8-11 7/8 12 3/8-8 7/8 12 7/8-9 3/4 - - - ------------------------------------------------------------------------------------------------------------------------------
63 33 INVESTOR INFORMATION - - - -------------------------------------------------------------------------- Anheuser-Busch Companies, Inc. is a diversified THE CORPORATION corporation whose subsidiaries include the world's largest brewing organization, the country's second-largest producer of fresh-baked goods and the country's second-largest theme park operator. The company also has interests in container manufacturing and recycling, malt and rice production, international brewing and beer marketing, snack foods, international baking, refrigerated and frozen foods, real estate development, major league baseball, stadium ownership, creative services, railcar repair and transportation services, and metalized-label printing. - - - --------------------------------------------------------------------------- Trademarks of the corporation and its subsidiaries TRADEMARKS include: Anheuser-Busch, the A & Eagle Design, Budweiser, Bud, Bud Dry, Bud Light, King of Beers, Michelob, Michelob Dry, Michelob Light, Michelob Classic Dark, Michelob Golden Draft, Mich, Busch, Natural Light, King Cobra, O'Doul's, Busch Gardens, Adventure Island, Kingsmill, Cardinals, Eagle (for snacks), Rainbo, Colonial, Earth Grains, Sea World and Shamu, among others. - - - -------------------------------------------------------------------------- The annual meeting of shareholders will be held on ANNUAL MEETING Wednesday, April 27, 1994, in Los Angeles, Calif. A formal notice of the meeting together with a proxy statement will be mailed to shareholders in mid-March 1994. - - - -------------------------------------------------------------------------- A COPY OF THE COMPANY'S ANNUAL REPORT TO THE ADDITIONAL SECURITIES AND EXCHANGE COMMISSION (FORM 10-K) IS INFORMATION AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO JOBETH G. BROWN, VICE PRESIDENT AND SECRETARY, ANHEUSER-BUSCH COMPANIES, INC., ONE BUSCH PLACE, ST. LOUIS, MO. 63118. A copy of the corporation's "Fact Book," which contains general information about the company, may be obtained by writing to Corporate Communications, Anheuser-Busch Companies, Inc., One Busch Place, St. Louis, Mo. 63118. Anheuser-Busch Companies, Inc. common stock is listed COMMON STOCK and traded on the New York Stock Exchange and the London, Frankfurt, Paris, Zurich, Geneva, Basle and Tokyo Stock Exchanges. It is also traded on the Boston, Midwest, Cincinnati, Pacific and Philadelphia Stock Exchanges and the over-the-counter market. Options in the company's common stock are traded on the Philadelphia Stock Exchange. The stock is quoted as "AnheuserB" in stock table listings in daily newspapers in the U.S.; the abbreviated ticker symbol is "BUD." - - - --------------------------------------------------------------------------- Dividends on common stock are normally paid in the DIVIDENDS months of March, June, September and December. - - - -------------------------------------------------------------------------- The company's Dividend Reinvestment Plan allows DIVIDEND shareholders to reinvest dividends in Anheuser-Busch REINVESTMENT Companies, Inc. common stock automatically, regularly and conveniently-without service charges or brokerage fees. In addition, participating shareholders may supplement the amount invested with voluntary cash investments on the same cost-free basis. Plan participation is voluntary and shareholders may join or withdraw at any time. Full details concerning the Anheuser-Busch plan are available from: Boatmen's Trust Company Dividend Reinvestment Agent P.O. Box 14793 St. Louis, Mo. 63178-4793 (314) 466-1357 (local) (800) 456-9852 (long distance) 64 - - - --------------------------------------------------------------------------- TRANSFER AGENT AND Boatmen's Trust Company REGISTRAR- 510 Locust Street COMMON STOCK St. Louis, Mo. 63101 (314) 466-1357 (local) (800) 456-9852 (long distance) - - - --------------------------------------------------------------------------- DIVIDEND Boatmen's Trust Company DISBURSING AGENT 510 Locust Street St. Louis, Mo. 63101 (314) 466-1357 (local) (800) 456-9852 (long distance) - - - --------------------------------------------------------------------------- TRUSTEE For all notes and debentures: DEBENTURES/NOTES Chemical Bank 55 Water Street New York, N.Y. 10041 - - - -------------------------------------------------------------------------- FISCAL AGENT- 8% dual-currency Japanese yen/U.S. dollar notes: NOTES The Industrial Bank of Japan, Limited 3-3 Marunouchi 1-Chome Chiyoda-ku Tokyo 100, Japan - - - -------------------------------------------------------------------------- INDEPENDENT Price Waterhouse ACCOUNTANTS One Boatmen's Plaza St. Louis, Mo. 63101 - - - -------------------------------------------------------------------------- CORPORATE OFFICE One Busch Place St. Louis, Mo. 63118 (314) 577-2000 65 34 APPENDIX In Exhibit 13 to the printed Form 10-K, the following bar graphs appear, all depicting data for 1989, 1990, 1991, 1992 and 1993: on page 33, "SALES" depicting gross sales and net sales in billions of dollars; on page 34, "TOTAL PAYROLL COST" depicting total payroll cost in millions of dollars; on page 35, "OPERATING INCOME" depicting operating income in millions of dollars; on page 36, "NET INCOME/DIVIDENDS ON COMMON STOCK" depicting net income and dividends in millions of dollars and "EARNINGS PER SHARE-FULLY DILUTED" depicting fully diluted earnings per share data; on page 37, "CASH FLOW FROM OPERATIONS" depicting cash flow from operations in millions of dollars; on page 38, "CAPITAL EXPENDITURES/DEPRECIATION AND AMORTIZATION" depicting capital expenditures and depreciation and amortization in millions of dollars; and, on page 40, "SHAREHOLDERS EQUITY/LONG-TERM DEBT" depicting shareholders equity and long-term debt in millions of dollars. In Exhibit 13 to the printed Form 10-K, the following photos appear: on pages 33, a photo of the Company's Ice Draft from Budweiser product; on page 35, a photo of the Company's Busch Light and Busch products; and, on page 39, a photo of a partial bag of Eagle brand Thins potato chips. EX-21 16 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY 1 EX-21 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ----------------------------------------------
STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - - - --------------- ------------- ------------- Anheuser-Busch, Incorporated Missouri Anheuser-Busch,Incorporated Campbell Taggart, Inc. Delaware Campbell Taggart, Inc. Busch Entertainment Corporation Delaware Busch Entertainment Corporation Anheuser-Busch International, Inc. Delaware Anheuser-Busch International, Inc. Metal Container Corporation Delaware Metal Container Corporation Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc.
All other subsidiaries of the Company, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of December 31, 1993. -----END PRIVACY-ENHANCED MESSAGE-----