-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PtKAD8sbzzLp5zrwF5IKJwH34IKursDlojkWDEhCCzc3xbdeLqY6KFOg4QTYdigr bFf9ESNhMGCxjkSyKrl6iA== 0000950114-00-000019.txt : 20000324 0000950114-00-000019.hdr.sgml : 20000324 ACCESSION NUMBER: 0000950114-00-000019 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC CENTRAL INDEX KEY: 0000310569 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 431162835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-07823 FILM NUMBER: 576211 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: 3145772000 MAIL ADDRESS: STREET 1: ONE BUSCH PL CITY: ST LOUIS STATE: MO ZIP: 63118 10-K 1 ANHEUSER-BUSCH COMPANIES, INC. FORM 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM --------- TO --------- COMMISSION FILE NUMBER 1-7823 ANHEUSER-BUSCH COMPANIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 43-1162835 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) ONE BUSCH PLACE, ST. LOUIS, MISSOURI 63118 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 314-577-2000 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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 6 1/2% DEBENTURES DUE JANUARY 1, 2028 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. [ ] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. $28,643,738,560 AS OF FEBRUARY 29, 2000 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. $1 PAR VALUE COMMON STOCK 452,656,492 SHARES AS OF MARCH 8, 2000 DOCUMENTS INCORPORATED BY REFERENCE Portions of Annual Report to Shareholders for the Year Ended December 31, 1999............................... PART I, PART II, and PART IV Portions of Definitive Proxy Statement for Annual Meeting of Shareholders on April 26, 2000............. PART III
================================================================================ 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. The Company's operations are comprised of the following business segments: domestic beer, international beer, packaging, entertainment and other. Financial information with respect to the Company's business segments appears in Note 14, "Business Segments," on pages 54-55 of the 1999 Annual Report to Shareholders, which Note hereby is incorporated by reference. Domestic beer volume was 95.7 million barrels in 1999 as compared with 92.7 million barrels in 1998. Worldwide sales of the Company's beer brands aggregated 102.9 million barrels in 1999 as compared with 99.8 million barrels in 1998 and accounted for approximately 82% of the Company's consolidated net sales dollars in 1999 and approximately 80% in 1998 and 1997. Worldwide beer volume is comprised of domestic and international volume. Domestic volume represents Anheuser-Busch brands produced and shipped within the United States. International volume represents Anheuser-Busch brands produced overseas by Company-owned breweries and under license and contract brewing agreements, plus exports from the Company's U.S. breweries to markets around the world. Total volume includes the Company's pro rata share of the volume of international equity partners, Grupo Modelo, S.A. de C.V. and Companhia Antarctica Paulista (for periods prior to July 1999 when the Company terminated its equity partnership with Companhia Antarctica Paulista), combined with worldwide Anheuser-Busch brand volume. Total beer volume was 118.0 million barrels and 111.0 million barrels in 1999 and 1998, respectively. DOMESTIC BEER OPERATIONS The Company's principal product is beer, produced and distributed by its subsidiary, ABI, in a variety of containers primarily under the brand names Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Dry, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Michelob Black & Tan Lager, Michelob Amber Bock, Michelob Pale Ale, Michelob Honey Lager, Michelob Hefe-Weizen, Busch, Busch Light, Busch Ice, Natural Light, Natural Ice, King Cobra, Red Wolf Lager, ZiegenBock Amber, Hurricane Malt Liquor, Hurricane Ice, Pacific Ridge Ale, Tequiza, Safari Amber Lager, Devon's Shandy, and Rhumba. ABI's products also include three non-alcohol malt beverages, O'Doul's, Busch NA, and O'Doul's Amber. During 1999 ABI introduced Rhumba and Devon's Shandy and discontinued Rio Cristal, Michelob Malt, and Catalina Blonde. The Company brews Kirin Light, Kirin Lager, and Kirin-Ichiban through a joint venture agreement with Kirin Brewing Company, Ltd. of Japan for sale in the United States. ABI owns a 25% equity interest in Seattle-based Redhook Ale Brewery, Inc. Through this alliance, Redhook products are distributed exclusively by ABI wholesalers in all new U.S. markets entered by Redhook since 1994. ABI also owns a 31% interest in Portland-based Widmer Brothers Brewing Company. Widmer products are distributed exclusively by ABI wholesalers in all new U.S. markets entered by Widmer since 1997. Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Black & Tan Lager, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Classic Dark, Michelob Amber Bock, Michelob Honey Lager, Michelob Hefe-Weizen, Busch, Busch Light, Natural Light, Natural Ice, Red Wolf Lager, ZiegenBock Amber, Kirin-Ichiban, O'Doul's, O'Doul's Amber, Widmer beer products, and Redhook Ales are sold in both draught and packaged form. Busch Ice, King Cobra, Hurricane Malt Liquor, Michelob Dry, Michelob Pale Ale, Devon's Shandy, Rhumba, Tequiza, Hurricane Ice, Kirin Lager, Kirin Light, and Busch NA are sold only in packaged form. Pacific Ridge Ale and Safari Amber Lager are sold only in draught form. Budweiser, Bud Light, Bud Ice, Bud Ice Light, Michelob, Michelob Light, Michelob Amber Bock, Tequiza, Natural Light, Natural Ice, O'Doul's Amber, and O'Doul's are distributed and sold on a nationwide basis. Busch, Busch Light, and Michelob Honey Lager are sold in 49 states; King Cobra, Michelob Hefe-Weizen, Bud Dry, Red Wolf Lager, and Redhook Ales in 48 states; Michelob Black & Tan Lager in 47 states; Michelob Pale Ale in 46 states; Michelob Classic Dark and Busch NA in 45 states; Hurricane Malt Liquor in 43 states; Michelob Dry in 42 states; Kirin Lager and Kirin-Ichiban in 36 states; Kirin Light in 32 states; Busch Ice in 20 states; Widmer beer products in 18 states; Michelob Golden Draft and Michelob Golden Draft Light in 10 states; Devon's Shandy in 5 states; Pacific Ridge Ale in 2 states; Rhumba, Hurricane Ice, Safari Amber Lager and ZiegenBock Amber in 1 state. 1 3 ABI has developed a system of twelve breweries, strategically located across the country, to economically serve its distribution system. (See Item 2 of Part I--Properties.) Ongoing modernization programs are part of ABI's overall strategic initiatives. By using controlled environment warehouses and stringent inventory monitoring policies, the quality and freshness of the product are protected, thus providing ABI a significant competitive advantage. During 1999 approximately 95% of the beer sold by ABI, measured in barrels, reached retail channels through approximately 700 independent wholesalers. ABI utilizes its regional vice-presidents, sales directors, key account and market managers, as well as certain other field sales personnel, to provide merchandising and sales assistance to its wholesalers. In addition, ABI provides national and local media advertising, point-of-sale advertising, and sales promotion programs to help stimulate sales. The remainder of ABI's domestic beer sales in 1999 were made through twelve ABI owned and operated branches, which perform similar sales, merchandising, and delivery services as wholesalers in their respective areas. ABI's peak selling periods are the second and third quarters. There are more than 100 companies engaged in the highly competitive brewing industry in the United States. ABI's domestic beers are distributed and sold in competition with other nationally distributed beers, with locally and regionally distributed beers and, to a lesser extent, with imported beers. Although the methods of competition in the industry vary widely, in part due to differences in applicable state laws, the principal methods of competition are product quality, taste and freshness, packaging, price, advertising (including television, radio, sponsorships, billboards, stadium signs, and print media), point-of-sale materials, and service to retail customers (including the replacement of over-age products with fresh products at no cost to the retailer). ABI's beers compete in different price categories. Although all brands compete against the total market, Budweiser, Bud Light, Bud Dry, Bud Ice, Bud Ice Light, Michelob Golden Draft, and Michelob Golden Draft Light compete primarily with premium priced beers. Michelob, Michelob Light, Michelob Dry, Michelob Classic Dark, and Michelob Amber Bock compete in the super-premium priced category. Busch, Busch Light, Natural Light, Busch Ice, and Natural Ice compete with the sub-premium or popular priced beers. King Cobra, Hurricane Malt Liquor, and Hurricane Ice compete against other brands in the malt liquor segment. Kirin Lager, Kirin Light, and Kirin-Ichiban compete primarily with imported malt beverages. Michelob Honey Lager, Michelob Pale Ale, Michelob Black & Tan Lager, Tequiza, Red Wolf Lager, ZiegenBock Amber, Michelob Hefe-Weizen, Pacific Ridge Ale, Safari Amber Lager, Devon's Shandy, Rhumba, the Redhook products, and Widmer beer products compete primarily in the specialty beers segment of the malt beverage market. O'Doul's and O'Doul's Amber (premium priced) and Busch NA (sub-premium priced) compete in the non-alcohol malt beverage category. Since 1957, ABI has led the United States brewing industry in total sales volume. In 1999, its sales exceeded those of its nearest competitor by more than 52 million barrels. ABI's domestic market share (excluding exports) for 1999 was 47.5%. Including exports, ABI's share of U.S. shipments for 1999 was 47.3%. Major competitors in the United States brewing industry during 1999 included Philip Morris, Inc. (through its subsidiary Miller Brewing Co.), Adolph Coors Co., and Pabst Brewery Co. The Company's wholly-owned subsidiary, Busch Agricultural Resources, Inc. ("BARI"), operates rice milling and research facilities in Arkansas and California; twelve grain elevators in the western and midwestern United States; barley seed processing plants in Fairfield, Montana, Idaho Falls, Idaho, Powell, Wyoming, and Moorhead, Minnesota; and a barley research facility in Ft. Collins, Colorado. BARI also owns and operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho. In 1999, BARI sold the wild rice processing business known as Gourmet House. Through wholly-owned subsidiaries, BARI operates land application farms in Jacksonville, Florida and Fort Collins, Colorado; hop farms in Bonners Ferry, Idaho and Huell, Germany; and an international office in Mar del Plata, Argentina. Another wholly-owned subsidiary, Wholesaler Equity Development Corporation, shares equity positions with qualified partners in independent beer wholesalerships and is currently invested in 8 wholesalerships. INTERNATIONAL BEER OPERATIONS International beer volume was 7.2 million barrels in 1999, compared with 7.1 million barrels in 1998. Anheuser-Busch International, Inc. ("ABII"), a wholly-owned subsidiary of the Company, operates breweries in the United Kingdom (U.K.) and China, negotiates and administers license and contract brewing agreements on behalf of ABI with various foreign brewers and negotiates and manages equity investments in foreign brewing partners. In addition, ABI's beer products are being sold under import-distribution agreements in more than 80 countries and U.S. territories and to the U.S. military and diplomatic corps outside the continental United States. 2 4 In Canada, Budweiser and Bud Light are brewed and sold through a license agreement with Labatt Brewing Co. ABI, through ABII, participated with Kirin Brewing Company, Ltd. in a joint venture in Japan, Budweiser Japan Company, Ltd., of which the Company was a 90% shareholder, for marketing, distribution and sale of Budweiser. Effective January 2000, the joint venture was converted to an exclusive licensing agreement with Kirin for the production and sale of Budweiser in Japan. Through Anheuser-Busch European Trade Ltd. ("ABET"), an indirect, wholly-owned subsidiary of the Company, certain ABI beer brands are marketed, distributed and sold in twenty-nine European countries. In the U.K., ABET sells Budweiser, Bud Light, Bud Ice, Michelob, and Michelob Golden Draft brands to selected on-premise accounts, brewers, wholesalers and directly to off-premise accounts. In 1995, ABET and Scottish Courage Ltd. entered into a joint venture, Stag Brewing Company Ltd., which brews and packages Budweiser at the Stag Brewery near London, England. In 1997, ABET purchased Scottish Courage's 50% interest in the joint venture company giving ABET full control over the management and operation of the brewery. Michelob and Michelob Golden Draft continue to be imported into the U.K. by ABET. Budweiser is also brewed under license and sold by brewers in Korea (Oriental Brewery Ltd.), the Republic of Ireland and Northern Ireland (Guinness Ireland Ltd.), Italy (Birra Peroni Industriale) and the Philippines (Asia Brewery, Inc.). In 1995, ABII entered into a contract brewing agreement with Sociedad Anonima Damm, one of the largest brewers in Spain, giving the Spanish brewer rights to contract brew and package beer under the brand name Budweiser in Spain and to distribute it on a non-exclusive basis. In 1998, the Company formed a new partnership with Brasseries Kronenbourg, the leading brewer in France, for sale and distribution of Bud in France. In 1996, ABII purchased a 5% equity interest (with options to increase its equity stake to 30%) in Antarctica Empreendimentos e Participacoes Ltda. ("ANEP"), the principal operating subsidiary of Companhia Antarctica Paulista ("Antarctica"), one of Brazil's leading brewers, and formed a strategic partnership with Antarctica. A component of the partnership was a joint venture company named Budweiser Brasil Ltda. ("BBL") that marketed and distributed locally-produced Budweiser in Brazil. CADE, the Brazilian anti-trust agency, required the Company's equity purchase options to be mandatorily exercised at specified dates. The first of the required fixed-dollar investment options was set to expire in September 1999, but was determined by the Company to be no longer economically attractive. Accordingly, in July 1999, the Company exercised its right to end its equity partnership with Antarctica, and also discontinued the BBL joint venture, effective December 1999, converting its Budweiser production agreement to an export arrangement. In 1995, the Company formed an alliance with Compania Cervecerias Unidas S.A. ("CCU"), the leading Chilean brewer. Under the terms of the alliance, a subsidiary of CCU in Argentina ("CCU-Argentina") brews and distributes Budweiser under license in Argentina. CCU also distributes Budweiser in Chile. The Company initially purchased a minority stake in CCU-Argentina, increased its ownership to 8.2% in 1998 and to 10.7% in December 1999. In 1995, the Company purchased an initial 80% equity interest in a joint venture, renamed the Budweiser Wuhan International Brewing Company, Ltd., that owns and operates a brewery in Wuhan, the fifth-largest city in China. This ownership interest was subsequently increased to 86.6%. The Company also owns a 5% equity interest in Tsingtao Brewery Company Ltd., a leading Chinese brewer. ABII also negotiates and oversees the Company's investments in international brewing companies. In 1993, Anheuser-Busch purchased a 17.7% direct and indirect equity interest in Grupo Modelo's operating subsidiary, Diblo, for $477 million. In May 1997, the Company increased its direct and indirect equity ownership in Diblo to 37% for an additional $605 million. In September 1998, the Company completed the purchase of an additional 13.25% of Diblo for $556.5 million, bringing the Company's total investment to $1.6 billion. The Company now owns a 50.2% direct and indirect interest in Diblo. However, the Company does not have voting or other effective control in either Grupo Modelo or Diblo. PACKAGING OPERATIONS The Company's wholly-owned subsidiary, Metal Container Corporation ("MCC"), manufactures beverage cans at eight plants and beverage can lids at three plants for sale to ABI and to soft drink customers. (See Item 2 of Part 1--Properties). Another wholly-owned subsidiary of the Company, Anheuser-Busch Recycling Corporation 3 5 ("ABRC"), recycles aluminum cans at its plant in Hayward, California, for conversion into new can sheet. The Company's wholly-owned subsidiary, Precision Printing and Packaging, Inc. ("PPPI"), manufactures metalized and paper labels at its plant in Clarksville, Tennessee. Eagle Packaging, Inc. ("EPI") was established during 1999 to manufacture and sell crown and closure liners, beginning in 2000. Packaging Business Services, Inc., another wholly-owned subsidiary of the Company, provides administrative services and develops existing and new businesses for MCC, ABRC, PPPI, and EPI. FAMILY ENTERTAINMENT The Company is active in the family entertainment field, primarily through its wholly-owned subsidiary, Busch Entertainment Corporation ("BEC"), which currently owns, directly and through subsidiaries, nine theme parks. BEC's tenth park, Discovery Cove located in Orlando, Florida, is scheduled to open in summer 2000. BEC operates Busch Gardens theme parks in Tampa, Florida and Williamsburg, Virginia, and SeaWorld theme parks in Orlando, Florida, San Antonio, Texas, Aurora, Ohio, and San Diego, California. BEC operates water park attractions in Tampa, Florida (Adventure Island) and Williamsburg, Virginia (Water Country, U.S.A.), and an educational play park for children near Philadelphia, Pennsylvania (Sesame Place). BEC also operates the Baseball City Sports Complex near Orlando, Florida. Due to the seasonality of the theme park business, BEC experiences higher revenues in the second and third quarters than in the first and fourth quarters. Through a Spanish affiliate, the Company also owns a 19.9% equity interest in Port Aventura, S.A., which is a theme park near Barcelona, Spain. The Company faces competition in the family entertainment field from other theme and amusement parks, public zoos, public parks, and other family entertainment events and attractions. OTHER Through its wholly-owned subsidiary, Busch Properties, Inc. ("BPI"), the Company is engaged in the business of real estate development. BPI also owns and operates The Kingsmill Resort and Conference Center in Williamsburg, Virginia. Through other wholly-owned subsidiaries, the Company owns and operates a marketing communications business (Busch Creative Services Corporation) and a transportation service business (Manufacturers Railway Co.). SOURCES AND AVAILABILITY OF RAW MATERIALS The products manufactured by the Company require a large volume of various agricultural products, including barley for malt; hops, malt, rice, and corn grits for beer; and rice for the rice milling and processing operations of BARI. The Company fulfills its commodities requirements through purchases from various sources, including purchases from its subsidiaries, through contractual arrangements, and through purchases on the open market. The Company believes that adequate supplies of the aforementioned agricultural products are available at the present time, but cannot predict future availability or prices of such products and materials. The commodity markets have experienced and will continue to experience price fluctuations. The price and supply of raw materials will be determined by, among other factors, the level of crop production, weather conditions, export demand, and government regulations and legislation affecting agriculture. The Company requires aluminum can sheet for manufacture of cans and lids. Can sheet prices are impacted by supply and demand for aluminum ingot and fabrication. ENERGY MATTERS The Company uses natural gas, fuel oil, and coal as its primary fuel materials. Supplies of fuels in quantities sufficient to meet ABI's total requirements are expected to be available on a year-round basis during 2000. The supply of natural gas, fuel oil, and coal is normally covered by yearly contracts and no difficulty has been experienced in entering into these contracts. The cost of fuel used by ABI increased in 1999 and is expected to increase in 2000. Based upon information presently available, there can be no assurance that adequate supplies of fuel will always be available to the Company and should such supplies not be available, the Company's sales and earnings would be adversely affected. 4 6 BRAND NAMES AND TRADEMARKS Some of the Company's major brand names used in its principal business segments are mentioned in the discussion above. The Company regards consumer recognition of and loyalty to all of its brand names and trademarks as extremely important to the long-term success of its principal business segments. RESEARCH AND DEVELOPMENT The Company is involved in a number of research activities relating to the development of new products or services or the improvement of existing products or services. The dollar amounts expended by the Company during the past three years on such research activities and the number of employees engaged full time therein during such period, however, are not considered to be material in relation to the total business of the Company. ENVIRONMENTAL PROTECTION All of the Company's facilities are subject to federal, state, and local environmental protection laws and regulations, and the Company is operating within existing laws and regulations or is taking action aimed at assuring compliance therewith. Various proactive strategies are utilized to help assure this compliance. Compliance with such laws and regulations is not expected to materially affect the Company's capital expenditures, earnings, or competitive position. The Company has devoted considerable effort to research, development and engineering of cost effective innovative systems to minimize effects on the environment from its operating facilities. A major portion of pollution prevention and pollution control expenditures in 1999 and projected for 2000 was or will be justified on the basis of cost reduction. These projects, coupled with the Company's Environmental Management System and an overall Company emphasis on pollution prevention and resource conservation initiatives, are improving efficiencies and creating saleable by-products from residuals. They have generally resulted in low cost operating systems while reducing impact to air, water, and land. ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS The states of California, Connecticut, Delaware, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont have adopted certain restrictive packaging laws and regulations for beverages that require deposits on packages. ABI continues to do business in these states. Such laws have not had a significant effect on ABI's sales, but have had a significant adverse impact on beer industry growth and are considered by the Company to be inflationary, costly, and inefficient for recycling packaging materials. Congress and a number of additional states continue to consider similar legislation, the adoption of which by Congress or a substantial number of states or additional local jurisdictions might require the Company to incur significant capital expenditures to comply. NUMBER OF EMPLOYEES As of December 31, 1999, the Company had 23,645 full-time employees. As of December 31, 1999, approximately 8,000 employees were represented by the International Brotherhood of Teamsters. Seventeen other unions represented approximately 1,100 employees. The labor agreement between ABI and the Brewery and Soft Drink Workers Conference of the International Brotherhood of Teamsters, which represents the majority of brewery workers, was scheduled to expire on February 28, 1998; it was extended to March 29, 1998 while the parties continued to negotiate a new agreement. Talks with the Teamsters reached impasse, and as a result, the Company implemented its final contract offer on September 21, 1998. The National Labor Relations Board has determined that the Company's bargaining and implementation of its final offer did not violate federal labor law. The Company considers its employee relations to be good. ITEM 2. PROPERTIES ABI has twelve breweries in operation at the present time, located in St. Louis, Missouri; Newark, New Jersey; Los Angeles and Fairfield, California; Jacksonville, Florida; Houston, Texas; Columbus, Ohio; Merrimack, New Hampshire; Williamsburg, Virginia; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. Title 5 7 to the Baldwinsville, New York brewery is held by the Onondaga County Industrial Development Agency ("OCIDA") pursuant to a Sale and Agency Agreement with ABI, which enabled OCIDA to issue tax exempt pollution control and industrial development revenue notes and bonds to finance a portion of the cost of the purchase and modification of the brewery. The brewery is not pledged or mortgaged to secure any of the notes or bonds, and the Sale and Agency Agreement with OCIDA gives ABI the unconditional right to require at any time that title to the brewery be transferred to ABI. ABI's breweries operated at approximately 97% of capacity in 1999; during the peak selling periods (second and third quarters), they operated at maximum capacity. The Company also owns an 86.6% equity interest in a joint venture that owns and operates a brewery in Wuhan, China. The Company also leases and operates the Stag Brewery near London, England. The Company, through wholly-owned subsidiaries, operates malt plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls, Idaho; rice mills in Jonesboro, Arkansas and Woodland, California; can manufacturing plants in Jacksonville, Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Newburgh, New York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma, California; and can lid manufacturing plants in Gainesville, Florida, Oklahoma City, Oklahoma, and Riverside, California. BEC operates its principal family entertainment facilities in Tampa, Florida; Williamsburg, Virginia; San Diego, California; Aurora, Ohio; Orlando, Florida; and San Antonio, Texas. The Tampa facility is 265 acres, Williamsburg is 364 acres, San Diego is 182 acres, Aurora is 90 acres, Orlando is 224 acres, and the San Antonio facility is 496 acres. Except for the Baldwinsville brewery, the can manufacturing plants in Newburgh, New York and Rome, Georgia, the SeaWorld park in San Diego, California, the Stag Brewery, and the brewery in Wuhan, China, all of the Company's principal properties are owned in fee. The lease for the land used by the SeaWorld park in San Diego, California expires in 2048. The Company leases the Stag Brewery from Scottish Courage, Ltd. In 1995, the joint venture that operates the brewery in Wuhan was granted the right to use the property for a period of 50 years from the appropriate governmental authorities. The Company also leases a bottling line at its brewery in Cartersville, Georgia and a can manufacturing plant in Rome, Georgia. The Company considers its buildings, improvements, and equipment to be well maintained and in good condition, irrespective of dates of initial construction, and adequate to meet the operating demands placed upon them. The production capacity of each of the manufacturing facilities is adequate for current needs and, except as described above, substantially all of each facility's capacity is utilized. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or its operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 1999. 6 8 EXECUTIVE OFFICERS OF THE REGISTRANT AUGUST A. BUSCH III (age 62) is presently Chairman of the Board and President, and a Director of the Company and has served in such capacities since 1977, 1974, and 1963, respectively. Since 1979 he has also served as Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Anheuser-Busch, Incorporated. PATRICK T. STOKES (age 57) is presently Vice President and Group Executive of the Company and has served in such capacity since 1981. He is also presently President of the Company's subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity since 1990 and Chairman of the Board of the Company's subsidiary, Anheuser-Busch International, Inc., and has served in such capacity since November 1999. JOHN H. PURNELL (age 58) is presently Executive Vice President of the Company and has served in such capacity since January 1999. He previously served as Vice President and Group Executive of the Company (1991-1998). He also previously served as Chairman of the Board of the Company's subsidiary, Anheuser-Busch International, Inc. (1980-November 1999), and as its Chief Executive Officer (1991-1998). W. RANDOLPH BAKER (age 53) is presently Vice President and Chief Financial Officer of the Company and has served in such capacity since 1996. He previously served as Vice President and Group Executive of the Company (1982-1996). STEPHEN K. LAMBRIGHT (age 57) is presently Group Vice President and General Counsel of the Company and has served in such capacity since 1997. He previously served as Vice President and Group Executive of the Company (1984-1997). ALOYS H. LITTEKEN (age 59) is presently Vice President-Corporate Engineering of the Company and has served in such capacity since 1981. WILLIAM L. RAMMES (age 58) is presently Vice President-Corporate Human Resources of the Company and has served in such capacity since 1992. He is also Chairman of the Board and President of the Company's subsidiary, Busch Properties, Inc., and has served in such capacities since 1995. JOSEPH L. GOLTZMAN (age 58) is presently Vice President and Group Executive of the Company and has served in such capacity since 1993. He is also presently Chairman, Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch Recycling Corporation, Chairman (since 1995), President and Chief Executive Officer (since 1993) of the Company's subsidiary, Metal Container Corporation, Chairman, Chief Executive Officer (since 1996) and President (since 1993) of the Company's subsidiary, Packaging Business Services, Inc., Chairman (since 1993), President (since January 1999), and Chief Executive Officer (since 1993) of the Company's indirect subsidiary, Precision Printing and Packaging, Inc., and Chairman, Chief Executive Officer, and President (since 1999) of the Company's indirect subsidiary, Eagle Packaging, Inc. DONALD W. KLOTH (age 58) is presently Vice President and Group Executive of the Company and has served in such capacity since 1994. He is also Chairman of the Board and Chief Executive Officer of the Company's subsidiary, Busch Agricultural Resources, Inc., and has served in such capacity since 1994. JOHN E. JACOB (age 65) is presently Executive Vice President and Chief Communications Officer, and a Director of the Company and has served in such capacities since 1994 and 1990, respectively. GERHARDT A. KRAEMER (age 67) is presently Senior Vice President-World Brewing and Technology and has served in such capacity since 1996. During the past five years, he also served as Vice President-Brewing of the Company's subsidiary, Anheuser-Busch, Incorporated (1985-1996). THOMAS W. SANTEL (age 41) is presently Vice President-Corporate Development of the Company and has served in such capacity since 1996. During the past five years, he also served as Director of Corporate Development (1994-1996). 7 9 STEPHEN J. BURROWS (age 48) is presently Vice President-International Operations of the Company and has served in such capacity since January 1999. He previously served as Vice President-International Marketing of the Company (1992-1998). He is also presently Chief Executive Officer and President of the Company's subsidiary, Anheuser-Busch International, Inc. and has served as Chief Executive Officer since January 1999 and as President since 1994. During the past five years, he also served as Chief Operating Officer of Anheuser-Busch International, Inc. (1994-1998). VICTOR G. ABBEY (age 44) is presently Chairman of the Board and President of the Company's subsidiary, Busch Entertainment Corporation and has served in such capacities since March 1, 2000. During the past five years, he also served as Executive Vice President and General Manager of the SeaWorld theme park in Orlando, Florida (1997-February, 2000), Executive Vice President and General Manager of the SeaWorld theme park in Cleveland, Ohio (1995-1997), and Vice President-Administration and International of Busch Entertainment Corporation (1992-1995). PART II The information required by Items 5, 6, 7, and 8 of this Part II are hereby incorporated by reference from pages 25 through 59 of the Company's 1999 Annual Report to Shareholders. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no disagreements with PricewaterhouseCoopers LLP, the Company's independent accountants since 1961, on accounting principles or practices or financial statement disclosures. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item with respect to Directors is hereby incorporated by reference from pages 3 through 6 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 26, 2000. The information required by this Item with respect to Executive Officers is presented on pages 7 and 8 of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is hereby incorporated by reference from page 8 and pages 19 through 25 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 26, 2000. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is hereby incorporated by reference from page 7 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 26, 2000. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is hereby incorporated by reference from pages 25 and 26 of the Company's Proxy Statement for the Annual Meeting of Shareholders on April 26, 2000. 8 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
PAGE ---- 1. FINANCIAL STATEMENTS: Consolidated Balance Sheet at December 31, 1999 and 1998 40 Consolidated Statement of Income for the three years ended December 31, 1999 41 Consolidated Statement of Changes in Shareholders Equity for the three years ended December 31, 1999 42 Consolidated Statement of Cash Flows for the three years ended December 31, 1999 43 Notes to Consolidated Financial Statements 44-55 Report of Independent Accountants 39 Incorporated herein by reference from the indicated pages of the 1999 Annual Report to Shareholders.
2. FINANCIAL STATEMENT SCHEDULE: Report of Independent Accountants on Financial Statement Schedule F-1 For the three years ended December 31, 1999: Schedule VIII--Valuation and Qualifying Accounts and Reserves F-2 3. EXHIBITS: Exhibit 3.1 --Restated Certificate of Incorporation. Exhibit 3.2 --By-Laws of the Company (as amended and restated December 16, 1998). (Incorporated by reference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 1998). Exhibit 4.1 --Form of Rights Agreement, dated as of October 26, 1994 between Anheuser-Busch Companies, Inc. and Boatmen's Trust Company. Exhibit 4.2 --Letter Agreement dated March 19, 1998 between Anheuser-Busch Companies, Inc., Boatmen's Trust Company, and ChaseMellon Shareholder Services, L.L.C. amending the Form of Rights Agreement filed as Exhibit 4.1 of this report. (Incorporated by reference to Exhibit 4.2 to Form 10-K for the fiscal year ended December 31, 1998). Exhibit 4.3 --Indenture dated as of August 1, 1995 between the Company and The Chase Manhattan Bank, as Trustee (Incorporated by reference to Exhibit 4.1 in the Form S-3 of the Company, Registration Statement No. 33-60885.) (Other indentures are not filed, but the Company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.) Exhibit 10.1 --Anheuser-Busch Companies, Inc. Deferred Compensation Plan for Non-Employee Directors amended and restated as of March 1, 2000. Exhibit 10.2 --Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan amended and restated as of March 1, 2000. Exhibit 10.3 --Anheuser-Busch Companies, Inc. Stock Plan for Non-Employee Directors (Incorporated by reference to Exhibit 4.1 in the Form S-8 of the Company, Registration Statement No. 333-88015). 9 11 Exhibit 10.4 --Anheuser-Busch Companies, Inc. 1981 Incentive Stock Option/Non-Qualified Stock Option Plan (As amended December 18, 1985, December 16, 1987, December 20, 1988, July 22, 1992, September 22, 1993, December 20, 1995, and November 26, 1997.) (Incorporated by reference to Exhibit 10.3 to Form 10-K for the fiscal year ended December 31, 1997.) Exhibit 10.5 --Anheuser-Busch Companies, Inc. 1981 Non-Qualified Stock Option Plan (As amended December 18, 1985, June 24, 1987, December 20, 1988, July 22, 1992, December 20, 1995, and November 26, 1997.) (Incorporated by reference to Exhibit 10.4 to Form 10-K for the fiscal year ended December 31, 1997.) Exhibit 10.6 --Anheuser-Busch Companies, Inc. 1989 Incentive Stock Plan (As amended December 20, 1989, December 19, 1990, December 15, 1993, December 20, 1995, and November 26, 1997.) (Incorporated by reference to Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 1997.) Exhibit 10.7 --Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan (Incorporated by reference to Exhibit A to the Definitive Proxy Statement for Annual Meeting of Shareholders on April 22, 1998.) Exhibit 10.8 --U.K. Addendum to the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan/Rules for Inland Revenue Approved Grants for Eligible Persons in the United Kingdom. Exhibit 10.9 --Anheuser-Busch Companies, Inc. Excess Benefit Plan amended and restated as of March 1, 2000. Exhibit 10.10--Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan amended and restated as of March 1, 2000. Exhibit 10.11--Anheuser-Busch Executive Deferred Compensation Plan amended and restated as of March 1, 2000. Exhibit 10.12--Anheuser-Busch 401(k) Restoration Plan amended and restated as of March 1, 2000. Exhibit 10.13--Form of Indemnification Agreement with Directors and Executive Officers. Exhibit 10.14--Anheuser-Busch Officer Bonus Plan as amended and restated on November 24, 1999. (Incorporated by reference to Exhibit A to the Definitive Proxy Statement for Annual Meeting of Shareholders on April 26, 2000.) Exhibit 10.15--Investment Agreement By and Among Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc. and Anheuser-Busch International Holdings, Inc. and Grupo Modelo, S.A. de C.V., Diblo, S.A. de C.V. and certain shareholders thereof, dated as of June 16, 1993. Exhibit 10.16--Letter agreement between Anheuser-Busch Companies, Inc. and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement filed as Exhibit 10.15 of this report. Exhibit 10.17--Fourth Amendment to the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan as amended and restated effective April 1, 1996. Exhibit 10.18--Fifth Amendment to the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan as amended and restated effective April 1, 1996. Exhibit 12 --Ratio of Earnings to Fixed Charges. 10 12 Exhibit 13 --Pages 25 through 59 of the Anheuser-Busch Companies, Inc. 1999 Annual Report to Shareholders, a copy of which is furnished for the information of the Securities and Exchange Commission. Portions of the Annual Report not incorporated herein by reference are not deemed "filed" with the Commission. Exhibit 21 --Subsidiaries of the Company Exhibit 23 --Consent of Independent Accountants, filed as page F-1 of this report. Exhibit 27 --Financial Data Schedule - -------- 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 There were no reports on Form 8-K filed during the fourth quarter of 1999. 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 /s/ AUGUST A. BUSCH III ------------------------------------------------- August A. Busch III Chairman of the Board and President Date: March 22, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ AUGUST A. BUSCH III Chairman of the Board and President and March 22, 2000 -------------------------------------------------- Director (Principal Executive (August A. Busch III) Officer) /s/ W. RANDOLPH BAKER Vice President and Chief Financial March 22, 2000 -------------------------------------------------- Officer (Principal Financial Officer) (W. Randolph Baker) /s/ JOHN F. KELLY Vice President and Controller March 22, 2000 -------------------------------------------------- (Principal Accounting Officer) (John F. Kelly) /s/ BERNARD A. EDISON Director March 22, 2000 -------------------------------------------------- (Bernard A. Edison) /s/ CARLOS FERNANDEZ G. Director March 22, 2000 -------------------------------------------------- (Carlos Fernandez G.) /s/ JOHN E. JACOB Director March 22, 2000 -------------------------------------------------- (John E. Jacob) /s/ JAMES R. JONES Director March 22, 2000 -------------------------------------------------- (James R. Jones) /s/ CHARLES F. KNIGHT Director March 22, 2000 -------------------------------------------------- (Charles F. Knight) Director March 22, 2000 -------------------------------------------------- (Vernon R. Loucks, Jr.) 12 14 /s/ VILMA S. MARTINEZ Director March 22, 2000 -------------------------------------------------- (Vilma S. Martinez) /s/ JAMES B. ORTHWEIN Director March 22, 2000 -------------------------------------------------- (James B. Orthwein) /s/ WILLIAM PORTER PAYNE Director March 22, 2000 -------------------------------------------------- (William Porter Payne) /s/ JOYCE M. ROCHE Director March 22, 2000 -------------------------------------------------- (Joyce M. Roche) /s/ ANDREW C. TAYLOR Director March 22, 2000 -------------------------------------------------- (Andrew C. Taylor) /s/ DOUGLAS A. WARNER III Director March 22, 2000 -------------------------------------------------- (Douglas A. Warner III) /s/ EDWARD E. WHITACRE, JR. Director March 22, 2000 -------------------------------------------------- (Edward E. Whitacre, Jr.)
13 15 ANHEUSER-BUSCH COMPANIES, INC. INDEX TO FINANCIAL STATEMENT SCHEDULE
PAGE ---- Report of Independent Accountants on Financial Statement Schedule...................................................... F-1 Consent of Independent Accountants.............................. F-1 Financial Statement Schedule for the Years 1999, 1998 and 1997: Valuation and Qualifying Accounts and Reserves (Schedule VIII)..................................................... F-2
All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements and Notes. Separate financial statements of subsidiaries not consolidated have been omitted because, in the aggregate, the proportionate shares of their profit before income taxes and total assets are less than 20% of the respective consolidated amounts, and investments in such companies are less than 20% of consolidated total assets. 14 16 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Anheuser-Busch Companies, Inc. Our audits of the consolidated financial statements referred to in our report dated February 1, 2000 appearing in the 1999 Annual Report to Shareholders of Anheuser-Busch Companies, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a) of this Form 10-K. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PricewaterhouseCoopers LLP St. Louis, Missouri February 1, 2000 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 333-71105) and in the Registration Statements on Forms S-8 (No. 2-77829, No. 33-4664, No. 33-36132, No. 33-39714, No. 33-39715, No. 33-46846, No. 33-53333, No. 33-58221, No. 33-58241, No. 333-67027, No. 333-71309, No. 333-71311, and No. 333-88015) of Anheuser-Busch Companies, Inc. of our report dated February 1, 2000 which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 1, 2000 on the financial statement schedule, which appears on page F-1 of this Form 10-K. PricewaterhouseCoopers LLP St. Louis, Missouri March 22, 2000 F-1 17
ANHEUSER-BUSCH COMPANIES, INC. SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (CONTINUING OPERATIONS BASIS, IN MILLIONS) 1999 1998 1997 ---- ---- ---- Reserve for doubtful accounts (deducted from related assets): Balance at beginning of period.......................... $ 5.5 $ 4.9 $ 3.1 Additions charged to costs and expenses................. 1.0 1.3 2.0 Additions (recoveries of uncollectible accounts previously written off ).............................. .1 .3 .1 Deductions (uncollectible accounts written off )........ (.2) (1.0) (.3) ------ ------ ------ Balance at end of period................................ $ 6.4 $ 5.5 $ 4.9 ====== ====== ====== Deferred income tax asset valuation allowance under FAS 109: Balance at beginning of period.......................... $117.0 $ 92.5 $ 81.7 Additions to valuation allowance charged to costs and expenses.............................................. 3.5 28.1 13.2 Deductions from valuation allowance (utilizations and expirations).......................................... (14.1) (3.6) (2.4) Reductions due to changes in foreign business operations............................................ (92.8) -- -- ------ ------ ------ Balance at end of period................................ $ 13.6 $117.0 $ 92.5 ====== ====== ======
F-2 EX-3.1 2 CERTIFICATE OF INCORPORATION 1 RESTATED CERTIFICATE OF INCORPORATION OF ANHEUSER-BUSCH COMPANIES, INC. ANHEUSER-BUSCH COMPANIES, INC. was incorporated under the name ABC ACQUISITION COMPANY, and its original certificate of incorporation was filed with the Secretary of State of Delaware on February 21, 1979. This Restated Certificate of Incorporation has been duly adopted by the board of directors of this corporation pursuant to Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not amend the corporation's certificate of incorporation and other certificates and instruments filed with the Secretary of State of Delaware pursuant to Section 104 of the General Corporation Law of the State of Delaware, and there is no discrepancy between the provisions of such certificate of incorporation, certificates and instruments and this Restated Certificate of Incorporation. FIRST. The name of the Corporation is Anheuser-Busch Companies, Inc. SECOND. The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The name of the Corporation's registered agent at such address is The Corporation Trust Company. THIRD. The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The aggregate number of shares which the Corporation shall have authority to issue is 1,640,000,000, of which 40,000,000 shares shall be Preferred Stock having a par value of $1 per share and 1,600,000,000 shares shall be Common Stock having a par value of $1 per share. A description of each of such classes of stock and the designation and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of each class of stock of the Corporation which are fixed by this Restated Certificate of Incorporation, and the express grant of authority to the Board of Directors to fix by resolution or resolutions the designations and the powers, preferences and rights of each other class, and the qualifications, limitations or restrictions thereof, are as follows: 1. The Board of Directors shall have authority, by resolution or resolutions, at any time and from time to time to divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock into one or more series, and, without limiting the generality of the foregoing, to fix and determine the designation of each such series, the number of shares which shall constitute such series and the following relative rights and preferences of the shares of each series so established: 2 (a) the annual dividend rate payable on shares of such series, the time of payment thereof, whether such dividends shall be cumulative or non-cumulative, and the date or dates from which any cumulative dividends shall commence to accrue; (b) the price or prices at which and the terms and conditions, if any, on which shares of such series may be redeemed; (c) the amounts payable upon shares of such series in the event of the voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Corporation; (d) the sinking fund provisions, if any, for the redemption or purchase of shares of such series; (e) the extent of the voting powers, if any, of the shares of such series; (f) the terms and conditions, if any, on which shares of such series may be converted into shares of stock of the Corporation of any other class or classes or into shares of any other series of the same or any other class or classes; (g) whether, and if so the extent to which, shares of such series may participate with the Common Stock in any dividends in excess of the preferential dividend fixed for shares of such series or in any distribution of the assets of the Corporation, upon a liquidation, dissolution or winding-up thereof, in excess of the preferential amount fixed for shares of such series; and (h) any other designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of shares of such series not fixed and determined by law or in this Restated Certificate of Incorporation. 2. Each series of Preferred Stock shall be so designated as to distinguish the shares thereof from the shares of all other series. Different series of Preferred Stock shall not be considered to constitute different classes of shares for the purpose of voting by classes except as otherwise fixed by the Board of Directors with respect to any series at the time of the creation thereof. 3. So long as any shares of Preferred Stock are outstanding, the Corporation shall not declare and pay or set apart for payment any dividends (other than dividends payable in Common Stock or other stock of the Corporation ranking junior to the Preferred Stock as to dividends) or make any other distribution on such junior stock, if at the time of making such declaration, payment or distribution the Corporation shall be in default with respect to any dividend payable on, or any obligation to retire, shares of Preferred Stock. 2 3 4. Subject to such limitations, if any, as may be contained in the resolution or resolutions providing for the issue of Preferred Stock of any series adopted by the Board of Directors, shares of Preferred Stock purchased, redeemed or otherwise acquired by the Corporation (excepting shares of such stock acquired on the conversion or exchange thereof into or for other shares of the Corporation) (a) shall, upon the filing by the Corporation of a Certificate pursuant to Delaware law reducing its capital in respect of such shares, have the status of authorized and unissued shares of Preferred Stock and may be reissued by the Corporation at any time as shares of any series of Preferred Stock and (b) shall, unless and until a certificate with respect thereto is filed as aforesaid, constitute treasury stock; and shares of Preferred Stock acquired on the conversion or exchange thereof into or for other shares of the Corporation shall, after such conversion or exchange, have the status of authorized and unissued shares of Preferred Stock and may be reissued by the Corporation at any time as shares of any series of Preferred Stock. 5. Subject to the provisions of any applicable law or the By-Laws of the Corporation as from time to time amended with respect to the closing of the transfer books or the fixing of a record date for the determination of stockholders entitled to vote, and except as otherwise provided by law or in resolutions of the Board of Directors establishing any series of Preferred Stock pursuant to this Article, the holders of outstanding shares of Common Stock of the Corporation shall exclusively possess the voting power for the election of directors and for all other purposes, each holder of record of shares of Common Stock of the Corporation being entitled to one vote for each share of such stock standing in such holder's name on the books of the Corporation. FIFTH. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors consisting of not less than three nor more than twenty-one directors, the exact number of directors to be determined from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three groups, designated Group I, Group II and Group III. Each group of directors shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors and shall serve for a three-year term. At each annual meeting of shareholders, successors to the group of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the groups so as to maintain the number of directors in each group as nearly equal as possible, and any additional director of any group elected to fill a vacancy resulting from an increase in such group shall hold office for a term that shall coincide with the remaining term of that group, but in no case will a decrease in the number of directors shorten the term of any incumbent director. 3 4 A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of preferred or preference stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation applicable thereto. SIXTH. The Board of Directors of the Corporation shall have the power, without the assent or vote of the stockholders, to make By-Laws for the Corporation, and to amend, alter or repeal the same. SEVENTH. The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Restated Certificate of Incorporation in the manner now or hereafter prescribed by the statues of the State of Delaware and this Restated Certificate of Incorporation, and all rights herein conferred on officers, directors and stockholders are expressly to this reservation. EIGHTH. A. In addition to any affirmative vote required by law, any other provision of this Restated Certificate of Incorporation, the By-laws of the Corporation or otherwise, and except as otherwise expressly provided in Sections B or C of this Article EIGHTH, a Business Transaction with or a Stock Repurchase from, or proposed by or on behalf of, an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder shall require the approval by not less than a majority vote of the holders of all of the Corporation's outstanding Voting Stock, voting together as a single class, which is beneficially owned by persons other than such Interested Shareholder and its Affiliates and Associates. Such affirmative vote shall be required notwithstanding the fact that no vote may otherwise be required, or that a lesser percentage or separate class vote may be required, by law, any other provision of this Restated Certificate of Incorporation, the By-laws of the Corporation or otherwise. B. The provisions of Section A of this Article EIGHTH shall not be applicable to any Business Transaction involving an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder, and such Business Transaction shall require only such affirmative vote, if any, as is required by law, any other provision of this Restated Certificate of Incorporation, the By-laws of the Corporation or otherwise, if all of the conditions specified in either of the following Paragraphs 1 or 2 are met: 4 5 1. The Business Transaction shall have been approved (or shall have been effected in accordance with a written agreement approved) by a majority of the Disinterested Directors, whether such approval is given prior to or subsequent to the acquisition of beneficial ownership of the Voting Stock that caused such Interested Shareholder to become an Interested Shareholder. A Business Transaction with an Interested Shareholder or an Affiliate or an Associate of an Interested Shareholder shall be deemed to have been approved by a majority of the Disinterested Directors if such Business Transaction either (i) was expressly approved (or the agreement pursuant to which it was effected was expressly approved) by a majority of Disinterested Directors, or (ii) is within a category of Business Transactions with such Interested Shareholder or its Affiliates or Associates authorized to be entered into by a resolution or resolutions adopted by, and not subsequently rescinded by, a majority of Disinterested Directors. 2. The Business Transaction is a Business Combination and all of the following conditions shall have been met: a. The aggregate amount of cash and the Fair Market Value as of the date of the consummation of the Business Transaction of consideration other than cash to be received per share by holders of the Corporation's Common Stock in such Business Transaction shall be at least equal to the highest amount determined under clauses (i) and (ii) below: (i) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of such Interested Shareholder or any Affiliate or Associate of such Interested Shareholder for any shares of Common Stock in connection with the acquisition by such Interested Shareholder or any such Affiliate or Associate of beneficial ownership of shares of Common Stock within (x) the two-year period immediately prior to the first public announcement of the proposed Business Transaction (the "Announcement Date"), or (y) in the transaction in which such Interested Shareholder became an Interested Shareholder, whichever is higher; and (ii) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which such Interested Shareholder became an Interested Shareholder (the "Determination Date"), whichever is higher. b. The aggregate amount of cash and the Fair Market Value as of the date of the consummation of the Business Transaction of consideration other than cash to be received per share by holders of shares of any class or series of outstanding Capital Stock other than Common Stock shall be at least equal to the highest amount determined under clauses (i), (ii) and (iii) below: 5 6 (i) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of such Interested Shareholder or any Affiliate or Associate of such Interested Shareholder for any shares of such class or series of Capital Stock in connection with the acquisition by such Interested Shareholder or any such Affiliate or Associate of beneficial ownership of shares of such class or series of Capital Stock (x) Within the two-year period immediately prior to the Announcement Date, or (y) in the transaction in which such Interested Shareholder became an Interested Shareholder, whichever is higher; (ii) the Fair Market Value per share of such class or series of Capital Stock on the Announcement Date or on the Determination Date, whichever is higher; and (iii) the highest preferential amount per share, if any, to which the holders of shares of such class or series of Capital Stock would be entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, regardless of whether the Business Transaction to be consummated constitutes such an event. The provisions of this Paragraph 2.b shall be required to be met with respect to every class or series of outstanding Capital Stock, whether or not such Interested Shareholder or any Affiliate or Associate of such Interested Shareholder has previously acquired beneficial ownership of any shares of the particular class or series of Capital Stock. c. The consideration to be received by holders of a particular class or series of outstanding Capital Stock shall be in cash or in the same form as previously has been paid by or on behalf of such Interested Shareholder and its Affiliates and Associates in connection with their direct or indirect acquisition of beneficial ownership of shares of such class or series of Capital Stock. If the consideration so paid for shares of any class or series of Capital Stock varied as to form, the form of consideration for such class or series of Capital Stock shall be either cash or the form used to acquire beneficial ownership of the largest number of shares of such class or series of Capital Stock previously acquired by such Interested Shareholder and its Affiliates and Associates. The prices determined in accordance with Paragraphs 2.a and 2.b of this Section B shall be subject to an appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event. d. After the Determination Date and prior to the consummation of such Business Transaction: (i) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) payable in accordance with the terms of any outstanding 6 7 Capital Stock; (ii) there shall have been no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any stock split, stock dividend or subdivision of the Common Stock), except as approved by a majority of the Disinterested Directors; (iii) there shall have been an increase in the annual rate of dividends paid on the Common Stock as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction that has the effect of reducing the number of outstanding shares of Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (iv) neither such Interested Shareholder nor any Affiliate or Associate of such Interested Shareholder shall have become the beneficial owner of any additional shares of Capital Stock except as part of the transaction that results in such Interested Shareholder becoming an Interested Shareholder and except in a transaction that, after giving effect thereto, would not result in any increase in such Interested Shareholder's or any such Affiliate's or Associate's percentage beneficial ownership of any class or series of Capital Stock. e. A proxy or information statement describing the proposed Business Transaction and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (the "Act") (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to all shareholders of the Corporation at least 30 days prior to the consummation of such Business Transaction (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). The proxy or information statement shall contain on the first page thereof, in a prominent place, any statement as to the advisability (or inadvisability) of the Business Transaction that the Disinterested Directors, or any of them, may choose to make and, if deemed advisable by a majority of the Disinterested Directors, the opinion of an investment banking firm selected by a Majority of the Disinterested Directors as to the fairness (or not) of the terms of the Business Transaction from a financial point of view to the holders of the outstanding shares of Capital Stock other than such Interested Shareholder and its Affiliates or Associates, such investment banking firm to be paid a reasonable fee for its services by the Corporation. C. The provisions of Section A of this Article EIGHTH shall not be applicable to a Stock Repurchase with, or proposed by or on behalf of, an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder, and such Stock Repurchase shall require only such affirmative vote, if any, as is required by law, any other provision of this Restated Certificate of Incorporation, the By-laws of the Corporation or otherwise, if the conditions specified in either of the following Paragraphs 1 or 2 are met: 1. The Stock Repurchase is made pursuant to a tender offer or exchange offer for a class of Capital Stock made available on the same basis to all holders of such class of Capital Stock. 2. The Stock Repurchase is made pursuant to an open market purchase 7 8 program approved by a majority of the Disinterested Directors, provided that such repurchase is effected on the open market and is not the result of a privately negotiated transaction. D. For the purposes of this Article EIGHTH: 1. The term "Business Transaction" shall mean: a. any merger or consolidation of the Corporation with, or any sale or transfer of all or substantially all of the Corporation's assets to, (i) any Interested Shareholder or (ii) any other corporation (whether or not itself an Interested Shareholder) which is or after such merger, consolidation, sale or transfer would be an Affiliate or Associate of an Interested Shareholder, or any liquidation or dissolution of the Corporation (any such merger, consolidation, sale, transfer, liquidation or dissolution being referred to herein as a "Business Combination"); and b. any other transaction (other than a Stock Repurchase) between the Corporation or any Subsidiary, on the one hand, and any Interested Shareholder or any Affiliate or Associate of an Interested Shareholder, on the other hand, and any amendment to the By-laws of the Corporation proposed by or on behalf of any Interested Shareholder or any Affiliate or Associate of an Interested Shareholder; and c. any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation), or any merger or consolidation of the Corporation with any Subsidiary, or any other transaction (whether or not with or otherwise involving an Interested Shareholder) that has the effect, directly or indirectly, of increasing the percentage beneficial ownership of any class or series of Capital Stock held by, or the voting power with respect to the Corporation of, any Interested Shareholder or any Affiliate or Associate of any Interested Shareholder; or d. any agreement, contract or other arrangement providing or any one or more of the actions specified in the foregoing clauses a. to c. 2. The term "Stock Repurchase" shall mean any repurchase by the Corporation or any Subsidiary of any shares of Capital Stock at a price greater than the then Fair Market Value of such shares from an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder if beneficial ownership of one-quarter or more of all shares of Capital Stock beneficially owned by such Interested Shareholder and its Affiliates and Associates were acquired (disregarding shares acquired as part of a pro-rata stock dividend or stock split) within a period of less than two years prior to the date of such repurchase (or the date of an agreement in respect thereof). 3. The term "Capital Stock" shall mean all capital stock of the Corporation authorized to be issued from time to time under Article FOURTH of this Restated 8 9 Certificate of Incorporation, and the term "Voting Stock" shall mean all Capital Stock which by its terms may be voted on all matters submitted to shareholders of the Corporation generally. 4. The term "person" shall mean any individual, firm, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Capital Stock. 5. The term "Interested Shareholder" shall mean any person (other than the Corporation or any Subsidiary, or any pension, profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary, or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who (a) is the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock. 6. A person shall be a "beneficial owner" of any Capital Stock (a) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; (b) which such person or any of its Affiliates or Associates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Capital Stock. For the purposes of determining whether a person is an Interested Shareholder pursuant to Paragraph 5 of this Section D, the number of shares of Capital Stock deemed to be outstanding shall include shares deemed beneficially owned by such person through application of Paragraph 6 of this Section D, but shall not include any other shares of Capital Stock that may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. 7. A person shall be deemed to be an "Affiliate" of a specified person, if such person directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person. A person shall be deemed to be an "Associate" of a specified person, if such person is (a) a corporation or organization (other than the Corporation or any Subsidiary) of which such specified person is an officer or partner or of which such specified person is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities, (b) a trust or other estate (other than 9 10 any pension, profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary) in which such specified person has a substantial beneficial interest or as to which such specified person serves as trustee or in a similar fiduciary capacity, or (c) a relative or spouse of such specified person, or a relative of such spouse, who has the same home as such specified person. 8. The term "Subsidiary" means any corporation of which a majority of any class of equity security is beneficially owned by the Corporation, as well as any Affiliate of the Corporation which is controlled by the Corporation; provided, however, that for the purposes of the definition of Interested Shareholder set forth in Paragraph 5 of this Section D, the term "Subsidiary" shall mean only a company of which a majority of each class of equity security is beneficially owned by the Corporation. 9. With respect to any Business Transaction with, or proposed by or on behalf of, an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder, and with respect to any proposal of the kind referred to in Section H of this Article EIGHTH, which is proposed by or on behalf of an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder, the term "Disinterested Director" means any member of the Board of Directors of the Corporation (the "Board") who is not an Affiliate or Associate or representative of such Interested Shareholder and was a Member of the Board either on February 27, 1985 or prior to the time that such Interested Shareholder became an Interested Shareholder, and any successor of a Disinterested Director, while such successor is a member of the Board, who is not an Affiliate or Associate or representative of such Interested Shareholder and is recommended or elected to succeed the Disinterested Director by a majority of Disinterested Directors. 10. The term "Fair Market Value" means (a) in the case of cash, the amount of such cash; (b) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any similar system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Disinterested Directors in good faith; and (c) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Disinterested Directors. 11. In the event of any Business Transaction in which the Corporation survives, the phrase "consideration other than cash to be received" as used in Paragraphs 2.a and 2.b of Section B of this Article EIGHTH shall include the 10 11 shares of Common Stock and/or the shares of any other class or series of Capital Stock retained by the holders of such shares. E. A majority of the Disinterested Directors shall have the power and duty to determine for the purposes of this Article EIGHTH, on the basis of information known to them after reasonable inquiry, all questions arising under this Article EIGHTH, including, without limitation, (a) whether a person is an Interested Shareholder, (b) the number of shares of Capital Stock or other securities beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, and (d) whether the consideration to be received in any Stock Repurchase by the Corporation or any Subsidiary exceeds the then Fair Market Value of the shares of Capital Stock being repurchased. Any such determination made in good faith shall be binding and conclusive on all parties. F. Nothing contained in this Article EIGHTH shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law. G. The fact that any Business Transaction complies with the provisions of Section B of this Article EIGHTH shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board, or any member thereof, to approve such Business Transaction or recommend its adoption or approval to the stockholders of the Corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Business Transaction. H. Notwithstanding any other provisions of this Restated Certificate of Incorporation or the By-laws of the Corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Restated Certificate of Incorporation or the By-laws of the Corporation), any proposal to amend or repeal, or adopt any provision of this Restated Certificate of Incorporation inconsistent with, this Article EIGHTH which is proposed by or on behalf of an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder shall require approval by not less than a majority vote of the holders of all then outstanding shares of Voting Stock which are beneficially owned by persons other than such Interested Shareholder and its Affiliates and Associates, voting together as a single class; provided, however, that this Section H shall not apply to, and such majority vote shall not be required for, any amendment, repeal or adoption which does not affect the provisions of this Article EIGHTH relating to Stock Repurchases and which is recommended by a majority of the Disinterested Directors, if a majority of the directors then in office are Disinterested Directors. NINTH. A. The Corporation shall indemnify to the full extent authorized or permitted by law any person made, or threatened to be made, a party to any action or proceeding (whether civil or criminal or otherwise) by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation or by reason of the fact that such director or officer, at the request of the Corporation, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in any capacity. Nothing contained herein shall affect any rights to indemnification to which employees other than directors and officers may be entitled by 11 12 law. No amendment or repeal of this Section A of Article NINTH shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal. B. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of the law. The Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing for indemnification to the fullest extent permitted by law and including as part thereof any or all of the foregoing, to ensure the payment of such sums as may become necessary to effect full indemnification. IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this Restated Certificate of Incorporation to be signed by JoBeth G. Brown, its Vice President and Secretary, as of this 7th day of May, 1999. /s/ JoBeth G. Brown ---------------------------------- Vice President and Secretary 12 13 CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK of ANHEUSER-BUSCH COMPANIES, INC. Pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Restated Certificate of Incorporation, a series of Preferred Stock of the Corporation has been created by means of adoption by the Board of Directors of a resolution on December 18, 1985, and the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be ----------------------- designated as "Series B Junior Participating Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting such series shall be 4,000,000. Section 2. Dividends and Distributions. ---------------------------- (A) The holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July and October in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1 per share, of the Corporation (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. In the event the Corporation shall at any time after September 12, 1986, declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 1 14 The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in this paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series B Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of Shares of Series B Preferred -------------- Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after September 12, 1986, declare or pay any dividend on Common Stock payable in shares of Common Stock; or effect a subdivision or combination of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote 2 15 together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series B Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series B Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, the holders of Preferred Stock, voting as a class, irrespective of series, shall have the right to elect two Directors. (ii) During any default period, such voting right of the holders of Series B Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of Preferred Stock as hereinafter provided to increase in certain cases the authorized number of Directors shall be exercised unless the holders of 25% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any 3 16 stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the Stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the by-laws irrespective of any increase pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (D) Except as set forth herein, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. --------------------- (A) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking 4 17 junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such Shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series B Preferred Stock ------------------ purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary --------------------------------------- liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $50 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or 5 18 not declared, to the date of such payment, provided that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after September 12, 1986, declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall --------------------------- enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series B Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after September 12, 1986, declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series B Preferred Stock shall -------------- not be redeemable. Section 9. Ranking. The Series B Preferred Stock shall rank pari passu -------- with all other series of the Corporation's Preferred Stock outstanding as of December 27, 1985 as to the payment of dividends and the distribution of assets. 6 19 Section 10. Amendment. The Certificate of Incorporation of the ---------- Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series B Preferred Stock, voting together as a single class. EX-4.1 3 RIGHTS AGREEMENT 1 RIGHTS AGREEMENT ---------------- RIGHTS AGREEMENT, dated as of October 26, 1994 (the "Agreement"), between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and Boatmen's Trust Company, a trust company organized under the laws of the State of Missouri (the "Rights Agent"). W I T N E S S E T H - - - - - - - - - - WHEREAS, on December 18, 1985, the Board of Directors of the Company authorized and declared a dividend distribution of one right for each share of Common Stock (as hereinafter defined) of the Company outstanding at the close of business on December 27, 1985 (the "1985 Record Date"), and authorized the issuance of one right for each share of Common Stock of the Company issued between the 1985 Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date (as defined in the Rights Agreement, dated as of December 18, 1985, as amended on July 23, 1986 (the "1985 Agreement") and as amended and restated as of December 17, 1986 (the "1986 Agreement") between the Company and Centerre Trust Company of St. Louis, the predecessor to the Rights Agent), each right initially representing the right to purchase one one-hundredth of a share of Series B Junior Participating Preferred Stock of the Company having the rights, powers and preferences set forth in the Restated Certificate of Incorporation of the Company (the "Certificate of Incorporation"), upon the terms and subject to the conditions set forth in the 1985 Agreement (the "1985 Rights"); WHEREAS, on July 23, 1986, the Board of Directors, in accordance with Section 26 of the 1985 Agreement, determined it desirable and in the best interests of the Company and its stockholders for the Company to supplement and amend certain provisions of the 1985 Agreement and on July 23, 1986 implemented such changes by executing an amendment to the 1985 Agreement; WHEREAS, effective as of December 17, 1986, the Board of Directors in accordance with Section 26 of the 1985 Agreement, determined it desirable and in the best interests of the Company and its stockholders for the Company to amend and restate the 1985 Agreement and on December 17, 1986 implemented such amendment and restatement by executing the 1986 Agreement; WHEREAS, on October 26, 1994, the Board of Directors determined it desirable and in the best interests of the Company and its stockholders for the Company to extend the 1986 Agreement and to implement such extension by executing this Agreement; and WHEREAS, on October 26, 1994 (the "Rights Dividend Declaration Date"), the Board of Directors of the Company authorized and declared a dividend distribution of one Right for each share of Common Stock of the Company outstanding upon the Expiration Date (as defined in the 1986 Agreement) (the "Record Date"), and authorized the issuance of one Right (as such number may hereafter be adjusted pursuant to the provisions of Section 11(p) hereof) for each share of Common Stock of the Company issued between the Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date, each Right initially representing the right to purchase one one-hundredth of a share of Series B Junior Participating Preferred Stock of the Company having the rights, powers and preferences set forth in the Certificate of Incorporation, upon the terms and subject to the conditions hereinafter set forth (the "Rights"). 2 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: 1. Certain Definitions. For purposes of this ------------------- Agreement, the following terms have the meanings indicated: (a) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, or any Person who becomes an Acquiring Person solely as a result of a reduction in the number of shares of Common Stock outstanding due to the repurchase of shares of Common Stock by the Company, unless and until such Person shall purchase or otherwise become the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock. (b) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement (the "Exchange Act"). (c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (i) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, -------- that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights; 3 (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the -------- "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy given in response to a public proxy or consent solici- tation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) of this paragraph (c)) or disposing of any voting securities of the Company; provided, however, that nothing in this -------- paragraph (c) shall cause a Person engaged in the business as an underwriter of securities to be deemed the "Beneficial Owner" of, or to "beneficially own," any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of Missouri are authorized or obligated by law or executive order to close. (e) "Close of business" on any given date shall mean 4:45 P.M., St. Louis time, on such date; provided, however, -------- that if such date is not a Business Day it shall mean 4:45 P.M., St. Louis time, on the next succeeding Business Day. (f) "Common Stock" shall mean the common stock, par value $1.00 per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 4 (g) "Continuing Director" shall mean (i) any member of the Board of Directors of the Company, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement, or (ii) any Person who subsequently becomes a member of the Board, while such Person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors. (h) "Person" shall mean any individual, firm, corporation, partnership or other entity. (i) "Preferred Stock" shall mean shares of Series B Junior Participating Preferred Stock, par value $1.00 per share, of the Company and, to the extent that there are not a sufficient number of shares of Series B Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of Preferred Stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series B Junior Participating Preferred Stock. (j) "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii)(A) or (B) hereof. (k) "Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof. (l) "Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. (m) "Subsidiary" shall mean, with reference to any Person, any corporation of which an amount of voting securities sufficient to elect at least a majority of the directors of such corporation is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person. (n) "Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event. 5 2. Appointment of Rights Agent. The Company hereby --------------------------- appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. 3. Issue of Rights Certificates. ---------------------------- (a) Until the earlier of (i) the close of business on the tenth business day after the Stock Acquisition Date, or (ii) the close of business on the tenth business day after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of 30% or more of the shares of Common Stock then outstanding (the earlier of (i) and (ii) being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more right certificates, in substantially the form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Right Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates. 6 (b) Rights shall be issued in respect of all shares of Common Stock which are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Anheuser-Busch Companies, Inc. and Boatmen's Trust Company, dated as of October 26, 1994 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of Anheuser- Busch Companies, Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Anheuser-Busch Companies, Inc. will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to such certificates containing the foregoing legend and certificates containing the legends specified in the 1985 Agreement and the 1986 Agreement and with respect to previously issued certificates that contain no comparable legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall be evidenced by such certificates alone and registered holders of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. 4. Form of Rights Certificates. --------------------------- (a) The Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall each be substantially in the form set forth in Exhibit A hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of one one-hundredths of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-hundredth of a share, the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. 7 (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement. 5. Countersignature and Registration. --------------------------------- (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 8 6. Transfer, Split Up, Combination and Exchange of ----------------------------------------------- Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights - ---------------------------------------------------------------- Certificates. (a) Subject to the provisions of Section 4(b), - ------------ Section 7(e) and Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a share of Preferred Stock (or, following a Triggering Event, Common Stock, other securities, cash or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated. 9 7. Exercise of Rights; Purchase Price; Expiration Date --------------------------------------------------- of Rights. (a) Subject to Section 7(e) hereof, the registered - --------- holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one one- hundredths of a share of Preferred Stock (or other securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earlier of (i) the close of business on October 31, 2004 (the "Final Expiration Date"), or (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as the "Expiration Date"). (b) The Purchase Price for each one one-hundredth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $195, and shall be subject to adjustment from time to time as provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below. (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-hundredth of a share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to be purchased as set forth below and an amount equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one-hundredths of a share of Preferred Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made (x) in cash or by certified bank check or bank draft payable to the order of the Company, or (y) by delivery of a certificate or certificates (with appropriate stock powers executed in blank attached thereto) evidencing a number of shares of Common Stock equal to the then Purchase Price divided by the closing price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on the Trading Date immediately preceding the date of such exercise. In the event that the Company is obligated to issue other securities (including Common Stock) of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when appropriate. 10 (d) In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. 11 8. Cancellation and Destruction of Rights Certificates. --------------------------------------------------- All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 9. Reservation and Availability of Capital Stock. (a) The --------------------------------------------- Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and, following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities or out of its authorized and issued shares held in its treasury), the number of shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) that, as provided in this Agreement including Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all outstanding Rights. (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. (c) The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement under the Securities Act of 1933 (the "Act"), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained. 12 (d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a share of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable. (e) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in respect of a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Com- pany's satisfaction that no such tax is due. 10. Preferred Stock Record Date. Each person in whose --------------------------- name any certificate for a number of one one-hundredths of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is - -------- a date upon which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 13 11. Adjustment of Purchase Price, Number and Kind of ------------------------------------------------ Shares or Number of Rights. The Purchase Price, the number and kind - -------------------------- of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Preferred Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof. 14 (ii) In the event: (A) (1) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time after the date of this Agreement, directly or indirectly, shall merge into the Company or otherwise combine with the Company and the Company shall be the continuing or surviving corporation of such merger or combination and the Common Stock of the Company shall remain outstanding and unchanged, or (2) any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan), alone or together with its Affiliates and Associates, shall, at any time after the Rights Dividend Declaration Date, become the Beneficial Owner of 30% or more of the shares of Common Stock then outstanding, other than pursuant to any transaction set forth in Section 13(a) hereof, or pursuant to an offer for all outstanding shares of Common Stock at a price and upon such terms and conditions as a majority of the Continuing Directors determine to be in the best interests of the Company and its stockholders, other than such Person, its Affiliates and its Associates, or (B) during such time as there is an Acquiring Person, there shall be any reclassification of securities (including any reverse stock split), or recapitalization of the Company, or any merger or consolidation of the Company with any of its Subsidiaries or any other transaction or series of transactions involving the Company or any of its Subsidiaries, other than a transaction or transactions to which the provisions of Section 13(a) apply (whether or not with or into or otherwise involving an Acquiring Person) which has the effect, directly or indirectly, of increasing by more than 1% the proportionate share of the outstanding shares of any class of equity securities of the Company or any of its Subsidiaries which is directly or indirectly beneficially owned by any Acquiring Person or any Associate or Affiliate of any Acquiring Person, then, promptly following the occurrence of a Section 11(a)(ii) Event, proper provision shall be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which, following such first occurrence, shall thereafter be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by 50% of the current market price (determined pursuant to Section 11(d) hereof) per share of Common Stock on the date of such first occurrence (such number of shares, the "Adjustment Shares"). 15 (iii) In the event that the number of shares of Common Stock which are authorized by the Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of this Section 11(a), the Company shall: (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (the "Current Value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock which the Board of Directors of the Company has deemed to have the same value as shares of Common Stock (such shares of preferred stock, "common stock equiva- lents")), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors of the Company; provided, -------- however, if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's right of redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faith that it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such period, as it may be extended, the "Substitution Period"). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of the Common Stock shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the value of any "common stock equivalent" shall be deemed to have the same value as the Common Stock on such date. 16 (b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock ("equivalent preferred stock")) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less than the current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (c) In case the Company shall fix a record date for a distribution to all holders of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and the denominator of which shall be such current market price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed. 17 (d) (i) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the "current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the "current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following such date; provided, however, that in the event that the -------- current market price per share of the Common Stock is determined during a period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth above, after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassi- fication, then, and in each such case, the "current market price" shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, "current market price" per share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 18 (ii) For the purpose of any computation hereunder, the "current market price" per share of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof). If the current market price per share of Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the "current market price" per share of Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current market price per share of the Common Stock. If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, "current market price" per share of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the "current market price" of one one- hundredth of a share of Preferred Stock shall be equal to the "current market price" of one share of Preferred Stock divided by 100. (e) Anything herein to the contrary notwith- standing, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, -------- that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date. (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares. 19 (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one- hundredths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths of a share covered by a Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of one one-hun- dredths of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one- hundredths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one-ten- thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certifi- cates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. 20 (j) Irrespective of any adjustment or change in the Purchase Price or the number of one one-hundredths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth of a share and the number of one one-hundredth of a share which were expressed in the initial Rights Certificates issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number of one one-hundredths of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable such number of one one-hundredths of a share of Preferred Stock at such adjusted Purchase Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of one one- hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a share of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company -------- shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in their good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such shareholders. (n) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolida- tion, merger or sale, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. 21 (o) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights. (p) Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, the number of Rights associated with each share of Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction the numerator which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. 12. Certificate of Adjusted Purchase Price or Number of --------------------------------------------------- Shares. Whenever an adjustment is made as provided in Section 11 - ------ and Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained. 22 13. Consolidation, Merger or Sale or Transfer of Assets --------------------------------------------------- or Earning Power. - ---------------- (a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions each of which complies with Section 11(o) hereof), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such one one-hundredths of a share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence), and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by (2) 50% of the current market price (determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event. 23 (b) "Principal Party" shall mean (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any such case, (1) if the Common Stock of - -------- such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, "Principal Party" shall refer to such other Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph (a) of this Section 13, the Principal Party will (i) prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; and (ii) will deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a). 24 14. Fractional Rights and Fractional Shares. --------------------------------------- (a) The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certifi- cates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock). In lieu of fractional shares of Pre- ferred Stock that are not integral multiples of one one-hundredth of a share of Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b), the current market value of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise. (c) Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one (1) share of Common Stock. For purposes of this Section 14(c), the current market value of one share of Common Stock shall be the closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. (d) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14. 25 15. Rights of Action. All rights of action in respect ---------------- of this Agreement are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement. 16. Agreement of Rights Holders. Every holder of a --------------------------- Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock; (b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed; (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its best efforts to have any - -------- such order, decree or ruling lifted or otherwise overturned as soon as possible. 26 17. Rights Certificate Holder Not Deemed a Stockholder. -------------------------------------------------- No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of one one-hundredths of a share of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof. 18. Concerning the Rights Agent. --------------------------- (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. 27 19. Merger or Consolidation or Change of Name of Rights Agent. --------------------------------------------------------- (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, -------- however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement. 20. Duties of Rights Agent. The Rights Agent undertakes ---------------------- the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of "current market price") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 28 (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or Section 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, however, reasonable care was -------- exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company. 29 21. Change of Rights Agent. The Rights Agent or any ---------------------- successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of Missouri (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Missouri), in good standing, having a principal office in the State of Missouri, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100,000,000. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 22. Issuance of New Rights Certificates. Notwithstanding any of ----------------------------------- the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate -------- shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 30 23. Redemption and Termination. -------------------------- (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the tenth business day following the Stock Acquisition Date or (ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"); provided, however, that if, following -------- the occurrence of a Stock Acquisition Date and following the expiration of the right of redemption hereunder but prior to any Triggering Event, (i) a Person who is an Acquiring Person shall have transferred or otherwise disposed of a number of shares of Common Stock in one transaction or series of transactions, not directly or indirectly involving the Company or any of its Subsidiaries, which did not result in the occurrence of a Triggering Event such that such Person is thereafter a Beneficial Owner of 10% or less of the outstanding shares of Common Stock, and (ii) there are no other Persons, immediately following the occurrence of the event described in clause (i), who are Acquiring Persons, then the right of redemption shall be reinstated and thereafter be subject to the provisions of this Section 23. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has expired. (b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder's last address as it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. 31 24. Notice of Certain Events. ------------------------ (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), or (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock whichever shall be the earlier. (b) In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, other securities. 32 25. Notices. Notices or demands authorized by this ------- Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Anheuser-Busch Companies, Inc. One Busch Place St. Louis, Missouri 63118-1852 Attention: Corporate Secretary Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Boatmen's Trust Company 510 Locust Street St. Louis, Missouri 63101 Attention: Corporate Trust Department Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 26. Supplements and Amendments. Prior to the Distribution -------------------------- Date and subject to the penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any holders of certificates representing shares of Common Stock. From and after the Distribution Date and subject to the penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any lengthen any time period hereunder, or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Rights Certificates; provided, this Agreement may not be supplemented or -------- amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when the Rights may be redeemed at such time as the Rights are not then redeemable, or (B) any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment. Notwithstanding anything contained in this Agreement to the contrary, no supplement or amendment shall be made which changes the Redemption Price, the Final Expiration Date, the Purchase Price or the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable; provided, -------- however, that at any time prior to (i) the existence of an Acquiring Person or (ii) the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of 30% or more of the shares of Common Stock then outstanding, the Board of Directors of the Company may amend this Agreement to increase the Purchase Price or extend the Final Expiration Date. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. 33 27. Successors. All the covenants and provisions of ---------- this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 28. Determinations and Actions by the Board of Directors, etc. --------------------------------------------------------- For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company (with, where specifically provided for herein, the concurrence of the Continuing Directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board or the Continuing Directors to any liability to the holders of the Rights. 29. Benefits of this Agreement. Nothing in this -------------------------- Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock). 30. Severability. If any term, provision, covenant or ------------ restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, -------- however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the close of business on the tenth day following the date of such determination by the Board of Directors. Without limiting the foregoing, if any provision requiring a majority of the Board of Directors of the Company to be Continuing Directors to act is held by any court of competent jurisdiction or other authority to be invalid, void or unenforceable, such determination shall then be made by the Board of Directors of the Company in accordance with applicable law and the Company's Certificate of Incorporation and By-Laws. 34 31. Governing Law. This Agreement, each Right and each ------------- Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. 32. Counterparts. This Agreement may be executed in any ------------ number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 33. Descriptive Headings. Descriptive headings of the -------------------- several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. Attest: ANHEUSER-BUSCH COMPANIES, INC. Corporate Seal By /s/ Laura Reeves By /s/ Ellis W. McCracken, Jr. ----------------------------------- -------------------------------- Name: Laura Reeves Name: Ellis W. McCracken, Jr. Title: Assistant Secretary Title: Vice President and General Counsel Attest: BOATMEN'S TRUST COMPANY Corporate Seal By /s/ R. Clasquin By /s/ H. E. Bradford ----------------------------------- -------------------------------- Name: R. Clasquin Name: H. E. Bradford Title: Assistant Secretary Title: Senior Vice President 35 Exhibit A --------- [Form of Rights Certificate] Certificate No. R- _________ Rights NOT EXERCISABLE AFTER OCTOBER 31, 2004 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] [FN] - -------------------------- The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence. Rights Certificate ANHEUSER-BUSCH COMPANIES, INC. This certifies that , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of October 26, 1994 (the "Rights Agreement"), between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and Boatmen's Trust Company, a trust company organized under the State of Missouri (the "Rights Agent"), to purchase from the Company at any time prior to 4:45 P.M. (St. Louis time) on October 31, 2004 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, nonassessable share of Series B Junior Participating Preferred Stock (the "Preferred Stock") of the Company, at a purchase price of $195 per one one-hundredth of a share (the "Purchase Price"), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The Purchase Price shall be paid, at the election of the holder, in cash or shares of Common Stock of the Company having an equivalent value. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of October 26, 1994, based on the Preferred Stock as constituted at such date. Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event. As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Preferred Stock or other securities, which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events. 36 This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the above- mentioned office of the Rights Agent and are also available upon written request to the Rights Agent. This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-hundredths of a share of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.01 per Right at any time prior to the earlier of the close of business on (i) the tenth business day following the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement), and (ii) the Final Expiration Date. After the expiration of the redemption period, the Company's right of redemption may be reinstated if an Acquiring Person reduces his beneficial ownership to 10% or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company. 37 No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or, to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _________ __, ____ ATTEST: ANHEUSER-BUSCH COMPANIES, INC. ___________________________________ By____________________________ Secretary Title: Countersigned: BOATMEN'S TRUST COMPANY By________________________________ Authorized Signature [Form of Reverse Side of Rights Certificate] 38 FORM OF ASSIGNMENT ------------------ (To be executed by the registered holder if such holder desires to transfer the Rights Certificate.) FOR VALUE RECEIVED __________________________________________________________ hereby sells, assigns and transfers unto ____________________________________ ______________________________________________________________________________ (Please print name and address of transferee) ______________________________________________________________________________ this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ________________ Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution. Date: ________________________, ____ __________________________________ Signature Signature Guaranteed: 39 Certificate ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: ___________, ____ __________________________________ Signature Signature Guaranteed: NOTICE ------ The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. 40 FORM OF ELECTION TO PURCHASE ---------------------------- (To be executed if holder desires to exercise Rights represented by the Rights Certificate.) To: ANHEUSER-BUSCH COMPANIES, INC.: The undersigned hereby irrevocably elects to exercise __________ Rights represented by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to: Please insert social security or other identifying number ______________________________________________________________________________ (Please print name and address) ______________________________________________________________________________ If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number ______________________________________________________________________________ (Please print name and address) ______________________________________________________________________________ ______________________________________________________________________________ Dated: _______________, ____ ---------------------------------- Signature Signature Guaranteed: 41 Certificate ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: ___________, ____ __________________________________ Signature Signature Guaranteed: NOTICE ------ The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever. 42 EXECUTION COPY ______________________________________________________________________________ ANHEUSER-BUSCH COMPANIES, INC. and BOATMEN'S TRUST COMPANY Rights Agent ______________________ Rights Agreement Dated as of October 26, 1994 ______________________________________________________________________________ 43 Table of Contents -----------------
Section Page - ------- ---- 1. Certain Definitions 2 2. Appointment of Rights Agent 6 3. Issue of Rights Certificates 6 4. Form of Rights Certificates 8 5. Countersignature and Registration 9 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates 10 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 11 8. Cancellation and Destruction of Rights Certificates 14 9. Reservation and Availability of Capital Stock 15 10. Preferred Stock Record Date 17 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights 17 12. Certificate of Adjusted Purchase Price or Number of Shares 30 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 31 14. Fractional Rights and Fractional Shares 34 15. Rights of Action 35 16. Agreement of Rights Holders 36 17. Rights Certificate Holder Not Deemed a Stockholder 37 18. Concerning the Rights Agent 37 19. Merger or Consolidation or Change of Name of Rights Agent 38 20. Duties of Rights Agent 39 21. Change of Rights Agent 42 22. Issuance of New Rights Certificates 43 23. Redemption and Termination 43 24. Notice of Certain Events 45 25. Notices 46 26. Supplements and Amendments 47 27. Successors 48 28. Determinations and Actions by the Board of Directors, etc. 48 29. Benefits of this Agreement 49 30. Severability 49 31. Governing Law 49 32. Counterparts 50 33. Descriptive Headings 50 Exhibit A -- Form of Rights Certificate A-1
EX-10.1 4 DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS 1 ANHEUSER-BUSCH COMPANIES, INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (AMENDED AND RESTATED AS OF MARCH 1, 2000) The Deferred Compensation Plan For Non-Employee Directors, originally effective June 24, 1981, amended and restated in is entirety effective July 24, 1981, April 2, 1987, February 22, 1989, and January 1, 1997, is hereby amended and restated in its entirety, effective March 1, 2000. 1. Definitions ----------- (a) "Board" - the Board of Directors of the Company. (b) "Cash Account" - each account being administered for the benefit of a Participant pursuant to section 5 below. (c) "Company" - Anheuser-Busch Companies, Inc. (d) "Compensation" - any retainer, meeting and committee fees, or any similar fee to which a Non-Employee Director is entitled for services performed. (e) "Credited Shares" - the shares of the Company's common stock which, for accounting purposes only, are to be credited to a Participant's Share Account from time to time. At no time shall Credited Shares be considered as actual shares of common stock and a Participant shall have no rights as a stockholder with respect to the Credited Shares. (f) "Deferred Amount" - Compensation deferred by a Participant under the Plan together with all interest, dividends or other amounts credited to a Participant's account(s) pursuant to the provisions of the Plan. (g) "Market Value" - the mean between the high and low price per share of the Company's common stock, as reported on the New York Stock Exchange, for the last business day of a calendar month. (h) "Non-Employee Director" - any duly elected or appointed member of the Board who is not an employee of the Company or of any subsidiary of the Company, including for this purpose any Advisory Member or any Member Emeritus. 2 (i) "Participant" - any Non-Employee Director who elects hereunder to defer payment by the Company of any or all Compensation to which he/she may be entitled and any Non-Employee Director entitled to a benefit under the Plan pursuant to section 9 below. (j) "Plan" - the Anheuser-Busch Companies, Inc. Deferred Compensation Plan For Non-Employee Directors. (k) "Prime Rate" - The annual prime interest rate published by The Boatmen's National Bank of St. Louis or its successor. (l) "Rate/Term" - one or more combinations of interest rates and time periods which shall apply to Compensation allocated to Participants' Cash Accounts for a calendar year pursuant to section 5 below. (m) "Secretary" - the duly elected Secretary of the Company. (n) "Share Account" - each account being administered for the benefit of a Participant pursuant to section 6 below. 2. Administration -------------- The Plan shall be administered by the Secretary, who shall have the authority to construe and interpret the Plan, and to establish or adopt rules, regulations, procedures and forms relating to the administration of the Plan. The Secretary shall have no authority to add to, delete from or modify the terms of the Plan without the prior approval of the Board. Neither the Secretary nor any member of the Board shall be liable for any act or determination made in good faith. Notwithstanding the foregoing, the Secretary shall have complete power from time to time to adopt, amend, and rescind such rules as the Secretary shall deem necessary, appropriate, or prudent in order to comply with or avoid liability under Section 16 of the Securities Exchange Act of 1934, as amended, or the rules promulgated thereunder from time to time. Without limiting the generality of such authority, the Secretary may adopt, amend, and rescind rules which may have the effect of adding to, deleting from, or otherwise modifying the terms of the Plan in any respect, provided only that the Secretary in good faith determines 2 3 that such rules are reasonably likely to further the objective of complying with or lawfully avoiding liability under Section 16 or the rules thereunder. In addition, from time to time the Secretary may (but need not) adopt, amend, and rescind rules which relax Plan restrictions on the timing or frequency of actions by Plan Participants if and to the extent the Secretary determines that such restrictions no longer are necessary to conform the Plan to any applicable legal requirements and no longer are appropriate to the prudent and convenient administration of the Plan. Any rules adopted, amended, or rescinded by the Secretary hereunder shall become effective at such times as the Secretary may determine, without approval or other action by the Board of Directors of the Company. The Secretary shall notify the Board promptly of any rules adopted, amended, or rescinded hereunder. The Board at all times shall retain the power to annul in whole or part any action taken by the Secretary hereunder. 3. Elections under the Plan ------------------------ The following types of election shall be available under the Plan: (a) (1) Each Non-Employee Director who desires to participate in the Plan for a calendar year shall execute and deliver to the Secretary before the beginning of the calendar year an appropriate election designating the portion of Compensation for the calendar year to be deferred. (2) An individual who becomes a Non-Employee Director after the beginning of a calendar year may make an initial election for the calendar year within 30 days after the individual becomes a Non-Employee Director, effective as of the first day of the month coincident with or next following the date the election is filed. (3) After the initial election, a Participant's failure to execute and deliver such an election before the beginning of a calendar year shall be deemed an election to continue to defer Compensation in accordance with the election in effect for the immediately prior calendar year. (b) (1) Coincident with the initial election provided for in section 3(a), a Participant shall execute and deliver to the Secretary an appropriate election designating the portion of the Participant's future Compensation to be 3 4 deferred that shall be allocated to the Cash Account and the Share Account respectively, and may make such an election from time to time thereafter with respect to future deferrals in the same manner. (2) A Participant may elect to transfer existing Deferred Amounts between the Cash Account and the Share Account from time to time as provided for in section 7. (c) Each Participant for whom a Cash Account is maintained at any time during a calendar year shall execute and deliver to the Secretary an appropriate election designating the Rate/Term combinations which shall apply to the amounts in the Participant's Cash Account as provided for in section 5 for the calendar year. (d) (1) Coincident with the initial election provided for in section 3(a), a Participant shall execute and deliver to the Secretary an appropriate election designating the date of commencement and form of distribution of the Participant's Deferred Amounts authorized in section 8(b). (2) In addition, a Participant may from time to time execute such an election designating a later date of commencement and/or a longer payment period for all or any portion of the Participant's existing Deferred Amounts and/or the Participant's Compensation to be deferred in the future, provided that no such election with respect to existing Deferred Amounts shall be valid unless it is executed and received by the Secretary at least one year prior to the date of commencement then on file with the Secretary and at least one year prior to the date the Participant's service on the Board is scheduled to end (including service as an Advisory Member or Member Emeritus). (e) (1) Any election under this section 3 shall be effective on and after the first day of the month next following the month in which the election form is received by the Secretary or such later date as may be specified on the election form, except with respect to transfers between the Cash Account and the Share Account, which shall be effective at the end of the month in which the election form is received by the Secretary as provided for in section 7(b). (2) The receipt by the Secretary of a new election form shall constitute a revocation of any previously filed 4 5 inconsistent election, provided that a Participant shall not be able to change the election provided for in section 3(a) before the first day of the following calendar year and a Participant shall not be able to change the elections provided for in section 3(b) before the later of the first day of the following calendar year or the expiration of the fixed Term, if any, that the Participant chose for any Deferred Amounts subject to the election, as provided for in section 5. (3) No election to change the amount or percentage of Compensation a Participant elects to defer shall be retroactively effective. 4. Accounting ---------- (a) The Company shall establish on its books appropriate bookkeeping accounts for each Participant which will accurately reflect the Deferred Amount in each account of a Participant. (b) The Secretary shall furnish each Participant with a statement of the Deferred Amount in each account promptly following the end of each calendar year. 5. Cash Account ------------ (a) Each Participant's Cash Account shall consist of all of the Deferred Amounts credited pursuant to a specific election to defer, a valid transfer from the Participant's Share Account, or an election by the Participant pursuant to section 9, if any. (b) Crediting of interest on Deferred Amounts in a Participant's Cash Account shall be governed by this section 5. (c) (1) Before the beginning of each calendar year, the Company shall offer one or more Rate/Term combinations. (2) The fixed Rates and Terms for each calendar year shall be determined by the Chief Financial Officer of the Company and shall be identical to the Rates and Terms available for the calendar year under the Anheuser-Busch Executive Deferred Compensation Plan. (3) A fixed Term elected by a Participant need not be limited to the deferral period for the amount subject to 5 6 the Term elected. For example, a Participant may elect a 10-year Term for an amount that will become payable after 5 calendar years. (4) In addition to any fixed Rate/Term combinations provided for in this section 5(c), the Prime Rate shall be offered to Participants for each calendar year. Deferred Amounts subject to the Prime Rate shall be credited as of the end of each calendar quarter with an amount equal to the product of one-fourth of the Prime Rate in force at the end of that calendar quarter, multiplied by the average daily balance of such Deferred Amounts for that calendar quarter. (5) All fixed Terms shall commence on a January 1 and expire on a December 31. If a Participant executes and delivers a Rate/Term election for a calendar year before the beginning of the calendar year, it shall become effective as of January 1 of such calendar year. If a Participant does not execute and deliver the appropriate election form before the beginning of a calendar year, the Participant shall be deemed to have elected that any amounts subject to such an election as of the beginning of the calendar year be subject to the Prime Rate. As to any portion of a Participant's Cash Account subject to the Prime Rate as of the beginning of a calendar year, the Participant may make a Rate/Term election effective as of the first day of any succeeding calendar month during the calendar year. For example: (i) if before January 1, 1995, a Participant elects a combination of a 3-year Term and a 3% Rate for 1995, the 3% Rate shall apply to affected Deferred Amounts from January 1, 1995 through December 31, 1997; (ii) if a Participant elects the Prime Rate as of January 1, 1995 and then a combination of a 3-year Term and a 3% Rate as of April 1, 1995, the Prime Rate shall apply to affected Deferred Amounts from January 1, 1995 through March 31, 1995, and the 3% Rate shall apply to affected Deferred Amounts from April 1, 1995 through December 31, 1997; and (iii) if a Participant makes no Rate/Term election for any portion of a calendar year, the affected Deferred Amounts shall be subject to the Prime Rate for the entire calendar year. (d) (1) Each Participant shall elect among the Rate/Term combinations available under section 5(c) which shall apply to the Participant's Compensation allocated to the Participant's Cash Account for the calendar year, to all 6 7 Deferred Amounts allocated to the Participant's Cash Account in prior calendar years which were subject to the Prime Rate as of the prior December 31, and to other Deferred Amounts allocated to the Participant's Cash Account in prior calendar years as to which the previous Terms expired on December 31 of the prior calendar year. (2) The number of Rate/Term combinations a Participant may select for a calendar year shall not exceed the number of Rate/Term combinations a participant may select under the Anheuser-Busch Executive Deferred Compensation Plan for the same calendar year. (e) Interest shall accrue on the Deferred Amounts of a Participant for each calendar year in accordance with the Participant's elections as provided for in this section 5 until payment becomes due with respect to such amounts. 6. Share Account ------------- (a) Each Participant's Share Account shall consist of all of the Deferred Amounts credited pursuant to a specific election to defer, a valid transfer from the Participant's Cash Account or an election by the Participant pursuant to section 9, if any. Any amount credited to a Share Account in a calendar month shall be converted, as of the end of that calendar month, into the maximum whole number of Credited Shares that the amount so credited could have purchased at the then Market Value. (b) As of the end of the calendar month during which the Company pays any dividend on its common stock, either in cash or property other than its common stock, a Share Account shall be credited with an amount equal to the cash dividend per share or the value per share (as conclusively determined by the Board), of the dividend in property other than its common stock, times the Credited Shares in the Share Account on the dividend record date. The amount so credited will be converted into the maximum whole number of Credited Shares that the amount so credited could have purchased at the then Market Value. If the Company pays any stock dividend, a Share Account shall be credited, as of the end of the calendar month during which the stock dividend is paid, with an amount equal to the stock dividend declared times the Credited Shares in the Share Account on the dividend record date. 7 8 (c) If any distribution other than a dividend is made on, or with respect to, the Company's common stock, or in the event of a stock split, recapitalization or other adjustment of the Company's common stock, an appropriate adjustment shall be made to the number of Credited Shares in a Share Account or to the cash credited to the Share Account on the same basis as would have been made had the Credited Shares then been actually issued and outstanding on the record date. The Board shall resolve any questions as to the appropriateness of any such adjustment, including, but not limited to, values and exchange ratios, and its determination shall be binding and conclusive. (d) All conversions into Credited Shares under subsections 6(a) through (c) above shall be made in full shares. Amounts not so converted shall be carried as excess cash in a Share Account and shall be added to any additional amounts subsequently available for conversion. 7. Election to Transfer -------------------- (a) Subject to any rules promulgated by the Secretary pursuant to section 2, a Participant may transfer from time to time: (1) all or any portion of any Deferred Amount from the Share Account to the Cash Account, or (2) all or any portion of any Deferred Amount then invested either at the Prime Rate or for a Term that expires on the effective date of the election to transfer from the Cash Account to the Share Account, by executing and delivering to the Secretary the appropriate election form. A Participant may make such an election to transfer Deferred Amounts that then remain payable to the Participant under the Plan, including the period after termination of service as a Non-Employee Director (including service as an Advisory Member or Member Emeritus) and any period of payment in installments. If a Participant elects to transfer any portion of any Deferred Amount from the Share Account to the Cash Account, the Participant may make a Rate/Term election with respect to the amount transferred incident to the election to transfer. (b) A transfer shall be effective as of the end of the calendar month in which the election is received by the Secretary and shall be based on the Market Value of the 8 9 Credited Shares for the month during which the election is made. (c) An election to transfer shall not affect any current elections to defer. No transfer may change either the date distribution is to commence or the form of distribution with respect to the Deferred Amount being transferred. 8. Distribution ------------ (a) Except in the case of the death of a Participant, distribution shall commence as of the first day of the calendar quarter coincident with or next following the date specified by the Participant. (b) Except in the case of the death of the Participant, payment of the amount in each deferred compensation account shall be either in the form of a lump sum or approximately equal quarterly installments over a period not to exceed ten (10) years as selected by the Participant; provided, if payment is made in installments and the Participant has both a Cash Account and a Share Account subject to the distribution as of the date of payment of any installment, the installment shall be paid pro rata from the Cash Account -------- and the Share Account. (c) In the event of the Participant's death prior to the date specified for distribution of any account, or after distribution to the Participant has commenced but before full distribution of any account has been made, the then remaining balance in each account shall be paid in a lump sum to the beneficiary or contingent beneficiary designated by the Participant, or to the estate of the deceased Participant if there is no surviving beneficiary or contingent beneficiary. In either such event the lump sum payment shall be made as of the first day of the calendar quarter following the Participant's date of death. A Participant may change the beneficiary or contingent beneficiary from time to time by filing with the Secretary a written notice of Such change; provided, however, no such notice of change of beneficiary shall be effective unless it had been received by the Secretary prior to the date of the Participant's death. (d) (1) If a Change in Control (as defined in Section 8(d)(2)) shall occur, then, notwithstanding anything to the contrary herein, within 30 days after the Change in Control 9 10 Date, each Participant shall be paid, in a single lump-sum payment, the value of all of the Participant's accounts. (2) For purposes of this Plan, a "Change in Control" shall occur automatically if and when an "Acceleration Date" occurs as defined in the Company's 1998 Incentive Stock Plan or if and when an analogous change in control event occurs as defined in any successor to such plan, and the Change in Control Date shall be the Acceleration Date or analogous date as defined therein. (3) This Section 8(d) may be deleted or amended in any way pursuant to Section 10(a) at any time prior to a Change in Control. Notwithstanding Section 10(a), following a Change in Control, the provisions of this Section 8(d) cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to the Change in Control. (4) Following a Change in Control, this Plan shall continue in effect, notwithstanding that payment of benefits shall have been made under Section 8(d)(1), unless and until terminated by the Company. (5) If by reason of this Section 8(d) an excise or other special tax ("Excise Tax") is imposed on any payment under this Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment. 9. Amounts Attributable to the Non-Employee Directors' Retirement Program. ----------------------------------------------------------------------- (a) Any Participant who was a Non-Employee Director as of January 1, 1996 (including any former Non-Employee Director then serving as an Advisory Member) shall be eligible for a benefit under the Plan, in addition to any other amounts due the Participant under the Plan, determined as follows: (1) The present value as of January 1, 1996 of an annuity commencing as of the first day of the month following the Participant's expected retirement date, payable monthly, equal to 1/12th of the annual fee for Non-Employee Directors in effect as of January 1, 1996, shall be determined, applying the interest rate and mortality assumptions in use 10 11 under the Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan as of January 1, 1996. (2) Effective as of January 1, 1996, the amount so determined shall be allocated to the Participant's Cash Account and/or Share Account under the Plan, in such proportions as the Participant elects, and shall be subject to the adjustments in value provided for in sections 5 and 6 of the Plan; provided that any amount allocated to the Cash Account shall be subject to the Prime Rate and shall not be subject to any fixed Rate/Term election available with respect to other amounts allocated to the Cash Account until January 1, 1997, whereupon the amount shall be subject to all provisions of sections 5, 6 and 7 of the Plan. (3) Effective as of January 1, 1996, the Participant shall elect a form of payment described in section 8(b) with respect to this amount. (4) As of the first day of the month following the date the Participant leaves service as a Non-Employee Director (including service as an Advisory Member or Member Emeritus), the total amount then allocated pursuant hereto to the Participant's Cash Account and Share Account shall become payable in the form elected by the Participant. The Participant may not change the date of commencement of payment of the amount subject to this section 9, but may elect a longer payment period as provided for in section 3(d)(2). (5) In the event of a Participant's death before payment of the amount provided for hereunder is complete, the then remaining balance of the amount due hereunder shall be paid as provided for in section 8(c); provided: (i) the Participant shall make a separate primary beneficiary and contingent beneficiary designation with respect to the amount due hereunder; (ii) a Participant may change the separate primary beneficiary or contingent beneficiary from time to time with respect to any payment due after death hereunder in the manner provided for generally in section 8(c); and (iii) if there is no surviving primary beneficiary or contingent beneficiary designated under the separate beneficiary designation provided for in this section 9(a)(5), the amount due hereunder shall be paid in accordance with the Participant's general beneficiary designation under section 8(c), if any, or if none, to the Participant's estate. 11 12 (b) Except as expressly provided in this section 9, the generally applicable provisions of the Plan shall apply to amounts allocated to the Cash Account and the Share Account in accordance with this section 9. 10. Miscellaneous ------------- (a) The Board may amend or terminate this Plan at any time; however, any amendment or termination of this Plan shall not affect the rights of Participants or beneficiaries to payment, in accordance with section 8 of this Plan, of amounts credited to Participants' accounts hereunder at the time of such amendment or termination. (b) This Plan does not create a trust in favor of a Participant, his/her designated beneficiary or beneficiaries, or any other person claiming on his/her behalf, and the obligation of the Company is solely a contractual obligation to make payments due hereunder. In this regard, the balance in any account shall be considered a liability of the Company and the Participant's right thereto shall be the same as any unsecured general creditor of the Company. Neither the Participant nor any other person shall acquire any right, title, or interest in or to any Deferred Amount outstanding under the Plan other than the actual payment of such Deferred Amount in accordance with the terms of the Plan. (c) No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or change, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or change the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefit. If any Participant or beneficiary shall become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or change any right or benefit hereunder, then such right or benefit shall, in the discretion of the Board, cease and terminate; and in such event, the Company may hold or apply the same or any part thereof for the benefit of the Participant or his/her beneficiary, his/her spouse, children or other dependents, at any time and in such proportion as the Board may deem proper. Any statement to the contrary notwithstanding, the Company may apply any Deferred Amount to satisfy, in whole or in part, any indebtedness of a Participant to the Company. 12 13 (d) Construction of the Plan shall be governed by the laws of Missouri (except with respect to choice of law). (e) The terms of the Plan shall be binding upon the heirs, executors, administrators, personal representatives, successors and assigns of all parties in interest. (f) The headings have been inserted for convenience only and shall not affect the meaning or interpretation of the Plan. (g) Each Participant shall submit to the Secretary his/her current mailing address. It shall be the duty of each Participant to notify the Secretary of any change of address. In the absence of such notice, the Secretary shall be entitled for all purposes to rely on the last known address of the Participant. (h) Any amount payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company and the Board with respect thereto. (i) Nothing in this Plan or any amendment thereto shall give a Participant, or any beneficiary of a Participant, a right not specifically provided therein. Nothing in this Plan or any amendment thereto shall be construed as giving a Participant the right to be retained as a member of the Board. 13 EX-10.2 5 NON-EMPLOYEE DIRECTOR ELECTIVE STOCK ACQUISITION PLAN 1 ANHEUSER-BUSCH COMPANIES, INC. NON-EMPLOYEE DIRECTOR ELECTIVE STOCK ACQUISITION PLAN ----------------------------------------------------- (AMENDED AND RESTATED AS OF MARCH 1, 2000) 1. Definitions ----------- (a) "Advisory Director" - any person designated as an advisory member of the Board who is not an employee of the Company or of any Subsidiary. (b) "Annual Meeting" - the Company's annual meeting of Stockholders in any year. (c) "Board" - the Board of Directors of the Company. (d) "Change of Control Date" - The date, if any, when an "Acceleration Date" occurs as defined in the Company's 1998 Incentive Stock Plan or an analogous change of control event occurs as defined in any successor to such plan. (e) "Company" - Anheuser-Busch Companies, Inc. (f) "Director Shares" - Shares granted pursuant to Section 6. (g) "Issue Date" - (i) with respect to each person who continues to be a Non-Employee Director as of December 31 in any year, the "Issue Date" shall be the first business day of the following calendar year, and (ii) with respect to each person who is newly elected or appointed as a Non-Employee Director, the "Issue Date" in the calendar year of appointment shall be the first business day following the date of such election or appointment. (h) "Non-Employee Director" - any duly elected or appointed member of the Board who is not an employee of the Company or of any Subsidiary and any Advisory Director. (i) "Plan" - the Anheuser-Busch Companies, Inc. Non-Employee Director Elective Stock Acquisition Plan. (j) "Retainer" - the annual retainer fee (exclusive of fees for attending meetings of the Board or committees thereof, fees for meetings dispensed with, committee chairmanship fees and any other fees as in effect from time to time) which becomes payable to a Non-Employee Director for the following calendar year. (k) "Secretary" - the duly elected Secretary of the Company. 2 (l) "Share" - a share of the Company's Common Stock which was reacquired by the Company and is held in treasury. (m) "Subsidiary" - an entity of which the Company (directly or through one or more Subsidiaries) is the beneficial owner of more than 50% of the entity's outstanding voting securities (measured on the basis of voting power). 2. Administration -------------- The Plan shall be administered by the Secretary who shall have the authority to construe and interpret the Plan, and to establish or adopt rules, regulations and forms relating to the administration of the Plan. The Secretary shall have no authority to add to, delete from or modify the terms of the Plan, as the Plan shall be nondiscretionary as to the eligibility of participants and the timing and amounts of the grants. Neither the Secretary nor any member of the Board shall be liable for any act or determination made in good faith. 3. Purpose ------- The Plan is intended to assist in attracting, retaining and motivating Non-Employee Directors of outstanding ability and to promote identification of their interests with those of the stockholders of the Company. 4. Eligibility ----------- Subject to Section 12, all Non-Employee Directors shall be eligible. 5. Shares Subject to the Plan -------------------------- The maximum number of Shares that may be issued under the Plan is 50,000. 6. Director Shares --------------- (a) On or prior to the last day of the calendar year each year until no Shares remain available under the Plan, each person who is then a Non-Employee Director may make an election to receive up to 100% of his or her Retainer in Shares in lieu of cash. The election shall be in writing on a form prescribed by the Company, shall specify the percentage of the Retainer to be paid in Shares, and shall be irrevocable. 2 3 Notwithstanding the foregoing, any Advisory Director whose term in such position is scheduled to expire at the next Annual Meeting may make the election under this Section 6(a) only with respect to the portion of the Retainer which is payable for the period ending on the date of such Annual Meeting. Any Non-Employee Director who is newly elected or appointed as such may make the election under this Section 6(a) upon the date of his or her election or appointment as a Non-Employee Director with respect to the portion of the Retainer which is payable for the remainder of the calendar year. (b) The percentage of the Retainer to be paid in Shares shall not be paid in cash, but in lieu thereof shall be paid by the transfer of such Shares to such Non-Employee Director. On each Issue Date, each Non-Employee Director who has elected to receive a percentage of the Retainer in Shares pursuant to the terms of this section shall automatically and without necessity of any action by the Company, be entitled to receive Shares for such percentage of the Retainer pursuant to the terms and conditions of the Plan. For purposes of the Plan, the number of Shares shall be determined by dividing (A) the amount of the Retainer to be paid in Shares by (B) the mean of the high and low sale prices per share of the Company's Common Stock on the New York Stock Exchange on the Issue Date (provided that, if the Issue Date is not a trading day on the New York Stock Exchange, then on the preceding such trading day), rounding to the nearest whole number. If on any Issue Date the number of Director Shares otherwise issuable to the Non-Employee Directors shall exceed the number of Shares then remaining available under the Plan, the available Shares shall be allocated among the Non-Employee Directors in proportion to the number of Shares they would otherwise be entitled to receive, and the remainder of the Retainer shall be payable in cash. 7. Capital Adjustments ------------------- The maximum number of Shares subject to the Plan pursuant to Section 5 shall be proportionately adjusted to reflect any dividend or other distribution on the Company's outstanding Common Stock payable in shares of the Company's Common Stock or any split or consolidation of the outstanding shares of the Company's Common Stock. If the Company's outstanding Common Stock shall, in whole or in part, be changed into or exchangeable for a different class or classes of securities of the Corporation or securities of another corporation, whether through recapitalization, merger, consolidation, reorganization or otherwise, then (subject to the powers of the Board to amend the Plan in whole or in part as provided in Section 14(a)) the Director Shares which each Non-Employee Director is entitled to receive on any Issue Date pursuant to Section 6 shall thereafter be paid in the class, or proportionately in the classes, of securities into which the outstanding shares of the Company's Common Stock shall have been converted or for which they are exchangeable, and the maximum amount of securities issuable under the Plan under Section 5 shall be the number of 3 4 securities into or for which such number of Shares would be changed or exchangeable. 8. Rights as a Stockholder ----------------------- Prior to the Issue Date, the Non-Employee Director shall have no rights as a Stockholder with respect to Director Shares to be issued for the Retainer. 9. Vesting ------- Director Shares shall be fully vested on the Issue Date notwithstanding any subsequent cessation of the status of the participant as a Non-Employee Director prior to the completion of the year of service for which the Retainer was payable. 10. Issuance of Certificates, Payment of Cash Retainers and Withholding ------------------------------------------------------------------- (a) As promptly as practicable following each Issue Date, the Company shall issue stock certificates registered in the name of each Non-Employee Director entitled to receive the Director Shares representing the number of Director Shares determined pursuant to Section 6, and shall deliver such certificates to the Non-Employee Director or his or her beneficiary. (b) The portion of the Retainer not paid in Director Shares shall be payable in cash pursuant to the policies of the Company as in effect from time to time. (c) The Company may make such provisions as it may deem appropriate for the withholding of any federal, state or local taxes which the Company determines it is required to withhold. 11. Relationship to Other Compensation Plans ---------------------------------------- To the extent Non-Employee Directors elect to receive Director Shares under the Plan, they shall not be permitted to defer the receipt thereof under any existing deferred compensation plans or any other such plan which the Board may adopt from time to time. 4 5 12. Legal Restrictions on Participation ----------------------------------- Notwithstanding any provision herein to the contrary, in the event that in the opinion of legal counsel to the Company it may be unlawful or create any regulatory issue for the Company for any Non-Employee Director (due to his or her affiliation or association with any other company or business, or other reason) to own Shares, then such Non-Employee Director may not participate in the Plan. 13. Compliance with the Securities Act of 1933 ------------------------------------------ The Company has no obligation to register the Director Shares under the Securities Act of 1933. Each recipient of Director Shares by accepting such Shares acknowledges that he or she is acquiring the Shares for investment and not with a view to distribution and in addition to any other restriction on transfer provided hereunder, the Director Shares may not be transferred except pursuant to the requirements of Rule 144 including the holding period thereunder, other available exemption from registration, or an effective registration statement. 14. Miscellaneous ------------- (a) The Board may amend this Plan at any time provided, however, that (i) any amendment shall not affect the rights of participants or beneficiaries to Director Shares which have been transferred to them, (ii) the Plan may not be amended more than once in every six months or otherwise to the extent that such amendment would have the effect of disqualifying the participants from administering any other stock plan of the Company for purposes of complying with the terms of Rule 16b-3 under the Securities Exchange Act of 1934 (or any successor rule), and (iii) on or following the Change of Control Date, the Plan may not be amended to affect the rights of any participants. (b) No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. The rights or interests under the Plan are not subject to the claims of creditors provided, however, that the Company may apply any Director Shares held in its custody or withhold the transfer thereof, to satisfy, in whole or in part, any indebtedness of a participant to the Company. (c) Construction of the Plan shall be governed by the laws of Delaware. 5 6 (d) The terms of the Plan shall be binding upon the heirs, executors, administrators, personal representatives, successors and assigns of all parties in interest. (e) The headings have been inserted for convenience only and shall not affect the meaning or interpretation of the Plan. (f) Each participant shall submit to the Secretary, his or her current mailing address. It shall be the duty of each participant to notify the Secretary of any change of address. In the absence of such notice, the Secretary shall be entitled for all purposes to rely on the last address of the participant in the Company's records. (g) Any Director Shares to be delivered to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed delivered when delivered to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such delivery shall fully discharge the Company and the Board with respect thereto. (h) Nothing in this Plan or any amendment thereto shall give a participant, or any beneficiary of a participant, a right not specifically provided therein. Nothing in this Plan or any amendment thereto shall be construed as giving a participant the right to be retained as a member of the Board or otherwise in service to the Company. (i) The Plan became effective commencing January 1, 1996; this amendment and restatement of the Plan shall become effective commencing March 1, 2000. 6 EX-10.8 6 UK ADDENDUM TO THE ANHEUSER-BUSCH COMPANIES, INC. 1 UK ADDENDUM TO THE THE ANHEUSER-BUSCH COMPANIES, INC. 1998 INCENTIVE STOCK PLAN RULES FOR INLAND REVENUE APPROVED GRANTS FOR ELIGIBLE PERSONS IN THE UNITED KINGDOM Adopted by the Company on 23 November 1999 Approved by the Board of the Inland Revenue on: Inland Revenue reference no: X20382/RC PRICEWATERHOUSECOOPERS PLUMTREE COURT LONDON EC4A 4HT 2 UK ADDENDUM TO THE THE ANHEUSER-BUSCH COMPANIES, INC. 1998 INCENTIVE STOCK PLAN RULES FOR INLAND REVENUE APPROVED GRANTS FOR ELIGIBLE PERSONS IN THE UNITED KINGDOM SECTION 1. OVERVIEW (a) This Addendum to the Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan ("the Plan") sets out the rules of The Anheuser-Busch Companies, Inc. 1998 Incentive Stock Plan Inland Revenue Approved Sub-Plan for the United Kingdom ("the Sub-Plan"). The Sub-Plan is intended to be approved by the Board of the Inland Revenue under Schedule 9 to ICTA 1988. (b) Anheuser-Busch Companies, Inc. ("the Company") has established the Sub- Plan under Section 14 of the Plan. The rules of the Plan, in their present form and as amended from time to time, shall, with the modifications set out in this UK Addendum, form the rules of the Sub- Plan. The Sub-Plan shall form part of the Plan and not a separate and independent plan. In the event of any conflict between the rules of the Plan and this UK Addendum, the UK Addendum shall prevail. (c) Notwithstanding Section 2 (ii) of the Plan, no Awards of cash may be made either under this Sub-Plan or in lieu of delivering shares of Stock on exercise of any UK Approved Option granted under this Sub-Plan. (d) The purpose of the Sub-Plan is to enable the grant to, and subsequent exercise by, employees and directors in the United Kingdom, on a tax favoured basis, of options to acquire shares in the Company under the Plan. SECTION 2. MAXIMUM NUMBER OF SHARES (a) For the avoidance of doubt, shares of Stock which may be issued pursuant to Awards under the Plan shall include shares of Stock placed under an Approved UK Option granted under the Sub-Plan for the purposes of Section 2 of the Plan. (b) The shares of Stock pursuant to an Award of UK Approved Options granted under the Sub-Plan shall form part of the Ordinary Share Capital of the Company and shall at all times comply with the requirements of paragraphs 10 to 14 of Schedule 9 to ICTA 1988. SECTION 3. ELIGIBILITY (a) Notwithstanding Section 3 of the Plan, a director of the Company or a Subsidiary or an Affiliate will not be eligible to receive UK Approved Options unless he is contracted to work at least 25 hours per week for the Company and or any of its Subsidiaries 1 3 (exclusive of meal breaks). (b) The companies participating in the Sub-Plan shall be the Company and any company Controlled by the Company which has been nominated by the Company to participate in the Sub-Plan. SECTION 4. GENERAL PROVISIONS RELATING TO AWARDS (a) An option granted under the Sub-Plan shall be granted under and subject to the rules of the Plan as modified by this UK Addendum. (b) Any terms, restrictions or conditions imposed upon the grant of a UK Approved Option by the Committee under Section 4(a) of the Plan shall be: * objective; * such that, once satisfied, the exercise of the UK Approved Option is not subject to the discretion of any person; and * stated on the Date of Grant. (c) Notwithstanding Section 4(b) of the Plan, Stock Appreciation Rights may not be granted as alternatives to UK Approved Options granted under this Sub-Plan. (d) An Award Document issued in respect of a UK Approved Option granted under the Sub-Plan must state all provisions relating to the vesting or exercise of that UK Approved Option after termination of employment and all provisions relating to the circumstances under which a termination is deemed to occur. (e) If under Section 4(d) of the Plan, a provision is inserted into an Award Document issued in respect of a UK Approved Option granted under the Sub-Plan permitting a Recipient to designate the person who may exercise an Award after the Recipient's death, such provision must state that the UK Approved Option may be exercised by such designated person at any time during the twelve month period following the Recipient's death and only if the exercise occurs within ten years from the Date of Grant, and if not so exercised, the UK Approved Option shall lapse immediately. (f) A UK Approved Option shall be personal to the Eligible Person to whom it is granted and, subject to Section 4(d) of the Plan, shall not be capable of being transferred, charged or otherwise alienated and shall lapse immediately if the Recipient purports to transfer, charge or otherwise alienate the UK Approved Option. (g) Section 4(g) of the Plan is disapplied for the purpose of the Sub-Plan. (h) If an event occurs as a result of which the Committee considers that a performance target or other condition imposed on the exercise of a UK Approved Option is no longer appropriate, the Committee may amend an Award Document in respect of that UK Approved Option by substituting, varying or waiving under Section 4(h) of the 2 4 Plan the performance target or condition, provided that any such substitution, variation or waiver shall: * be reasonable in the circumstances; * produce a fairer measure of performance and be neither materially more nor less difficult to satisfy; and * be approved beforehand by the Board of Inland Revenue. (i) Subject to Rule 4(h) of this Sub-Plan, no other amendments may be made Under Section 4(h) of the Plan to an Award Document issued in respect of a UK Approved Option granted under the Sub-Plan. SECTION 5. OPTIONS AND SARS (a) The amount payable per share of Stock on the exercise of a UK Approved Option shall not be less than the Fair Market Value of a share of Stock on the Date of Grant and shall be stated on the Date of Grant. (b) Notwithstanding Section 5(a) of the Plan, Stock Appreciation Rights may not be granted as alternatives to UK Approved Options granted under this Sub-Plan. (c) A UK Approved Option may not be granted earlier than the Approval Date and a UK Approved Option may not be granted to an individual who is not an Eligible Person at the Date of Grant. No UK Approved Option shall be granted to an Eligible Person at a time when the Eligible Person has, or has had within the preceding twelve (12) months, a Material Interest in a Close Company which is (i) the Company or (ii) a company which has control of the Company. (d) A UK Approved Option may not be granted to an Eligible Person if the result of granting the UK Approved Option would be that the aggregate Fair Market Value of the shares subject to all outstanding options granted to him under the Sub-Plan or any other share option scheme established by the Company or an Associated Company and approved by the Board of the Inland Revenue under Schedule 9 to ICTA 1988 (other than a savings related share option scheme) would exceed sterling 30,000 or such other limit as may from time to time be specified in paragraph 28 of Schedule 9 to ICTA 1988. For this purpose, the United Kingdom sterling equivalent of the market value of a share on any day shall be determined by taking the highest buying price of the bid/offer spread for that day as shown in the Financial Times. (e) An Award Document issued in respect of a UK Approved Option granted under the Sub-Plan shall state: - that it is issued in respect of a UK Approved Option; 3 5 - the Date of Grant of the UK Approved Option; - the number of shares of Stock subject to the UK Approved Option; - the option price under the UK Approved Option; - any performance target or other condition imposed on the exercise of the UK Approved Option under Section 4(a) of the Plan; and - the date(s) on which the UK Approved Option will ordinarily become exercisable and the provisions determined by the Committee in relation to the termination of the Recipient's employment under Section 4(c) of the Plan. (f) An Award Document issued in respect of a UK Approved Option shall expressly state that it is issued in respect of a UK Approved Option. An option which is not so identified shall not constitute a UK Approved Option. (g) A UK Approved Option may not be exercised if the Recipient then has, or has had within the preceding twelve months, a Material Interest in a Close Company which is the Company or which is a company which has Control of the Company or which is a member of a Consortium which owns the Company. SECTION 6. LIMITED RIGHTS The provisions contained at Section 6 of the Plan shall not form part of, and no such rights may be granted under, the Sub-Plan. SECTION 7. STOCK ISSUANCE, PAYMENT AND WITHHOLDING (a) The amount due on the exercise of a UK Approved Option shall be paid in cash or by cheque or banker's draft and may be paid out of funds provided to the Recipient on loan by a bank, broker or other person. Notwithstanding Section 7(a) of the Plan, the amount may not be paid by the transfer to the Company of shares of Stock or any other shares or securities. The date of exercise of a UK Approved Option shall be the date on which the Company receives the amount due on the exercise of the UK Approved Option. (b) The Company shall, as soon as reasonably practicable and in any event not later than thirty days after the date of exercise of a UK Approved Option, issue or transfer to the Recipient, or procure the issue or transfer to the Recipient of, the number of shares of Stock specified in the notice of exercise and shall deliver to the Recipient, or procure the delivery to the Recipient of, a certificate in respect of such shares of Stock together with, in the case of the partial exercise of a UK Approved Option, an Award Document in respect of, or the original Award Document endorsed to show, the unexercised part of the UK Approved Option, subject only to compliance by the Recipient with the rules of the Sub-Plan and to any delay necessary to complete or obtain 4 6 - the listing of the shares of Stock on any stock exchange on which shares of Stock are then listed; - such registration or other qualification of the shares of Stock under any applicable law, rule or regulation as the Company determines is necessary or desirable; or - the making or provision for the payment or withholding of any taxes required to be withheld in accordance with any applicable law in respect of the exercise of the UK Approved Option or the receipt of the shares of Stock. (c) All shares of Stock issued on the exercise of a UK Approved Option shall, as to any voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, rank equally in all respects and as one class with the shares of Stock in issue at the date of such exercise save as regards any rights attaching to such shares of Stock by reference to a record date prior to the date of such exercise. SECTION 8. FORFEITURES (a) Notwithstanding Section 8 of the Plan, a forfeiture may only occur in the event of a termination of employment and in any event is subject to the provisions of the Plan as modified by this UK Addendum and the terms of the Award Document issued in respect of the UK Approved Option. (b) Where, under the provisions of the Plan as modified by this UK Addendum and the terms of the Award Document issued in respect of the UK Approved Option, a forfeiture is required, except in the case where employment is terminated as a result of redundancy (within the meaning of the Employment Rights Act 1996) the Committee retain the discretion to instead permit exercise of the UK Approved Option within the period of ninety days from the date of termination of employment. (c) Notwithstanding Section 8 of the Plan, the term "forfeiture" shall not include the recapture of Stock issued or other economic benefits derived from the exercise of a UK Approved Option. SECTION 9. ADJUSTMENTS AND ACQUISITIONS (a) Notwithstanding Section 9(a) of the Plan, no adjustment may be made to a UK Approved Option unless approval has been given for such adjustment by the Board of the Inland Revenue. (b) The following words at Section 9(a) of the Plan "Alternatively to (i) and (iii), if there is an Adjustment Event and the Committee deems it appropriate, it may provide for cash payments to holders of outstanding Awards" 5 7 are disapplied for the purposes of this Sub-Plan. (c) Section 9 of the Plan is replaced with the following provisions 9(d), (e), (f) and (g) below for the purposes of the Sub-Plan: "9(d)(i) EXCHANGE OF OPTIONS If a company ("Acquiring Company") obtains Control of the Company as a result of making: 1. a general offer to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or 2. a general offer to acquire all the shares in the Company of the same class as the shares of Stock a Recipient may, at any time during the period set out in Section 9(d)(ii) below by agreement with the Acquiring Company, release his or her UK Approved Option in whole or in part in consideration of the grant to him of a new option ("New Option") which is equivalent to the UK Approved Option but which relates to shares ("New Shares") in: 3. the Acquiring Company; 4. a company which has Control of the Acquiring Company; or 5. a company which either is, or has Control of, a company which is a member of a Consortium which owns either the Acquiring Company or a company having Control of the Acquiring Company. (ii) PERIOD ALLOWED FOR EXCHANGE OF OPTIONS The period referred to in Section 9(d)(i) above is the period of six months beginning with the time when the person making the offer has obtained Control of the Company and any condition subject to which the offer is made has been satisfied. (e) Meaning of "equivalent" The New Option shall not be regarded for the purpose of this Section 9 as equivalent to the UK Approved Option unless (i) the New Shares satisfy the conditions in paragraphs 10 to 14 of Schedule 9 to ICTA 1988; and 6 8 (ii) save for any performance target or other condition imposed on the exercise of the UK Approved Option, the New Option will be exercisable in the same manner as the UK Approved Option and subject to the provisions of the Sub-Plan as it had effect immediately before the release of the UK Approved Option; and (iii) the total market value, immediately before the release of the UK Approved Option, of the shares of Stock which were subject to the UK Approved Option is as nearly as may be equal to the total market value, immediately after the grant of the New Option, of the New Shares (market value being determined for this purpose in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992); and (iv) the total amount payable by the Recipient for the acquisition of the New Shares under the New Option is as nearly as may be equal to the total amount that would have been payable by the Recipient for the acquisition of the shares of Stock under the UK Approved Option. (f) Date of grant of New Option The date of grant of the New Option shall be deemed to be the same as the Date of Grant of the UK Approved Option. (g) Application of Sub-Plan to New Option In the application of the Sub-Plan to the New Option, where appropriate, references to "Company" and "shares of Stock" shall be read as if they were references to the company to whose shares the New Option relates and the New Shares, respectively, save that in the definition of "Committee" the reference to "Company" shall be read as if it were a reference to Anheuser-Busch Companies Inc. SECTION 10. ACCELERATION AND VESTING Section 10 of the Plan applies as written to the Sub-Plan. SECTION 11. ADMINISTRATION Section 11 of the Plan applies as written to the Sub-Plan. SECTION 12. AMENDMENT, TERMINATION AND SHAREHOLDER APPROVAL (a) Notwithstanding section 12(a) and (b) of the Plan, no amendment of the Sub-Plan shall take effect until it has been approved by the Board of the Inland Revenue. (b) No Awards of UK Approved Options may be granted under this Sub-Plan at any time whilst it does not retain the approval of the Board of the Inland Revenue. 7 9 SECTION 13. DEFINITIONS (a) In this Sub-Plan: (i) the definition of "AWARD" in the Plan is extended to include the grant of UK Approved Options under this Sub-Plan; (ii) the definition of "AFFILIATE" is extended to include the words "... equity interest (other than a Subsidiary) WHICH IS ALSO A COMPANY UNDER THE CONTROL OF THE COMPANY"; (iii) the definition of "FAIR MARKET VALUE" in the Plan is replaced with the definition: "notwithstanding Section 13(n) of the Plan, FAIR MARKET VALUE means: (a) in the case of a UK Approved Option granted under the Sub-Plan: (i) if at the relevant time the Stock is listed on the New York Stock Exchange the average of the highest and lowest selling prices per share of Stock reported on the New York Stock Exchange Composite Tape or similar quotation service for such date; (ii) if paragraph (i) does not apply, the market value of a share of Stock as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with the Inland Revenue Shares Valuation Division on the Date of Grant of the UK Approved Option or such earlier date or dates as may be agreed with the Board of the Inland Revenue; (b) in the case of an option granted under any other share option scheme, the market value of an ordinary share in the capital of the company determined under the rules of such scheme for the purpose of the grant of the option": (iv) The definition of "OPTION" in the Plan is extended to include a UK Approved Option; (v) The definition of "STOCK" in the Plan is extended to include the words "and means save as provided in paragraph 16.1, a share in the Company satisfying paragraphs 10 to 14 inclusive of Schedule 9 to ICTA 1988"; (vi) The definition of "SUBSIDIARY" in the Plan is extended to include the words "which is under the Control of the Company". The following definitions also apply for the purposes of the Sub-Plan: (i) "ACQUIRING COMPANY" means a company which obtains Control of the Company in the circumstances referred to in Section 9 of this Sub- Plan; 8 10 (ii) "APPROVAL DATE" means the date on which the Sub-Plan is approved by the Board of the Inland Revenue under Schedule 9 to ICTA 1988; (iii) "ASSOCIATED COMPANY" means an associated company as defined in Section 416 of ICTA 1988. (iv) "CLOSE COMPANY" means a "close company" as defined in Section 414 of ICTA 1988. (v) "CONSORTIUM" means the meaning given to that word by Section 187(7) of ICTA 1988; (vi) "CONTROL" means "control" as defined in Section 840 of ICTA 1988. (vii) "DATE OF GRANT" means the date on which a UK Approved Option is granted to an Eligible Person determined in accordance with Section 4 of the Plan; (viii) "ELIGIBLE EMPLOYEE" means an Optionee who is employed by any of the Company, a Subsidiary or Affiliate. (ix) "ICTA 1988" means the Income and Corporation Taxes Act 1988 of the United Kingdom. (x) "MATERIAL INTEREST" means a "material interest" as defined in Section 187(3) of ICTA 1988. (xi) "NEW OPTION" means an option granted by way of exchange under Section 9(d)(i) of the Sub-Plan; (xii) "NEW SHARES" means the shares subject to a New Option referred to in Section 9(d)(i) of the Sub-Plan; (xiii) "ORDINARY SHARE CAPITAL" means the meaning given to that expression by Section 832(1) of ICTA 1988; and (xiv) "UK APPROVED OPTION" means a subsisting right to acquire shares of Stock granted under the Sub-Plan. (c) In this UK Addendum, unless the context otherwise requires: (i) words and expressions not defined above have the same meanings as are given to them in the Plan; (ii) the rule headings are inserted for ease of reference only and do not affect their interpretation; 9 11 (iii) a reference to a rule is a reference to a rule in this UK Addendum; (iv) the singular includes the plural and vice-versa and the masculine includes the feminine; and (v) a reference to a statutory provision is a reference to a United Kingdom statutory provision and includes any statutory modification, amendment or re-enactment thereof. SECTION 14. MISCELLANEOUS Section 14 of the Plan applies as written to the Sub-Plan. 10 EX-10.9 7 EXCESS BENEFIT PLAN 1 ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN AMENDED AND RESTATED AS OF MARCH 1, 2000 Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), established this Excess Benefit Plan, originally effective as of January 1, 1984, to provide supplemental retirement benefits to certain employees whose retirement benefits may be adversely affected by the limitations of Section 415 of the Internal Revenue Code. This Plan is intended to be an "excess benefit plan" as defined in Section 3(36) of the Employee Retirement Income Security Act of 1974. The Plan has been amended and restated from time to time. The Company hereby amends and restates the Plan as of March 1, 2000. The provisions of this restated Plan shall apply to all eligible individuals whose termination of employment occurs on or after March 1, 2000. 1. Definitions Applicable to this Excess Benefit Plan. All capitalized --------------------------------------------------- terms used in this Plan shall have the meanings herein set out: (a) "Actuarial Equivalent" means a benefit or benefits, or a payment or payments, which are of equal value at the date of determination to the benefits for which they are to be substituted. Equivalence of value is determined from actuarial calculations based on actuarial assumptions as to interest and mortality applicable with respect to the particular form or forms of payment under the Basic Plan, disregarding interest and mortality assumptions grandfathered as of December 31, 1999 with respect to single sum and installment payments. (b) "Basic Plan" means the Supplement for the Anheuser-Busch Salaried Employees Pension Plan maintained as part of the Anheuser-Busch Companies Pension Plan as now in effect or as hereafter amended. (c) "Committee" means the same group of persons appointed to administer the Basic Plan. (d) "Company" means Anheuser-Busch Companies, Inc., a Delaware corporation, and any corporation(s) into which or with which it may be liquidated, merged or consolidated. (e) "Participant" means an individual who is eligible to participate in this Plan as described in Section 2. (f) "Participating Employer" as used in this Plan means a Participating Employer in the Basic Plan which has adopted this Plan. 1 2 (g) "Plan" means this Anheuser-Busch Companies, Inc. Excess Benefit Plan Amended and Restated as of March 1, 2000 as thereafter amended from time to time. (h) "Subsidiary" means any business entity in which the Company has an equity interest of at least fifty percent. 2. Eligibility to Participate. Any individual whose retirement benefit --------------------------- under the Basic Plan will be limited by the provisions of Section 415 of the Internal Revenue Code, or any regulations issued thereunder, shall be a Participant in this Plan. 3. Benefits Under this Plan. The Retirement Benefit payable by a ------------------------- Participating Employer under this Plan shall be equal to the Actuarial Equivalent of: (a) The retirement benefit a Participant would be entitled to receive under the Basic Plan, under the actual method of payment elected under such plan, if Section 415 were inapplicable, less (b) The retirement benefit actually payable to the Participant under the Basic Plan. No Participant shall be vested in benefits under this Plan until the Participant has (a) terminated employment, (b) attained age 55 or been determined to be totally and permanently disabled under the Basic Plan, (c) vested in his benefit under the Basic Plan, and (d) satisfied all other requirements of this Plan for commencement of benefits. 4. Special Rule for Non-Deductible Amounts. Any amount otherwise ---------------------------------------- payable under the Plan in a calendar year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code shall not be paid until such calendar year as the Company determines that the amount has ceased to be so non-deductible. In the case of any inconsistency between this Section 4 and any other provision of the Plan, this Section 4 shall govern, unless Section 20 applies. 5. Pre-Retirement Death Benefits. There will be no pre-retirement death ------------------------------ benefit under this Plan. 6. Payment Method. The retirement benefit determined under Section 3 --------------- shall be payable under the basic method of payment under the Basic Plan. However, 2 3 a Participant may elect, subject to approval of the Committee, to have his retirement benefit hereunder paid under one or more of the optional methods of payment set forth in the Basic Plan. All optional methods of payment shall be the Actuarial Equivalent of the amount determined under Section 3. A Participant may elect an optional method of payment under this Plan which is different from the method of payment elected under the Basic Plan. Notwithstanding the foregoing, effective for any Participant whose employment terminates on or after January 1, 1995, payment shall be made in the form of a single lump sum unless the Participant shall elect, on forms provided by the Committee, at least one calendar year prior to termination of employment, to receive payment under the basic method or some other available method. Except as otherwise specifically provided in this Plan, retirement benefits hereunder shall commence as of the same date benefits commence under the Basic Plan. 7. Obligation to Pay Benefits Hereunder. No trust fund, escrow account ------------------------------------- or other segregation of assets shall be established or made by a Participating Employer to guarantee, secure or assure the payment of any benefit hereunder. A Participating Employer's obligation to pay retirement benefits pursuant to this Plan shall constitute only a general contractual liability to the Participants and other payees hereunder in accordance with the terms hereof. Payment of benefits by a Participating Employer shall be made only from the general funds of such Participating Employer and no Participant or any other potential payee of any amount hereunder shall have any interest in any particular asset of a Participating Employer by reason of the existence of this Plan. The amounts payable hereunder shall be subject in all respects to claims of general creditors of the Participating Employer until actually paid over to the person(s) entitled to receive the same. 8. Concerning Payment. ------------------- (a) Except as otherwise provided in this Section 8, any amount payable under this Plan as a result of or following the death of a Participant shall be applied only for the benefit of the beneficiary or beneficiaries designated by the Participant pursuant to this Section 8. Each Participant shall specifically designate, by name, on forms provided by the Committee, the beneficiary(ies) to whom any such amounts shall be paid. Except as provided in paragraph (c), a Participant may change or revoke a beneficiary designation without the consent of the beneficiary(ies) at any time by filing a new beneficiary designation form with the Committee. The filing of a new form shall automatically revoke any forms previously filed with the Committee. A beneficiary designation form not properly filed with the Committee prior to the death of the Participant shall have no validity under the Plan. 3 4 (b) Except as provided in paragraph (c), any such designation shall be contingent on the designated beneficiary surviving the Participant. If a designated beneficiary survives the Participant but dies before receiving the entire amount payable to the designated beneficiary hereunder, the amount which would otherwise have been so paid shall be paid to the estate of the deceased beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one beneficiary, and alternative or contingent beneficiaries, may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent beneficiaries, all of which must be satisfactory to the Committee. (c) If a Participant has selected a joint and survivor annuity method of payment and the contingent annuitant dies before payments begin, the selection shall be revoked, but if the contingent annuitant dies after payments begin, the selection of this method of payment shall not be affected and no new contingent annuitant may be named. (d) If no beneficiary designation is on file with the Committee at the time of the Participant's death or no beneficiary designated by the Participant survives the Participant, the Participant's estate shall be deemed to be the beneficiary designated to receive any amounts then remaining payable under this Plan. (e) In determining any question concerning a Participant's beneficiary, the latest designation filed with the Committee shall control and intervening changes in circumstances shall be ignored; provided, if a Participant's spouse is designated as beneficiary but thereafter is divorced from the Participant, such designation shall become invalid effective as of the date of divorce unless the Participant files a beneficiary designation form with the Committee after the date of divorce confirming the former spouse as the Participant's beneficiary. (f) Any check issued on or before the date of a Participant's death shall remain payable to the Participant, whether or not the check is received by the Participant prior to death. Any check issued after the date of the Participant's death shall be the property of the Participant's beneficiaries determined in accordance with this Section 8. 9. Facility of Payment. If any amount is payable hereunder to a minor or -------------------- other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Committee in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Committee shall determine in its sole discretion: 4 5 (i) Directly to said minor or other person; (ii) To a custodian for said minor or other person (whether designated by the Committee or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any other jurisdiction; (iii) To the conservator of the estate of said minor or other person; or (iv) To some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Committee shall not be required to see to the application of any payment so made, and payment to the person determined by the Committee shall fully discharge the Participating Employers and this Plan from any further accountability or responsibility with respect to the amount so paid. 10. Payees Presumed Competent. Every person receiving or claiming -------------------------- amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age until the Committee receives a written notice, in form, manner and substance acceptable to it, that any such person is incompetent or is a minor or that a guardian or other person legally vested with the care of his estate has been appointed. 11. Notice of Address; Lost Payees. The address of every Participant or ------------------------------- other person entitled to any payment hereunder on file for purposes of the Basic Plan shall be used for all purposes of this Plan. If the Committee is unable to locate any person, or the estate of such person, entitled to receive a payment hereunder within two years after an amount becomes payable, the right and interest of such payee in and to the amount payable shall terminate on the last day of such two year period. 12. No Liability for Participant's Debts. Amounts payable under this ------------------------------------- Plan shall not be liable for or subject to the debts or liabilities of any payee, and no amount payable hereunder shall at any time or in any manner be subject to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance of any kind, whether to the Participating Employer or to any other party whomsoever, and whether with or without consideration. If any payee shall attempt to, or shall anticipate, alienate, sell, transfer, assign, pledge or otherwise encumber any amounts payable hereunder or any part thereof, or if by reason of bankruptcy or other event, such amounts would at any time be received or enjoyed by persons other than such payee, except as otherwise permitted by this Plan, the Committee in its sole discretion may terminate such person's interest in any such amounts and hold or apply such amounts to or for the use of such person, his or her spouse, children or other dependents, or any of them, as the Committee may determine. 5 6 13. Administration. --------------- (a) The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Committee shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Committee deems proper in its discretion. Any interpretation or construction placed upon any term or provision of the Plan by the Committee, any decisions and determinations of the Committee arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant and a Participant's status as such; and (ii) the time, method and amounts of payments payable under the Plan, and any other action or determination or decision whatsoever taken or made by the Committee shall be final, conclusive and binding upon all persons concerned. (b) The procedure provided for in this Section 13 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan; provided, that if a Participant wishes to make a valid legal challenge to the Committee's determination and he has entered into an agreement with the Company to arbitrate disputes arising from his employment with the Company, such legal challenge shall be resolved pursuant to the arbitration procedures in that agreement and the Participant's burden of proof in any arbitration shall be the same as if the dispute were tried in a court proceeding. (c) Notwithstanding the foregoing, upon a Change in Control as defined in Section 20, Section (d) above shall not apply. 14. Negation of Employment Contract. This Plan does not create an -------------------------------- employment contract and nothing contained herein shall be deemed (a) to give a Participant the right to be retained in the employ of any Participating Employer; (b) to interfere with the right of the Participating Employer to discharge a participant at any time; (c) to give the Participating Employer the right to require a Participant to remain in its employ; or (d) to interfere with the right of a Participant to terminate his employment voluntarily whenever he chooses. 15. Forfeiture for Activity Contrary to a Participating Employer's Best ------------------------------------------------------------------- Interests. - ---------- (a) Notwithstanding any provision of this Plan to the contrary, the right of a Participant and his beneficiary or beneficiaries to receive a benefit hereunder is expressly conditioned upon the Participant neither (i) having ceased to be employed by the Company or any Subsidiary under circumstances or conditions inimical or 6 7 contrary to the best interests of the Company or any Subsidiary, nor (ii) thereafter engaging in any activity which in the Committee's judgment is inimical or contrary to the best interests of the Company or any Subsidiary. (b) Should a Participating Employer propose to enforce the foregoing, it shall give written notice to the Participant or other person(s) otherwise entitled to payment, and may withhold payment pending final resolution of the matter. The Committee shall thereupon investigate the alleged violation and shall consider, under such rules of procedure as the Committee shall deem reasonable, such evidence and testimony as the Participating Employer and the Participant or other person or persons receiving or otherwise entitled to receive payment may wish to submit in support or refutation of the alleged violation. The decision of the Committee shall be final and conclusive. If the Committee concludes that there has been a violation, the right of the Participant and all beneficiaries to receive payment hereunder shall thereupon cease. If the Committee concludes that there has not been a violation, the amounts withheld or suspended shall become payable as though no proceedings had been instituted nor any payment withheld or suspended, without, however, any interest for the period during which such amounts were withheld or suspended. (c) The provisions of this Section authorizing the Participating Employer to give notice of an alleged violation or possible violation of the conditions of paragraph (a) shall not be interpreted as requiring the Participating Employer to take such action in each and every instance of a violation or suspected violation, and in determining whether an attempt to enforce the forfeiture provisions of this Section shall be made, the Participating Employer may consider the possible economic damage it might suffer from the violation or suspected violation, the circumstances surrounding the discontinuance of the employment of the Participant with the Participating Employer and the quantum of proof which the Participating Employer may have of a violation of the aforesaid conditions. (d) The provisions of this Section shall in no way impair or derogate the rights which a Participating Employer may otherwise have under any employment contract with a Participant or at law or in equity, to prevent the disclosure of confidential information or to recover damages for the disclosure thereof or to prevent a Participant from engaging in competition with a Participating Employer or to recover damages therefor. (e) The Board (or the Executive Committee at any time the Board of Directors is not in session) may revoke this Section at any time, whereupon no benefit that would otherwise become payable under this Plan shall ever be subject to forfeiture or revocation for any reason, including (but not limited to) any subsequent 7 8 amendment to this Plan which reinstates the provisions of this Section or imposes similar conditions on a Participant's right to receive benefits hereunder. (f) If the provisions of this Section are invoked at any time after payments have already been made, the Participating Employer shall have the right to a refund of all monies theretofore paid. If the Participating Employer shall find it necessary to file suit to recover any amount hereunder, it shall be entitled to recover its reasonable attorney's fees and costs. 16. Amendment. The Board of Directors of the Company or any duly ---------- authorized officer shall have the absolute right to modify or amend this Plan in whole or in part, at any time and from time to time, effective as of any specified prior, current or future date. Any amendments to the Basic Plan shall automatically amend the provisions of this Plan where they would so apply. 17. Termination. The Board of Directors of the Company or any duly ------------ authorized individual shall have the right to terminate this Plan as of any specified current or future date. The Plan shall be automatically terminated upon: (a) termination of the Basic Plan; (b) the Company being legally adjudicated a bankrupt; (c) the appointment of a receiver of trustee in bankruptcy with respect to the Company's assets and business if such appointment is not set aside within 90 days thereafter; or (d) the making by the Company of an assignment for the benefit of creditors. Upon a termination of this Plan, no additional employees shall become eligible to participate herein, and no additional benefits shall be accrued hereunder. Notwithstanding the termination of this Plan, a Participant shall remain entitled to a retirement benefit under this Plan, determined under Section 3, but based only on the Participant's benefit accrued under the Basic Plan prior to the date of termination and payable as otherwise provided herein. 18. Participating Employer. Any Participating Employer in the Basic Plan ----------------------- may become a Participating Employer in this Plan by submitting to the Committee a resolution of its board of directors adopting this Plan. The adoption of this Plan by a Participating Employer shall constitute an automatic delegation by it to the Company's Board of Directors of full authority to amend or terminate the Plan. A Participating Employer may withdraw from the Plan by action of its board of directors. Notwithstanding such withdrawal, a Participant shall remain entitled to a retirement benefit from such withdrawing Participating Employer, determined under Section 3, but based only on the Participant's benefit accrued under the Basic Plan prior to the date of termination and payable as otherwise provided herein. 19. Successor Participating Employer. In the event of the dissolution, --------------------------------- merger, consolidation or reorganization of a Participating Employer, the successor 8 9 company may adopt and continue this Plan as a Participating Employer, provided it has adopted the Basic Plan. If a successor company does not continue this Plan, all Participants affected thereby shall be entitled to a retirement benefit from such successor company calculated and payable as provided in Section 18 with the benefits determined as of the date of dissolution, merger, consolidation or reorganization. 20. Change in Control. ------------------ (a) If a Change in Control (as defined in Section 20(b)) shall occur, then, notwithstanding anything to the contrary herein, a Participant's benefit under the Plan as of the Change in Control Date shall be fully vested and non-forfeitable. Within 30 days after the Change in Control Date, the Participant shall be paid, in a single lump-sum payment, the Actuarial Equivalent of his benefits determined under Section 3 as if the Participant had terminated employment and commenced receiving benefits immediately. (b) For purposes of this Plan, a "Change in Control" shall occur automatically if and when an "Acceleration Date" occurs as defined in the Company's 1998 Incentive Stock Plan or if and when an analogous change in control event occurs as defined in any successor to such plan, and the Change in Control Date shall be the Acceleration Date or analogous date as defined therein. (c) This Section 20 may be deleted or amended in any way pursuant to Section 16 at any time prior to a Change in Control. Notwithstanding Sections 16 and 17, following a Change in Control, the provisions of this Section 20 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to the Change in Control. (d) Following a Change in Control, this Plan shall continue in effect, notwithstanding that payment of benefits shall have been made under Section 20(a), unless and until terminated by the Company. (e) If a Change in Control occurs, Section 15 shall no longer apply to any individual whose activities are not under investigation by the Committee on the Change in Control Date. (f) If by reason of this Section an excise or other special tax ("Excise Tax") is imposed on any payment under this Plan (a "Required Payment"), the amount of each required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment. 9 10 21. Set Off and Withholding. ------------------------ (a) Any amount then due and payable by the Company or any other Participating Employer to any Participant or the beneficiary of any Participant under this Plan may be offset by any amounts owed to the Company or any Subsidiary by the Participant and/or the beneficiary for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 22. Miscellaneous. -------------- (a) In any instance in which the Committee believes such action to be in the best interest of the party entitled to receive any payment under this Plan, or to be in the best interests of a Participating Employer (such as to avoid the administrative inconvenience and expense which might be incurred if relatively small amounts were to be paid to multiple recipients over lengthy periods of time), amounts payable hereunder may be paid in a single lump sum, the amount of which shall be the Actuarial Equivalent of the benefits otherwise payable. (b) In the event of the death of a Participant or any Beneficiary designated by him or her, no payment need be made by the Plan until the Committee shall have received proof satisfactory to it of such death and of the identity, existence and location of the party thereafter entitled to receive payments under this Plan. (c) In making any payment or taking any action under this Plan, the Participating Employer and the Committee shall be absolutely protected in relying upon any finding or statement of facts believed by it to be true, and on any written instrument believed by it to have been signed by the proper party. (d) Subject to the applicable provisions of the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri (except with respect to choice of law), and in Courts situated in that State. IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this Amended and Restated Plan to be executed by its officers thereunto duly authorized, this 9th day of March, 2000, effective as of March 1, 2000. ANHEUSER-BUSCH COMPANIES, INC. By /s/ W. Randolph Baker ---------------------------- W. Randolph Baker Chief Financial Officer 10 11 ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN AMENDED AND RESTATED AS OF MARCH 1, 2000 11 12 TABLE OF CONTENTS
PAGE 1. Definitions Applicable to this Excess Benefit Plan 1 2. Eligibility to Participate 2 3. Benefits Under this Plan 2 4. Special Rule for Non-Deductible Amounts 2 5. Pre-Retirement Death Benefits 2 6. Payment Method 2 7. Obligation to Pay Benefits Hereunder 3 8. Concerning Payment 3 9. Facility of Payment 4 10. Payees Presumed Competent 5 11. Notice of Address; Lost Payees 5 12. No Liability for Participant's Debts 5 13. Administration 5 14. Negation of Employment Contract 6 15. Forfeiture for Activity Contrary to a Participating Employer's Best Interests 6 16. Amendment 7 17. Termination 8 18. Participating Employer 8 19. Successor Participating Employer 8 20. Change in Control 8 21. Set Off and Withholding 9 22. Miscellaneous 9
EX-10.10 8 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 1 ANHEUSER-BUSCH COMPANIES, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AMENDED AND RESTATED AS OF MARCH 1, 2000 ANHEUSER-BUSCH COMPANIES, INC., a Delaware corporation, established this Supplemental Executive Retirement Plan, originally effective as of January 1, 1984. The Plan has been amended from time to time and the Company hereby amends and restates the Plan. The provisions of this restated Plan shall apply to eligible employees whose termination of employment with the Company or any other Participating Employer occurs on or after March 1, 2000. The Plan is intended to be a nonqualified, unfunded plan to provide supplemental retirement benefits to a select group of management and highly compensated employees, as described in Section 201(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"). 1. Definitions. The capitalized terms used in this Plan shall have ------------ the meanings herein set out: (a) "Accrued Benefit" means at any given time the benefit calculated in accordance with the formula in Section 3, using the Participant's Eligible Earnings and Credited Service as of the date the calculation is being made. The benefit so calculated shall be the benefit that would commence under the basic method of payment on the Participant's Normal Retirement Date. (b) "Actuarial Equivalent" means a benefit or benefits, or a payment or payments, which are of equal value at the date of determination to the benefits for which they are to be substituted. Equivalence of value is determined from actuarial calculations based on actuarial assumptions as to interest and mortality applied with respect to the particular form or forms of payment under the Basic Plan, disregarding the interest and mortality assumptions grandfathered as of December 31, 1999 with respect to single sum and installment payments. (c) "Basic Plan" means the Supplement for the Anheuser-Busch Salaried Employees Pension Plan maintained as part of the Anheuser-Busch Companies Pension Plan as now in effect or as hereafter amended. (d) "Board" means the board of directors of the Company. (e) Intentionally blank. (f) "Committee" means the Committee designated to administer this Plan, as described in Section 20. (g) "Company" means Anheuser-Busch Companies, Inc., a Delaware corporation, and any corporation(s) into which or with which it may be liquidated, merged or consolidated. 2 (h) "Credited Service" For all purposes, a Participant's Credited Service under this Plan shall be the same as his Credited Service under the Basic Plan. This generally means an individual's years and completed months of salaried employment with a Participating Employer after attainment of age 21. Credited Service shall not exceed 30 years. (i) "Eligible Earnings" means, for any calendar year, the sum of the employee's annual base salary as of January 1 of such year plus the bonus earned during the prior calendar year. For purposes of computing benefits under this Plan, the Eligible Earnings to be used shall be the highest of the Eligible Earnings in the calendar year of termination or any of the four preceding calendar years. Eligible Earnings shall recognize any compensation deferred under the Executive Deferred Compensation Plan and treat such compensation as if it were not deferred. (j) "Eligible Employee" means a salaried employee of a Participating Employer who is an active participant currently accruing benefits in the Basic Plan and who satisfies or in the past has satisfied one or more of the following requirements: i) He is a member of the Company's Strategy Committee; ii) He has a salary band of I or above, or the equivalent thereof as determined by the Committee, and has, for the current calendar year, Eligible Earnings of at least $140,000 (indexed as described below) or such other amount as the Committee shall determine from time to time; or iii) He is an officer of the Company or Anheuser-Busch, Inc., a Missouri corporation, excluding an assistant officer. The $140,000 figure shall be indexed as of January 1 of each year commencing January 1, 1994, in accordance with the Company's merit budget increase applicable for such year. (k) "Excess Benefit Plan" means the Anheuser-Busch Companies, Inc. Excess Benefit Plan, Amended and Restated as of March 1, 2000, and as thereafter amended, or any other "excess plan" as described in Section 3(36) of ERISA, maintained by a Participating Employer and as in effect from time to time. (l) "Normal Retirement Date" means the first day of the month coincident with or next following the date on which the Participant attains his sixty-fifth (65th) birthday. (m) "Participant" means an Eligible Employee who is participating in this Plan in accordance with Section 2. (n) "Participating Employer" means the Company and any other member of the controlled group of corporations of which the Company is a member -2- 3 which is a Participating Employer in the Basic Plan and which has adopted this Plan in the manner described in Section 18. (o) "Plan" means this Anheuser-Busch Companies, Inc. Supplemental Executive Retirement Plan, Amended and Restated as of March 1, 2000, and as thereafter amended. (p) "Primary Social Security Benefit" means, for retirements on or after the Normal Retirement Date, the estimated primary insurance amount that would commence immediately under the Federal Social Security Act in effect on the retirement date assuming that the Participant's earning's for Social Security purposes are equal to the benefit base as determined under Section 230 of the Federal Social Security Act from the date the Participant attained age 21 until his retirement date. For purposes of determining the Accrued Benefit prior to a Participant's Normal Retirement Date, the Primary Social Security Benefit means: (i) An amount determined as described above assuming that the Participant retires on his Normal Retirement Date and that the Social Security Act and benefit base remain unchanged in the future, multiplied by (ii) The ratio of the Participant's Credited Service as of the date of determination to the lesser of thirty (30) years or the Participant's Credited Service had he remained an active Participant until his Normal Retirement Date. (q) "Subsidiary" means any business entity in which the Company has an equity interest of at least fifty percent. Miscellaneous Rules of Construction. Masculine pronouns include the - ------------------------------------ feminine, the singular includes the plural, and the plural includes the singular, as the context or application demands. 2. Participation. Each Eligible Employee shall commence -------------- participation in this Plan as of the first day of the month coincident with or next following the date he first becomes an Eligible Employee. An individual who is an Eligible Employee solely under subparagraph (ii) of Section 1(j) shall be deemed to have first satisfied the band and compensation requirements of such provision on January 1 of the first calendar year for which such requirements are satisfied. Except as provided in Section 18, once an individual becomes a Participant, he shall continue to participate until termination of employment with a Participating Employer even if such individual no longer satisfies the band and compensation requirements to remain an Eligible Employee. Any Eligible Employee on October 1, 1993 who was not a Participant in this Plan prior to its restatement effective October 1, 1993 shall first participate as of October 1, 1993. -3- 4 3. Benefit on or after Normal Retirement Date. A Participant who ------------------------------------------- ceases to be employed by all members of the Company's controlled group of corporations on or after his Normal Retirement Date shall receive a monthly benefit, payable under the basic method of payment described in Section 10, and commencing on the first day of the month coinciding with or immediately following his last date of employment, in an amount which is one-twelfth of the following: (a) For Strategy Committee members, one and two-thirds percent of Eligible Earnings times Credited Service; for all other Participants, one and one-half percent of Eligible Earnings times Credited Service; less ---- (b) The Participant's annual retirement benefit payable at Normal Retirement Date (or, if applicable, postponed retirement date) under the Basic Plan, under the basic method of payment described in such plan; less also - --------- (c) Any other benefits from any excess benefit plan or other retirement plan or arrangement maintained or sponsored by the Company or any Subsidiary, other than a qualified or nonqualified 401(k) plan or a voluntary nonqualified deferred compensation plan. The reduction under this paragraph shall be the annual benefit under such other plan or plans, payable at Normal Retirement Date (or, if applicable, postponed retirement date), expressed as if payable under the basic method of payment described in such plan; provided, however, that if such basic method is not a form of single life annuity, then expressed as if payable solely for the lifetime of the Participant on an Actuarial Equivalent basis; less also --------- (d) The Participant's annual Primary Social Security Benefit. (e) In no event shall a Participant's benefits calculated hereunder be less than the difference between (a) the benefit actually payable under the Basic Plan, and (b) the benefit that would have been payable under the Basic Plan without regard to the limitation imposed by Section 401(a)(17) of the Internal Revenue Code (both amounts to be determined under the basic method of payment). This minimum benefit shall be separately calculated with respect to all Participants, including those whose benefits exceed this minimum, and shall be treated as a separate obligation payable from a separate plan solely for the purpose of determining which, if any, portion of a Participant's benefits is subject to income tax in the state where the Participant resided when the benefit was earned. 4. Benefit on Early Retirement. The following benefits are available ---------------------------- for Participants who retire prior to Normal Retirement Date: (a) A Participant who ceases to be employed by all members of the Company's controlled group of corporations prior to his Normal Retirement Date but after reaching age 62 and completing 30 years of Credited Service shall be entitled to receive a retirement benefit equal to his Accrued Benefit, but commencing on the -4- 5 first day of the month coinciding with or immediately following his last date of employment. (b) A Participant who ceases to be employed by all members of the Company's controlled group of corporations after reaching age 55 and who has at least five years of Credited Service but who is not eligible to receive a benefit under paragraph (a) above may, unless disapproved by the Company's Chief Executive Officer (or, in the case of the Chief Executive Officer, the Board of Directors), be granted a benefit equal to his Accrued Benefit reduced in accordance with the reduction applicable to early retirement benefits under the Basic Plan. Such benefit shall commence as of the first day of the month coincident with or next following his last date of employment. (c) There shall be no benefits payable from this Plan for a Participant who ceases employment prior to the attainment of age 55, except as provided in Sections 5, 6 and 13. 5. Pre-Retirement Death Benefit. ----------------------------- (a) If a Participant dies while employed by a Participating Employer, and after otherwise satisfying the requirements of Sections 3, 4 or 6 to receive a retirement benefit, a death benefit may be paid. The death benefit, when combined with certain life insurance proceeds as described below, is intended to place the Participant in approximately the same position (after payment of income taxes) as he would have been in had he retired on the date of his death. The amount of the death benefit, if any, payable from this Plan shall be computed as follows: (i) the After-Tax single lump sum Actuarial Equivalent of his Accrued Benefit under this plan plus the After-Tax single lump sum value of any benefits that would have been payable under any Excess Benefit Plan if the Participant had retired (rather than died) on his date of death, minus ----- (ii) the single lump sum proceeds of any life insurance policy insuring the life of the Participant, whether group, individual, term, universal or any other type, available through the Company or any Subsidiary, regardless of whether the premiums therefor are paid by the Participant or the Company. For purposes hereof, each Participant shall be deemed to have elected to participate in all such life insurance programs available through the Company or any Subsidiary, whether or not such Participant actually so participated on the date of his death. Any insurance policy proceeds directly attributable to supplemental contributions made by the Participant with respect to any such policy shall not be taken into account for this purpose. -5- 6 (iii) The amount so obtained shall then be grossed up for income tax purposes by dividing such amount by one minus the tax rate determined under paragraph (b). (b) For purposes of this Section 5, the term "After-Tax" shall mean the amount remaining after subtraction of approximate federal, state and local income and employment taxes expected to be paid on the amount in question. The Company's Tax Controller, or other officer with similar responsibilities, shall determine "After-Tax" amounts, in his discretion, using such presumed tax rates as he shall deem reasonable and appropriate under the circumstances of the individual involved. (c) Any amount payable under this Section 5 shall be paid in a single lump sum to the Beneficiary determined in accordance with Section 14. 6. Disability Benefit. A Participant whose employment terminates ------------------- because of disability prior to becoming eligible for benefits under Section 3 or 4 shall be entitled to the Actuarial Equivalent of his Accrued Benefit. Disability shall be established, as determined by the Committee, if the Participant is unable for a period reasonably expected to exceed six months to perform the duties of the position held prior to the incident or the onset of the illness resulting in the disability. 7. Intentionally blank. 8. Forfeiture for Activity Contrary to the Company's Best Interests. ----------------------------------------------------------------- (a) Notwithstanding any provision of this Plan to the contrary, the right of a Participant and his beneficiary or beneficiaries to receive a benefit hereunder is expressly conditioned upon the Participant neither (i) having ceased to be employed by the Company or any Subsidiary under circumstances or conditions inimical or contrary to the best interests of the Company or any Subsidiary, nor (ii) thereafter engaging in any activity which in the Committee's judgment is inimical or contrary to the best interests of the Company or any Subsidiary. (b) Should a Participating Employer propose to enforce the foregoing, it shall give written notice to the Participant or other person(s) otherwise entitled to payment, and may withhold payment pending final resolution of the matter. The Committee shall thereupon investigate the alleged violation and shall consider, under such rules of procedure as the Committee shall deem reasonable, such evidence and testimony as the Participating Employer and the Participant or other person or persons receiving or otherwise entitled to receive payment may wish to submit in support or refutation of the alleged violation. The decision of the Committee shall be final and conclusive. If the Committee concludes that there has been a violation, the right of the Participant and all beneficiaries to receive payment hereunder shall thereupon cease. If the Committee concludes that there has not been a violation, the amounts withheld or suspended shall become payable as though no proceedings had been instituted nor any payment withheld or suspended, -6- 7 without, however, any interest for the period during which such amounts were withheld or suspended. (c) The provisions of this Section authorizing the Participating Employer to give notice of an alleged violation or possible violation of the conditions of paragraph (a) shall not be interpreted as requiring the Participating Employer to take such action in each and every instance of a violation or suspected violation, and in determining whether an attempt to enforce the forfeiture provisions of this Section shall be made, the Participating Employer may consider the possible economic damage it might suffer from the violation or suspected violation, the circumstances surrounding the discontinuance of the employment of the Participant with the Participating Employer and the quantum of proof which the Participating Employer may have of a violation of the aforesaid conditions. (d) The provisions of this Section shall in no way impair or derogate the rights which a Participating Employer may otherwise have under any employment contract with a Participant or at law or in equity, to prevent the disclosure of confidential information or to recover damages for the disclosure thereof or to prevent a Participant from engaging in competition with a Participating Employer or to recover damages therefor. (e) The Board (or the Executive Committee at any time the Board of Directors is not in session) may revoke this Section at any time, whereupon no Accrued Benefit at that time shall ever be subject to forfeiture or revocation for any reason, including (but not limited to) any subsequent amendment to this Plan which reinstates the provisions of this Section or imposes similar conditions on a Participant's right to receive benefits hereunder. (f) If the provisions of this Section are invoked at any time after payments have already been made, the Participating Employer shall have the right to a refund of all monies theretofore paid. If the Participating Employer shall find it necessary to file suit to recover any amount hereunder, it shall be entitled to recover its reasonable attorney's fees and costs. 9. Intentionally blank. 10. Payment Methods. The basic method of payment for Participants ---------------- retiring on or after January 1, 1995 shall be monthly payments for life, beginning on the first day of the month coincident or next following the Participant's retirement date, with the last payment being for the month in which the Participant's death occurs, but with 120 monthly payments guaranteed. Notwithstanding the foregoing, payment shall be made in a single lump sum unless the Participant gives written notice to the Committee, at least one year prior to the date benefits are to commence, that he elects to receive benefits under either the basic method of payment described above or one of the following optional methods which shall be the Actuarial Equivalent of the basic method of payment: -7- 8 (a) A two-thirds joint and survivor annuity with such contingent annuitant as the Participant may designate. If a Participant has selected this method of payment and the contingent annuitant dies before payments begin, the selection shall be revoked, but if the contingent annuitant dies after payments begin, the selection of this method of payment shall not be affected and no new contingent annuitant may be named; or (b) Level installments over a five-year period. A Participant may elect an optional method of payment under this Plan which is different from the method of payment elected under either the Basic Plan or the Excess Benefit Plan. 11. Obligation to Pay Benefits Hereunder. No trust fund, escrow ------------------------------------- account or other segregation of assets shall be established or made by any Participating Employer to guarantee, secure or assure the payment of any benefit hereunder. The obligation of each Participating Employer to pay benefits pursuant to this Plan shall constitute only a general obligation of the Participating Employer to the Participants and other payees hereunder in accordance with the terms hereof. Payment of benefits by a Participating Employer hereunder shall be made only from the general funds of the Participating Employer and no Participant or other potential payee of any amount hereunder shall have any interest in any particular asset of any Participating Employer by reason of the existence of this Plan, and the amounts payable hereunder shall be subject in all respects to claims of general creditors of the respective Participating Employers until actually paid over to the person(s) entitled to receive the same. 12. Special Rule for Non-Deductible Amounts. Any amount otherwise ---------------------------------------- payable under the Plan in a calendar year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code, shall not be paid until such calendar year as the Company determines that the amount has ceased to be so non-deductible. In the case of any inconsistency between this Section 12 and any other provision of the Plan, this Section 12 shall govern, except in the case of Section 13 becoming applicable. 13. Change in Control. ------------------ (a) If a Change in Control (as defined in Section 13(b)) shall occur, then, notwithstanding anything to the contrary herein, a Participant's Accrued Benefit under the Plan as of the Change in Control Date shall be fully vested and non-forfeitable. Within 30 days after the Change in Control Date, the Participant shall be paid, in a single lump-sum payment, the Actuarial Equivalent of such Accrued Benefit as of the date of payment. Notwithstanding the foregoing, if, on the Change in Control date, a Participant otherwise satisfied the eligibility requirements for early or normal retirement benefits under Sections 3 or 4, such Participant's benefit shall -8- 9 be paid as if he actually retired on the Change in Control Date. The Chief Executive Officer shall be deemed to have granted any necessary approvals. (b) For purposes of this Plan, a "Change in Control" shall occur automatically if and when an "Acceleration Date" occurs as defined in the Company's 1998 Incentive Stock Plan or if and when an analogous change in control event occurs as defined in any successor to such plan, and the Change in Control Date shall be the Acceleration Date or analogous date as defined therein. (c) This Section 13 may be deleted or amended in any way pursuant to Section 22 at any time prior to a Change in Control. Notwithstanding Section 22, following a Change in Control, the provisions of this Section 13 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to the Change in Control. (d) Following a Change in Control, this Plan shall continue in effect, notwithstanding that payment of benefits shall have been made under Section 13(a), unless and until terminated by the Company. (e) If a Change in Control occurs, Section 8 shall no longer apply to any individual whose activities are not under investigation by the Committee on the Change in Control Date. (f) If by reason of this Section an excise or other special tax ("Excise Tax") is imposed on any payment under this Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment. 14. Concerning Payment; Beneficiaries. ---------------------------------- (a) Except as otherwise provided in this Section, any amount payable under this Plan as a result of or following the death of a Participant shall be applied only for the benefit of the beneficiary or beneficiaries designated by the Participant pursuant to this Section. Each Participant shall specifically designate, by name, on forms provided by the Committee, the beneficiary(ies) to whom any such amounts shall be paid. A Participant may change or revoke a beneficiary designation without the consent of the beneficiary(ies) at any time by filing a new beneficiary designation form with the Committee. The filing of a new form shall automatically revoke any forms previously filed with the Committee. A beneficiary designation form not properly filed with the Committee prior to the death of the Participant shall have no validity under the Plan. (b) Except as provided in Section 10, any such designation shall be contingent on the designated beneficiary surviving the Participant. If a designated beneficiary survives the Participant but dies before receiving the entire amount payable to the designated beneficiary hereunder, the amount which would otherwise -9- 10 have been so paid shall be paid to the estate of the deceased beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one beneficiary, and alternative or contingent beneficiaries, may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent beneficiaries, all of which must be satisfactory to the Committee. (c) If no beneficiary designation is on file with the Committee at the time of the Participant's death or no beneficiary designated by the Participant survives the Participant, the Participant's estate shall be deemed to be the beneficiary designated to receive any amounts then remaining payable under this Plan. (d) In determining any question concerning a Participant's beneficiary, the latest designation filed with the Committee shall control and intervening changes in circumstances shall be ignored; provided, if a Participant's spouse is designated as beneficiary but thereafter is divorced from the Participant, such designation shall become invalid as of the date of divorce unless the Participant files a beneficiary designation form with the Committee after the date of divorce confirming designation of such former spouse as beneficiary. (e) Any check issued on or before the date of a Participant's death shall remain payable to the Participant, whether or not the check is received by the Participant prior to death. Any check issued after the date of the Participant's death shall be the property of the Participant's beneficiaries determined in accordance with this Section 14. 15. Payees Presumed Competent. Every person receiving or claiming -------------------------- amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age until the Committee receives a written notice, in form, manner and substance acceptable to it, that any such person is incompetent or is a minor or that a guardian or other person legally vested with the care of his estate has been appointed. 16. Facility of Payment. If any amount is payable hereunder to a -------------------- minor or other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Committee in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Committee shall determine in its sole discretion: (i) Directly to said minor or other person; (ii) To a custodian for said minor or other person (whether designated by the Company or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any other jurisdiction; -10- 11 (iii) To the conservator of the estate of said minor or other person; or (iv) To some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Committee shall not be required to see to the application of any payment so made, and payment to the person determined by the Committee shall fully discharge the plan and the Participating Employer from any further accountability or responsibility with respect to the amount so paid. 17. Notice of Address; Lost Payees. The address of every Participant ------------------------------- or other person entitled to any payment hereunder on file for purposes of the Basic Plan shall be used for all purposes of this Plan. If the Committee is unable to locate any person, or the estate of such person, after a reasonable attempt to locate such person has been made, within two years after an amount becomes payable hereunder, the right and interest of such payee in and to the amount payable shall terminate on the last day of such two-year period. 18. Participating Employer. Any Participating Employer in the Basic ----------------------- Plan may become a Participating Employer in this Plan by submitting to the Committee a resolution of its board of directors adopting the provisions of this Plan. The adoption of this Plan by a Participating Employer shall constitute an automatic delegation by it to the Board of full authority to amend or terminate the Plan and to the Committee to administer this Plan. Benefits payable under this Plan for a Participant whose employment terminates from a Participating Employer shall be solely the obligation of that Participating Employer. A Participating Employer may withdraw from the Plan by action of its board of directors. If such a withdrawal shall occur, no benefit shall be payable under this Plan to any Participant who has not otherwise satisfied the eligibility requirements of Sections 3, 4 or 6, as of the date of withdrawal. Notwithstanding the foregoing, any benefits in pay status as of the date of withdrawal shall continue to be paid in full in accordance with the terms hereof. 19. No Liability for Payee's Debts. Amounts payable under this Plan ------------------------------- shall not be liable for or subject to the debts or liabilities of any payee, and no amount payable hereunder shall at any time or in any manner be subject to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance of any kind, whether to any Participating Employer or to any other party whomsoever, and whether with or without consideration. If any payee shall attempt to, or shall anticipate, alienate, sell, transfer, assign, pledge or otherwise encumber any amounts payable hereunder or any part thereof, or if by reason of bankruptcy or other event, such amounts would at any time be received or enjoyed by persons other than such payee, except as otherwise permitted by this Plan, the Committee in its sole discretion may terminate such person's interest in any such amounts and hold or apply such amounts to or for the use of such person, his spouse, children or other dependents, or any of them, as the Committee may determine. -11- 12 20. Administration. This Plan shall be administered by a Committee --------------- composed of the Company's Chief Executive Officer, Chief Financial Officer and Corporate Secretary. The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Committee shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Committee deems proper in its discretion. Any interpretation or construction placed upon any term or provision of the Plan by the Committee, any decisions and determinations of the Committee arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant and a Participant's status as such, and Eligible Earnings for any year; (ii) the time, method and amounts of payments payable under the Plan; (iii) the rights of Participants; and any other action or determination or decision whatsoever taken or made by the Committee in good faith shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. 21. Negation of Employment Contract. This Plan does not create an -------------------------------- employment contract and nothing contained herein shall be deemed (a) to give a Participant the right to be retained in the employ of any Participating Employer; (b) to interfere with the right of any Participating Employer to discharge a Participant at any time with or without cause; (c) to give any Participating Employer the right to require a Participant to remain in its employ; or (d) to interfere with the right of a Participant to terminate employment voluntarily whenever the Participant chooses. 22. Modification, Amendment, or Termination. Except as provided for ---------------------------------------- in Section 13, the Company has the absolute right to modify or amend this Plan in whole or in part, at any time and from time to time, effective as of any specified prior, current or future date. Such amendment shall be made in accordance with applicable corporate procedures then in effect for similar matters. The Company also reserves the right to terminate this Plan, in whole or in part, voluntarily as of any specified current or future date. This Plan shall be automatically terminated upon a termination of the Basic Plan, a dissolution of the Company (but not upon a merger, consolidation, reorganization or recapitalization of the Company unless the surviving corporation therein specifically terminates this Plan); upon the Company being legally adjudicated a bankrupt; upon the appointment of a receiver or trustee in bankruptcy with respect to the Company's assets and business if such appointment is not set aside within 90 days thereafter; or upon the making by the Company of an assignment for the benefit of creditors. Upon termination of this Plan, no additional employee shall become eligible to participate herein, and no additional benefits shall be accrued hereunder. Notwithstanding the termination of this Plan, no Participant affected thereby shall be deprived of the right to receive his Accrued Benefit at the time and in the manner provided by this Plan. -12- 13 23. Set Off and Withholding. ------------------------ (a) Any amount then due and payable by the Company or any Participating Employer to any Participant or the beneficiary of any Participant under this Plan may be offset by any amounts owed to the Company or any Subsidiary by the Participant and/or the beneficiary for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 24. Claims Procedures. ------------------ (a) The Committee shall make all decisions and determinations respecting the right of any person to a payment under the Plan. (b) The following procedure shall be followed with respect to claims under the Plan: (i) Any claimant who believes he or she is entitled to a benefit under this Plan shall submit a claim for such benefit in writing to the Committee. (ii) Any decision by the Committee denying a claim in whole or in part shall be stated in writing by the Committee and delivered or mailed to the claimant within ninety (90) days after receipt of the claim by the Committee unless special circumstances require an extension of time for processing, but in any event within one hundred eighty (180) days after such receipt. If such an extension of time is taken, the Committee shall inform the claimant of the delay in writing before the expiration of the initial ninety (90) day period, including the reasons therefor and the date by which the Committee expects to render a decision. Any decision denying a claim shall set forth the specific reasons for the denial with specific references to Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and the reasons therefor, and an explanation of the Plan's claim review procedure, all written in a manner calculated to be understood by the claimant. If the Committee does not notify the claimant of denial of the claim or the need for an extension of time within the initial ninety (90) day period, the claim shall be deemed denied. (iii) If a claim is denied in whole or in part, the claimant or his duly authorized representative may request a review by the Committee of the decision upon written application to the Committee within sixty (60) days after notification of the decision. The claimant or his duly authorized representative may -13- 14 review pertinent documents and submit issues and comments in writing. The Committee shall make its decision on review not later than sixty (60) days after receipt of the request for review unless special circumstances require an extension of time for processing, in which case its decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is taken, the Committee shall inform the claimant of the delay in writing before the expiration of the initial sixty (60) day period. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant and specific references to the pertinent plan provisions on which the decision is based. If the Committee does not notify the claimant of its decision on review within the period herein provided for, the claim shall be deemed denied on review. (c) The Committee may adopt such rules as it deems necessary, desirable, or appropriate to carry out its duties under this Section 24. Any action or determination or decision whatsoever taken or made by the Committee under this Section 24 shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. (d) The procedure provided for in this Section 24 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan; provided, that if a Participant wishes to make a valid legal challenge to the Committee's determination and he has entered into an agreement with the Company to arbitrate disputes arising from his employment with the Company, such legal challenge shall be resolved pursuant to the arbitration procedures in that agreement and the Participant's burden of proof in any arbitration shall be the same as if the dispute were tried in a court proceeding. (e) Notwithstanding the foregoing, upon a Change in Control as defined in Section 13, Section (d) above shall not apply. 25. Miscellaneous. -------------- (a) In any instance in which the Committee believes such action to be in the best interest of the party entitled to receive any payment under this Plan, or to be in the best interests of any Participating Employer (such as to eliminate small account balances or to avoid the administrative inconvenience and expense which might be incurred if relatively small amounts were to be paid to multiple recipients over lengthy periods of time), amounts payable hereunder may be paid in a single lump-sum payment, the amount of which shall be the Actuarial Equivalent of the payment in question. (b) In the event of the death of a Participant or any beneficiary, the Committee need not make any payment provided for by this Plan until it shall have -14- 15 received proof satisfactory to it of such death and of the identity, existence and location of the party thereafter entitled to receive payments under this Plan. (c) In making any payment or taking any action under this Plan, the Participating Employers and the Committee shall be absolutely protected in relying upon any finding or statement of facts believed to be true, and on any written instrument believed to have been signed by the proper party. (d) Subject to the applicable provisions of the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri (other than choice of law), and in Courts situated in that State. IN WITNESS WHEREOF, ANHEUSER-BUSCH COMPANIES, INC. has caused this Amended and Restated Plan to be executed by its officers thereunto duly authorized, this 9th day of March, 2000, effective as of March 1, 2000. ANHEUSER-BUSCH COMPANIES, INC. By /s/ W. Randolph Baker ------------------------------ W. Randolph Baker Chief Financial Officer -15- 16 ANHEUSER-BUSCH COMPANIES, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AMENDED AND RESTATED AS OF MARCH 1, 2000 17 TABLE OF CONTENTS 1. Definitions 1 2. Participation 3 3. Benefit on or After Normal Retirement Date 3 4. Benefit on Early Retirement 4 5. Pre-Retirement Death Benefit 5 6. Disability Benefit 6 7. Intentionally Blank 6 8. Forfeiture for Activity Contrary to the Company's Best Interests 6 9. Intentionally Blank 7 10. Payment Methods 7 11. Obligation to Pay Benefits Hereunder 7 12. Special Rule for Non-Deductible Amounts 8 13. Change in Control 8 14. Concerning Payment; Beneficiaries 9 15. Payees Presumed Competent 10 16. Facility of Payment 10 17. Notice of Address; Lost Payees 10 18. Participating Employer 10 19. No Liability for Payee's Debts 11 20. Administration 11 21. Negation of Employment Contract 11 22. Modification, Amendment, or Termination 12 23. Set Off and Withholding 12 24. Claims Procedure 12 25. Miscellaneous 14
EX-10.11 9 EXECUTIVE DEFERRED COMPENSATION PLAN 1 ANHEUSER-BUSCH EXECUTIVE DEFERRED COMPENSATION PLAN (AMENDED AND RESTATED AS OF MARCH 1, 2000) Preamble -------- Anheuser-Busch Companies, Inc. (the "Company") adopted the Anheuser-Busch Executive Deferred Compensation Plan (the "Plan") for the purpose of providing deferred compensation to a select group of management and highly compensated employees, effective as of January 1, 1994. The Company reserved to itself the right to amend the Plan. The Plan has been amended from time to time. The Company deems it necessary and desirable to amend and restate the Plan in its entirety as hereinafter set forth, effective March 1, 2000. I. DEFINITIONS Base Salary: The substantially equal amounts owed by a Participating ----------- Employer to an Employee on a regular periodic basis in exchange for services rendered during a Year, regardless of when paid. Bonus: Any amount awarded by a Participating Employer to an Employee ----- for a Year under a bonus plan, regardless of when awarded or paid. Company: Anheuser-Busch Companies, Inc. ------- Effective Date: The original Effective Date was January 1, 1994. -------------- The Effective Date of this amendment and restatement of the Plan is March 1, 2000. Eligible Compensation: As to any Year, a Participant's Base Salary and --------------------- Bonus for such Year. No payments under the Company's Supplemental Life Insurance Program or any like program, taxable or non-taxable fringe benefits, stock-related compensation, international service premiums or other cash or in-kind compensation shall be taken into account as Eligible Compensation. Eligible Employee: With respect to any Year, an Employee who satisfies ----------------- the requirements for participation in the Plan for the Year, as determined pursuant to Section II. Employee: A salaried common-law employee of a Participating Employer as -------- determined from time to time. In no event shall any individual be classified as an Employee while he or she is in any of the following categories: (a) Independent contractors, including non-employee directors of the Company and its subsidiaries. 1 2 (b) Leased employees. (c) Non-resident aliens. (d) Collective bargaining unit members. Participant: With respect to any Year, an Eligible Employee who elects ----------- to defer a portion of his or her Eligible Compensation for the Year or who so elected with respect to an earlier Year as to which the entire amount deferred and all interest accrued thereon have not been paid. Participating Employer: The Company and any other business entity in ---------------------- which the Company has an equity interest of at least fifty percent (50%), and which adopts this Plan, as determined from time to time. Plan: Anheuser-Busch Executive Deferred Compensation Plan, the Plan set ---- forth herein, as duly amended from time to time. Related Employer: Each Participating Employer and each other legal ---------------- entity as to which the Company has at least fifty percent (50%) of the voting power. Year: Each calendar year commencing on or after January 1, 1994. ---- II. ELIGIBILITY An Employee shall be an Eligible Employee for a Year only if the sum of the Employee's annual rate of Base Salary as of October 1 of the immediately preceding calendar year and the Employee's Bonus for the second preceding calendar year exceeds $250,000, as adjusted for each Year after 1994 in accordance with the Company's budgeted internal merit increase factor for that Year (hereinafter "$250,000 As Adjusted"). III. DEFERRAL ELECTIONS 3.01. Types of Election; Time of Election. Each Participant for a Year ----------------------------------- shall make the following elections in writing on a form provided by the Company and delivered to the Company not later than the Company may direct. (a) The portion of the Participant's Eligible Compensation for the Year that shall be deferred; however: (i) The maximum portion of each installment of a Participant's Base Salary subject to deferral election hereunder shall be 2 3 equal to a pro rata share of the portion of the -------- Participant's Base Salary in excess of $250,000 As Adjusted. If by reason of Sec. 3.04, an installment is insufficient to support any deferral, no make-up deferral shall be made from any future Base Salary installment. (ii) If a Participant's annual Base Salary rate is changed during a Year, the amounts deferred prior to the date of change shall not be changed. The maximum portion of each installment that can be deferred after the change shall be determined by: (i) adding (a) the - Participant's actual Base Salary for the period before the effective date of the change, and (b) the - Participant's Base Salary rate per pay period on the effective date of the change multiplied by the number of pay periods remaining in the Year on the effective date of the change; (ii) subtracting from the total (a) $250,000 As Adjusted, and (b) the total amount - - deferred during the Year before the effective date of the change; and (iii) dividing the remainder by the number of pay periods remaining in the Year as of the effective date of the change. (iii) The maximum portion of a Participant's Bonus subject to deferral election hereunder shall be equal to the amount by which the Participant's Eligible Compensation exceeds the sum of the portion of the Participant's Base Salary deferred hereunder plus $250,000 As Adjusted. (iv) If any portion of a Participant's total compensation from all Participating Employers for a Year would not be deductible for the Year by any Participating Employer under section 162(m) of the Internal Revenue Code, the Participant may elect to defer an indefinite amount equal to such non-deductible portion of the Participant's compensation, and the Company may adopt such special rules and procedures as it deems appropriate to carry out such election. (b) The period of deferral for amounts deferred during the Year, which may be a definite period of five (5), ten (10), fifteen (15) or twenty (20) Years including the Year of deferral, or an indefinite period ending on termination of the Participant's employment with all Related Employers, subject to extension provided for in Secs. 3.01(e), 3.01(f) and 3.02 or acceleration as provided for in Secs. 5.01(b), 5.05, 5.06 and 5.07. 3 4 (c) The interest rates to be applied to amounts deferred during the Year and to any previously deferred amounts as to which a new election is required under Sec. 4.01. (d) Whether payment of amounts deferred for the Year and interest accrued thereon shall be made in a single sum, in five (5) installments, or in ten (10) installments subject to acceleration as provided for in Secs. 5.02(c), 5.05, 5.06 and 5.07. (e) Whether payment of amounts deferred for the Year that become due on account of termination of the Participant's employment with all Related Employers shall begin as of the first day of the calendar month following the termination or the January 1 following the termination. (f) Except as provided for in this Sec. 3.01(f), all elections pursuant to this Sec. 3.01 shall be irrevocable. Notwithstanding anything, a Participant may elect a longer deferral period (not to exceed the period ending on termination of employment as provided for in Sec. 3.01(b))or a longer period for payment of installments for amounts previously deferred under the Plan under Sec. 3.01(d) or the later commencement date permitted in Sec. 3.01(e), provided that such an election shall be of no force or effect unless the Participant provides the Company with written notice of the change at least one year prior to the date payment would begin in the absence of such an election or termination of the Participant's employment with all Related Employers, whichever occurs first. 3.02. Special Rule for Non-deductible Amounts. Any amount otherwise --------------------------------------- payable under the Plan in a Year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code shall not be paid until such Year as the Company determines that the amount has ceased to be non-deductible by any Participating Employer under section 162(m) of the Internal Revenue Code. In the case of any inconsistency between this Sec. 3.02 and any other provision of the Plan, this Sec. 3.02 shall govern, except in the case of Sec. 5.06. 3.03. Termination of Deferrals on Termination of Employment. If a ----------------------------------------------------- Participant's employment with all Participating Employers is terminated before the end of a Year as to which the Participant elected to defer a portion of Eligible Compensation under the Plan: (a) Except for deferrals described in Sec. 3.01(a)(iv), all such deferrals shall cease upon such termination of employment, whether or not the Participant receives any amounts otherwise classified as Eligible Compensation after such termination, and 4 5 (b) No portion of the Participant's Eligible Compensation previously deferred during the Year shall be refunded to the Participant, even though the Participant's total Eligible Compensation for the Year may be less than $250,000 As Adjusted. 3.04. Miscellaneous Limitations on Deferral. Notwithstanding Sec. 3.01, ------------------------------------- a Participant's deferral election for a Year shall be of no force or effect to the extent that it requires deferral of: (i) any amounts the Participant elects to contribute under the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan on either a before-tax or after-tax basis and the Anheuser-Busch 401(k) Restoration Plan; (ii) any amounts the Participant elects or is required to contribute under the Group Insurance Plan for Certain Employees of Anheuser-Busch Companies, Inc., the Anheuser-Busch Dependent Care Assistance Plan, the Anheuser-Busch Salaried Long-Term Disability Plan, or any other welfare benefit plan maintained by any Participating Employer; (iii) any payroll taxes, income taxes or any other taxes required to be withheld from the Participant's compensation which is subject to such taxes during the Year, including but not limited to FICA taxes and federal, state and local income taxes required to be withheld on the Participant's wages for the Year; and (iv) any amounts payable to a court or other individual or entity by court order. IV. ACCRUAL OF INTEREST 4.01. Participant Elections. --------------------- (a) Before the beginning of each Year, the Company shall offer one or more combinations of interest rates (hereinafter "Rates") and time periods (hereinafter "Terms") which shall apply to amounts deferred for the Year and to all prior deferrals and interest accrued thereon as to which the previous Terms expired on December 31 of the prior Year. (b) The Rates and Terms for each Year shall be determined by the Chief Financial Officer of the Company and shall correspond generally to the borrowing rates and terms that will be available to the Company for the Year on the basis of market rates in effect prior to announcement to Eligible Employees of the Rates and Terms for the Year. (c) All Terms shall commence on a January 1 and expire on a December 31. For example, if before January 1, 1995, a Participant elects a combination of a 3-Year Term and a 3% Rate for the amounts deferred by the Participant for 1995, the 3% Rate shall apply to all amounts deferred for 1995 from the date of deferral through December 31, 1997. 5 6 (d) The Terms elected by a Participant need not be limited to the deferral period for the amount subject to the Term elected. For example, a Participant may elect a 10-Year Term for an amount the Participant has elected to be distributed after 5 Years. (e) Each Participant shall elect the Rate/Term combinations which shall apply to amounts the Participant defers for the Year and to the Participant's prior deferrals and interest accrued thereon as to which the previous Terms expired on December 31 of the prior Year. The Participant may make separate elections regarding the Rate/Term combinations for amounts the Participant defers for the Year and amounts attributable to prior deferrals and interest accrued thereon as to which the previous Terms expired on December 31 of the prior Year. 4.02. Accrual of Interest during Deferral Period. Interest shall accrue ------------------------------------------ on the amounts deferred by a Participant for each Year in accordance with the Participant's elections from time to time as provided for in Sec. 4.01 until payment becomes due with respect to such amounts pursuant to Section V. 4.03. Accrual of Interest on Installment Payments. If any amount is paid ------------------------------------------- in installments pursuant to a Participant's election in accordance with Sec. 3.01(d) or (f), interest shall accrue on any balance thereof remaining to be paid in installments from time to time in accordance with the Participant's elections from time to time as provided for in Sec. 4.01(e) until payment is complete; provided, in the absence of an election by a Participant in accordance with the foregoing, the Participant shall be deemed to have elected the Rate in effect for the longest time period available as of the due date of the election. 4.04. If Payment Is Delayed. --------------------- (a) In the event payment of an amount due a Participant occurs thirty (30) or fewer days after its due date, no interest shall accrue during the period between the due date and the date of payment. (b) In the event payment of any amount due a Participant occurs more than thirty (30) days after its due date, interest shall accrue during the period between the due date and the date of payment at an annual rate equal to the prime rate published by The Boatmen's National Bank of St. Louis as of the due date. 4.05. If Payment Is Accelerated. If payment of an amount due a ------------------------- Participant is accelerated for any reason, no interest shall accrue with respect to the accelerated amount after the date scheduled for accelerated payment, notwithstanding that the Participant previously elected a longer term or a later payment date, except as provided for in Sec. 4.04(b). 6 7 V. PAYMENTS TO PARTICIPANTS 5.01. Time Payment Begins. ------------------- (a) Subject to the remaining provisions of this Section V, payment of amounts deferred for a Year and interest accrued thereon shall begin as of January 1 of the Year following expiration of the deferral period the Participant elected therefor in accordance with Sec. 3.01(b) or (f). (b) Notwithstanding Sec. 5.01(a), payment of a Participant's deferred amounts and interest thereon shall begin not later than the first day of the calendar month following termination of the Participant's employment with all Related Employers on account of retirement, death or any reason or the January 1 following the termination, as elected by the Participant pursuant to Sec. 3.01(e) or (f). 5.02. Form of Payment. --------------- (a) If a Participant elects payment of any amount in a single sum pursuant to Sec. 3.01(d), such single sum amount shall be due and payable as of the date determined pursuant to Sec. 5.01. (b) If a Participant elects payment of any amount in five (5) or ten (10) installments pursuant to Sec. 3.01(d) or (f), the initial installment shall be paid as of the first day of the calendar month following termination of the Participant's employment with all Related Employers or as of the January 1 following the termination, as elected by the Participant pursuant to Sec. 3.01(e) or (f), and the remaining four (4) or nine (9) installments shall be paid as of January 1 of the next four (4) or nine (9) calendar years. (c) Notwithstanding Sec. 5.02(b): (i) if a Participant's employment with all Related Employers terminates before age fifty-five (55) for any reason other than the Participant's death or disability, or (ii) if a Participant's termination of employment with all Related Employers occurs before the end of the Participant's first Year of deferral under the Plan, the Company may determine that payment of the entire amount then accrued for the benefit of the Participant under the Plan shall be paid in a single sum, notwithstanding any election by the Participant to the contrary. 7 8 5.03. Set Off and Withholding. ----------------------- (a) Any amount then due and payable by the Company to any Participant or the successor to any Participant under this Plan may be offset by any amounts owed to any Related Employer by the Participant and/or the successor for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 5.04. Determination of Installment Amounts. If payment of a deferred ------------------------------------ amount occurs in installments, the amount of each installment shall be equal to the deferred amount and accrued interest thereon remaining unpaid as of the December 31 preceding payment, divided by the number of installments then remaining to be paid. For example, with respect to a deferred amount that is payable in five (5) installments, to determine the amount of the first installment, divide the total amount of the deferral and accrued interest as of the preceding December 31 by five (5); to determine the amount of the second installment, divide the amount of the deferral and accrued interest remaining to be paid as of the preceding December 31 by four (4), and so on. 5.05. Acceleration of Payment for Unforeseeable Emergency. --------------------------------------------------- (a) The Company may determine that payment of any portion of the amount then accrued for the benefit of a Participant or beneficiary under the Plan shall be accelerated on application of the Participant or beneficiary on account of and subject to reasonable proof of unforeseeable emergency as provided for in this Sec. 5.05. (b) For purposes of this Sec. 5.05, an unforeseeable emergency is a severe financial hardship to the Participant or beneficiary resulting from a sudden and unexpected illness or accident of the Participant or beneficiary or of a dependent (as defined in section 152(a) of the Internal Revenue Code) of the Participant or beneficiary, loss of the Participant's or beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or beneficiary. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment 8 9 may not be made to the extent that such hardship is or may be relieved-- (i) Through reimbursement or compensation by insurance or otherwise, (ii) By liquidation of the Participant's or beneficiary's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (iii) By cessation of deferrals under this Plan or by cessation of elective deferrals if and when possible under any other deferred compensation plan for which the Participant or beneficiary is eligible; provided that a Participant shall not be permitted to cease deferrals under this plan as of any date other than a January 1. Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant's or beneficiary's child to college or the desire to purchase a home. (c) Withdrawal of amounts because of an unforeseeable emergency shall be permitted only to the extent reasonably needed to satisfy the emergency need. (d) All determinations under this Sec. 5.05 shall be made by an Administrative Committee appointed pursuant to Sec. 6.01(c). (e) Notwithstanding any other provision of this Sec. 5.05, authorization of distribution on account of hardship under the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan shall automatically terminate any deferral election of the Participant then in force with respect to Eligible Compensation and further deferrals under this Plan shall not be permitted for a period of twelve (12) months. 5.06. Change in Control. ----------------- (a) If a Change in Control (as defined in Sec. 5.06(b)) shall occur, then, notwithstanding anything to the contrary herein, the entire amount accrued on behalf of a Participant under the Plan as of the Change in Control Date shall be paid in a single sum within 30 days after the Change in Control Date. (b) For purposes of this Plan, a "Change in Control" shall occur automatically if and when an "Acceleration Date" occurs as defined 9 10 in the Company's 1998 Incentive Stock Plan or if and when an analogous change in control event occurs as defined in any successor to such plan, and the Change in Control Date shall be the Acceleration Date or analogous date as defined therein. (c) This Sec. 5.06 may be deleted or amended in any way pursuant to Article VII at any time prior to a Change in Control. Notwithstanding Article VII, following a Change in Control, the provisions of this Sec. 5.06 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to the Change in Control. (d) Following a Change in Control, this Plan may continue in effect, notwithstanding that payment of benefits shall have been made under Sec. 5.06(a). (e) If by reason of this Sec. 5.06 an excise or other special tax ("Excise Tax") is imposed on any payment under the Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax thereon, will equal such Excise Tax on the Required Payment. 5.07. General Right to Accelerate Payment. Notwithstanding Secs. 5.01 ----------------------------------- and 5.02, the Company by its proper officers in its sole discretion may direct current payment of all amounts that all Participants have elected to defer pursuant to Sec. 3.01 and all interest then accrued thereon. 5.08. Payments After Death. -------------------- (a) Except as otherwise provided in this Sec. 5.08, any amount payable under this Plan as a result of or following the death of a Participant shall be applied only for the benefit of the beneficiary or beneficiaries designated by the Participant pursuant to this Sec. 5.08. Each Participant shall specifically designate, by name, on forms provided by the Company, the beneficiary(ies) to whom any such amounts shall be paid. A Participant may change or revoke a beneficiary designation without the consent of the beneficiary(ies) at any time by filing a new beneficiary designation form with the Company. The filing of a new form shall automatically revoke any forms previously filed with the Company. A beneficiary designation form not properly filed with the Company prior to the death of the Participant shall have no validity under the Plan. 10 11 (b) Any such designation shall be contingent on the designated beneficiary surviving the Participant. If a designated beneficiary survives the Participant but dies before receiving the entire amount payable to the designated beneficiary hereunder, the amount which would otherwise have been so paid shall be paid to the estate of the deceased beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one beneficiary, and alternative or contingent beneficiaries, may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent beneficiaries, all of which must be satisfactory to the Company. (c) If no beneficiary designation is on file with the Company at the time of the Participant's death or no beneficiary designated by the Participant survives the Participant, the Participant's estate shall be deemed to be the beneficiary designated to receive any amounts then remaining payable under this Plan. (d) In determining any question concerning a Participant's beneficiary, the latest designation filed with the Company shall control and intervening changes in circumstances shall be ignored; provided, if a Participant's spouse is designated as beneficiary but thereafter is divorced from the Participant, such designation shall become invalid as of the date of divorce unless the Participant files a beneficiary designation form with the Company after the date of divorce confirming designation of such former spouse as beneficiary. (e) Any check issued on or before the date of a Participant's death shall remain payable to the Participant, whether or not the check is received by the Participant prior to death. Any check issued after the date of the Participant's death shall be the property of the Participant's beneficiaries determined in accordance with this Sec. 5.08. (f) A Participant's election of payment in installments shall not be altered by reason of the Participant's death. 5.09. All Payments to be Made by the Company. All payments due any -------------------------------------- Participant or beneficiary under this Plan shall be the sole responsibility of the Company. 11 12 VI. ADMINISTRATION 6.01. Administrative Duties of the Company. ------------------------------------ (a) The Company shall have sole responsibility for the administration of the Plan. (b) The Company shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Company shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Company deems proper. Any interpretation or construction placed upon any term or provision of the Plan by the Company, any decisions and determinations of the Company arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant and a Participant's status as such, and Eligible Compensation for any Year; (ii) the time, method and amounts of payments payable under the Plan; (iii) the rights of Participants; and any other action or determination or decision whatsoever taken or made by the Company in good faith shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. (c) The Chief Financial Officer of the Company shall appoint one or more Employees to carry out the Company's duties hereunder. (d) The Company may employ accountants, counsel, specialists, and other persons necessary to help carry out its duties and responsibilities under the Plan. The Company or any appointee shall be entitled to rely conclusively upon any opinions or reports which shall be furnished to it or him by such accountants, counsel, specialists, and other persons. (e) No Employee shall participate in determining his or her own entitlement under the Plan. 6.02. Claims Procedures. ----------------- (a) The Company shall make all decisions and determinations respecting the right of any person to a payment under the Plan. 12 13 (b) The following procedure shall be followed with respect to claims under the Plan: (i) Any claimant who believes he or she is entitled to a benefit under this Plan shall submit a claim for such benefit in writing to the Company. (ii) Any decision by the Company denying a claim in whole or in part shall be stated in writing by the Company and delivered or mailed to the claimant within ninety (90) days after receipt of the claim by the Company unless special circumstances require an extension of time for processing, but in any event within one hundred eighty (180) days after such receipt. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial ninety (90) day period, including the reasons therefor and the date by which the Company expects to render a decision. Any decision denying a claim shall set forth the specific reasons for the denial with specific references to Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and the reasons therefor, and an explanation of the Plan's claim review procedure as provided for in Sec. 6.02(b)(iii), all written in a manner calculated to be understood by the claimant. If the Company does not notify the claimant of denial of the claim or the need for an extension of time within the initial ninety (90) day period, the claim shall be deemed denied. (iii) If a claim is denied in whole or in part, the claimant or his or her duly authorized representative may request a review by the Company of the decision upon written application to the Company within sixty (60) days after notification of the decision. The claimant or his or her duly authorized representative may review pertinent documents and submit issues and comments in writing. The Company shall make its decision on review not later than sixty (60) days after receipt of the request for review unless special circumstances require an extension of time for processing, in which case its decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial sixty (60) day period. The decision on review shall be in writing and shall include specific reasons for the decision, written in 13 14 a manner calculated to be understood by the claimant and specific references to the pertinent plan provisions on which the decision is based. If the Company does not notify the claimant of its decision on review within the period herein provided for, the claim shall be deemed denied on review. (c) The Company may adopt such rules as it deems necessary, desirable, or appropriate to carry out its duties under this Sec. 6.02. All rules, decisions and determinations of the Company under this Sec. 6.02 shall be uniformly and consistently applied. Any action or determination or decision whatsoever taken or made by the Company under this Sec. 6.02 in good faith shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and beneficiaries. (d) The procedure provided for in this Sec. 6.02 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan; provided, that if a Participant wishes to make a valid legal challenge to the Company's determination and he has entered into an agreement with the Company to arbitrate disputes arising from his employment with the Company, such legal challenge shall be resolved pursuant to the arbitration procedures in that agreement and the Participant's burden of proof in any arbitration shall be the same as if the dispute were tried in a court proceeding. (e) Notwithstanding the foregoing, upon a Change in Control as defined in Sec. 5.06, Section (d) shall not apply. 6.03. Books and Records. ----------------- (a) The Company shall keep such books, records, and other data as it deems necessary for proper administration of the Plan, including but not limited to records of each Participant's Eligible Compensation, elections, deferred amounts, Rates and Terms, interest accrued, amounts payable to each Participant from time to time, and amounts paid to each Participant or beneficiary from time to time. (b) The records of the Company shall be conclusive on all persons unless proved incorrect to the satisfaction of the Company. (c) The Company shall comply with all reporting and disclosure requirements of the law and shall maintain all records required by law. 14 15 6.04. Notices. ------- (a) Any notice from the Company to any Participant shall be in writing and shall be given by delivery to the Participant, or by mailing to the last known residence address of the Participant. Any notice from a Participant to the Company shall be in writing and shall be given by delivery to the Pension Department of the Company at the Company's headquarters, except as otherwise designated by the Company. Notices shall be effective on the date of actual delivery. (b) Each Participant shall furnish all information, including post office address and each change of post office address, proofs, receipts and releases, as may be required by the Company. (c) Any communication, statement or notice addressed to any individual at the last post office address filed with the Company shall be binding for all purposes of the Plan, and the Company shall not be obligated to search for or ascertain the whereabouts of any such individual. (d) Except as provided in Section III, any notice required by the Plan may be waived by the Company or any Participant. VII. AMENDMENT AND TERMINATION The Chief Financial Officer of the Company shall have authority to amend or terminate the Plan on behalf of the Company in his sole discretion at any time, except as follows: (a) Amendments that provide for substantial increases in benefits shall require approval by the Compensation Committee of the Board of Directors of the Company. (b) No amendment shall reduce the amount accrued for the benefit of a Participant immediately prior to the effective date of the amendment. (c) No amendment shall reduce any Rate elected by a Participant before expiration of the Term provided therefor when the election was made unless the amount governed by the Rate and Term is distributed to the Participant in connection with termination of the Plan or otherwise pursuant to the Plan. 15 16 VIII. PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY 8.01. Adoption. A Participating Employer other than the Company shall -------- adopt this Plan by written instrument executed by its proper officers, subject to the written approval of the Company. Adoption of the Plan by a Participating Employer shall constitute automatic delegation of all rights and duties it might otherwise reserve to itself under the Plan to the Company, including full authority to amend or terminate the Plan. 8.02. Withdrawal. A Participating Employer shall automatically withdraw ---------- from the Plan if and when the Company ceases to have an equity interest of at least fifty percent (50%) without the execution of any other instrument. A Participating Employer may voluntarily withdraw from the Plan on not less than thirty (30) days' written notice from its proper officers. 8.03. Succession. In the event of dissolution, merger, consolidation, ---------- or spin-off involving a Participating Employer, the entity surviving the transaction shall succeed to the rights and duties of the affected Participating Employer without the execution of any other instrument. IX. MISCELLANEOUS 9.01. Company's Obligations Unsecured. It is the intention of the ------------------------------- Company and all Participants that the Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time. Amounts payable to Participants under this Plan shall be paid solely from the general assets of the Company as they come due from time to time. No Participant and no successor of any Participant shall have any property interest whatsoever in any asset of the Company on account of participation in this Plan. Participants' rights under this Plan shall be no greater than the right of an unsecured general creditor of the Company. Nothing in this Plan shall require the Company to invest any amount in any asset or type of asset. 9.02. No Alienation. Except as required by law, amounts payable under ------------- this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to payment hereunder shall be void, and the Company shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any Participant or other person. 9.03. No Waiver of Rights. Except as provided for in Sec. 6.02, no ------------------- failure or delay by the Company or any Participant to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 16 17 9.04. Severability. The invalidity of any particular clause, provision ------------ or covenant herein shall not invalidate all or any part of the remainder of this Plan, but such remainder shall be and remain valid in all respects as fully as the law will permit. 9.05. Legal Expenses. In any proceeding to enforce rights and -------------- obligations hereunder, the unsuccessful party shall pay the successful party an amount equal to all reasonable out-of-pocket expenses (including reasonable legal expenses and court costs) incurred by the successful party. 9.06. Presumption of Competence. Every person receiving or claiming ------------------------- amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age unless and until the Company receives proof satisfactory to the Company that the person is incompetent or is a minor or that a guardian or other person legally vested with the care of the person's estate has been appointed. 9.07. Facility of Payment. If any amount is payable hereunder to a ------------------- minor or other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Company in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Company shall determine in its sole discretion: (i) Directly to said minor or other person; (ii) To a custodian for said minor or other person (whether designated by the Company or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any other jurisdiction; (iii) To the conservator of the estate of said minor or other person; or (iv) To some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Company shall not be required to see to the application of any payment so made, and payment to the person determined by the Company shall fully discharge the Company from any further accountability or responsibility with respect to the amount so paid. 9.08. No Guarantee of Employment or Compensation. No provision of this ------------------------------------------ Plan shall restrict any Related Employer from discharging a Participant from employment or restrict any Participant from resigning from employment with any Related Employer. No provision of this Plan shall restrict any Related Employer from increasing or decreasing the compensation of any Employee. 17 18 9.09. Plan Provisions Binding. The provisions of the Plan shall be ----------------------- binding upon the Company, all Participating Employers and all persons entitled to benefits under the Plan and their respective successors, heirs and legal representatives. 9.10. Rules of Interpretation. Words of gender shall include persons ----------------------- and entities of any gender, the plural shall include the singular, and the singular shall include the plural. Captions are intended to assist in reference and shall not be interpreted as part of the Plan. 9.11. Missouri Law Controls. Subject to the applicable provisions of --------------------- the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri (other than choice of law) and in Courts situated in that State. 9.12. Counterparts. This Plan may be executed in two or more ------------ counterparts, any one of which shall constitute an original without reference to the others. IN WITNESS WHEREOF, Anheuser-Busch Companies, Inc. executed this amended and restated Plan this 9th day of March, 2000, effective as of the 1st day of March, 2000. ANHEUSER-BUSCH COMPANIES, INC. By /s/ W. Randolph Baker -------------------------- W. Randolph Baker Chief Financial Officer 18 19 ANHEUSER-BUSCH EXECUTIVE DEFERRED COMPENSATION PLAN Amended and Restated as of March 1, 2000 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 Related Employer 2 Year 2 II. ELIGIBILITY 2 III. DEFERRAL ELECTIONS 2 3.01. Types of Election; Time of Election 2 3.02. Special Rule for Non-deductible Amounts 4 3.03. Termination of Deferrals on Termination of Employment 4 3.04. Miscellaneous Limitations on Deferral 5 IV. ACCRUAL OF INTEREST 5 4.01. Participant Elections 5 4.02. Accrual of Interest during Deferral Period 6 4.03. Accrual of Interest on Installment Payments 6 4.04. If Payment Is Delayed 6 4.05. If Payment Is Accelerated 6 V. PAYMENTS TO PARTICIPANTS 7 5.01. Time Payment Begins 7 5.02. Form of Payment 7 5.03. Set Off and Withholding 8 5.04. Determination of Installment Amounts 8 5.05. Acceleration of Payment for Unforeseeable Emergency 8 5.06. Change in Control 9 5.07. General Right to Accelerate Payment 10 5.08. Payments After Death 10 5.09. All Payments to be Made by the Company 11 i 21 VI. ADMINISTRATION 12 6.01. Administrative Duties of the Company 12 6.02. Claims Procedures 12 6.03. Books and Records 14 6.04. Notices 15 VII. AMENDMENT AND TERMINATION 15 VIII. PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY 16 8.01. Adoption 16 8.02. Withdrawal 16 8.03. Succession 16 IX. MISCELLANEOUS 16 9.01. Company's Obligations Unsecured 16 9.02. No Alienation 16 9.03. No Waiver of Rights 16 9.04. Severability 17 9.05. Legal Expenses 17 9.06. Presumption of Competence 17 9.07. Facility of Payment 17 9.08. No Guarantee of Employment or Compensation 17 9.09. Plan Provisions Binding 18 9.10. Rules of Interpretation 18 9.11. Missouri Law Controls 18 9.12. Counterparts 18
ii EX-10.12 10 401(K) RESTORATION PLAN 1 ANHEUSER-BUSCH 401(k) RESTORATION PLAN Amended and Restated as of March 1, 2000 2 ANHEUSER-BUSCH 401(k) RESTORATION PLAN ----------------------- (Amended and Restated as of March 1, 2000) ARTICLE I RESTATEMENT OF PLAN ------------------- 1.1. Action By Company. Effective as of January 1, 1994, ----------------- Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), established the Anheuser-Busch 401(k) Restoration Plan (the "Plan"). The Company reserved to itself the right to amend the Plan and has amended the Plan. The Company deems it necessary and desirable to amend and restate the Plan in its entirety as set forth herein, effective March 1, 2000. 1.2. Purpose of the Plan. The Plan is established and maintained by ------------------- the Company for the purpose of restoring certain benefits which are precluded from being provided under the Regular 401(k) Plan to a select group of management and highly compensated employees. ARTICLE II DEFINITIONS ----------- Except as otherwise expressly provided in this Plan, all capitalized terms used herein shall have the meaning ascribed to them in the Regular 401(k) Plan. 2.1. "Account". The separate record of the interest of each ------- Participant in this Plan which the Company will establish in accordance with Article VI. 2.2. "Beneficiary." The individual or individuals designated by a ----------- Participant to receive benefits under Section 9.9, or any other person deemed to be a Beneficiary under any other provision of this Plan or by law. 2.3. "Company Contributions." The amounts credited to the Accounts --------------------- of Participants pursuant to Article V hereof. 2.4. "Compensation." Base Pay under the Regular 401(k) Plan, except ------------ that no reduction shall be made to reflect the limitation under Section 401(a)(17) of the Code. 2.5. "Effective Date." The original Effective Date of the Plan was -------------- January 1, 1994. The Effective Date of this amendment and restatement of the Plan is March 1, 2000. 1 3 2.6. "Election Date." A date determined by the Company not later ------------- than which any election under the Plan must be made. 2.7. "Eligible Employee." An Employee of any Participating Employer ----------------- who is eligible to participate in the Plan in accordance with Article III hereof. 2.8. "Employee." A common-law employee of any Participating -------- Employer. 2.9. "Investment Fund." Any of the investment sub-funds which, from --------------- time to time, comprise the Fund under the Regular 401(k) Plan. At the time of the establishment of this Plan, the Investment Funds include the Company Stock Fund, the Equity Index Fund, the Medium-Term Fixed Income Fund and the Short-Term Fixed Income Fund. 2.10. "Match Rate." The applicable contribution rate for Company ---------- Matching Contributions under the Regular 401(k) Plan from time to time. 2.11. "Participant." Any Eligible Employee who has elected to ----------- participate in the Plan in accordance with Section 4.1 hereof and for whom an Account is maintained. 2.12. "Participating Employer." The Company and any other employer ---------------------- which is a Participating Employer under the Regular 401(k) Plan and employs any Eligible Employees. 2.13. "Personal Salary Deferral Contributions." A Participant's -------------------------------------- personal salary deferral contributions to this Plan. 2.14. "Plan Year." The fiscal year adopted for this Plan. On the --------- Effective Date, the Plan Year is the calendar year. 2.15. "Regular 401(k) Plan." The Anheuser-Busch Deferred Income Stock ------------------- Purchase and Savings Plan, as amended from time to time. 2.16. "Regular 401(k) Plan Matched Contributions." A Participant's ----------------------------------------- Personal Contributions to the Regular 401(k) Plan with respect to which Company Matching Contributions are made. 2.17. "Reporting Person." As of a given date, an Employee who would ---------------- be required to report an ordinary purchase or sale of the common stock of the Company occurring on such date to the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. 2.18. "Reporting Person's HCSF Sub-Account." That portion of an ----------------------------------- Account of a Reporting Person which is hypothetically invested in the Company Stock Fund. 2 4 ARTICLE III ELIGIBILITY ----------- 3.1. Eligibility on Election Dates. Any person who is an Employee of ----------------------------- a Participating Employer on the Effective Date or any subsequent Election Date is eligible to participate in the Plan as of such Effective Date or Election Date provided he or she satisfies the requirements of Section 3.2 on such date. 3.2. Eligibility Requirements. In order to be eligible to defer any ------------------------ portion of his Compensation under the Plan from time to time, an Employee must satisfy the following requirements: (a) Be a participant in the Regular 401(k) Plan; (b) Have Compensation exceeding the limit established under Section 401(a)(17) of the Code, determined on a ratable basis under the standards applied under the Regular 401(k) Plan; and (c) Be contributing to the Regular 401(k) Plan the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions. 3.3. Participation. Any Eligible Employee shall become a Participant ------------- in the Plan by electing to make Personal Salary Deferral Contributions pursuant to Article IV hereof, and shall remain a Participant as long as he or she shall continue to live and have an Account. 3.4. Suspension. ---------- (a) A Participant who reduces contributions to the Regular 401(k) Plan below the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions shall be suspended from making Personal Salary Deferral Contributions and from receiving Company Contributions under this Plan for period of twelve (12) months after the effective date of such reduction. (b) A Participant who makes a withdrawal pursuant to Section 9.6 or a hardship withdrawal under the Regular 401(k) Plan shall be suspended from making Personal Salary Deferral Contributions and receiving Company Contributions under this Plan for a period of twelve (12) months after the effective date of such withdrawal. (c) A Participant who is suspended from making Regular 401(k) Plan Matched Contributions for any other reason shall be suspended from making Personal Salary Deferral Contributions and receiving Company Contributions under this Plan for the same period as the suspension period provided for in the 3 5 Regular 401(k) Plan. (d) Any Participant suspended pursuant to this Section 3.4 may resume deferrals under this Plan only if the Participant satisfies the requirements of Section 3.2 at the time of resumption and makes an election described in Section 4.1 not later than the Election Date for the Plan Year in which deferrals are resumed, whether the Participant's suspension period expires as of January 1 or on a later date during the Plan Year. ARTICLE IV PARTICIPANT DEFERRAL OF COMPENSATION ------------------------------------ 4.1. Election. An Eligible Employee who wishes to begin or resume -------- Personal Salary Deferral Contributions under the Plan must execute and deliver the appropriate Company form properly completed. Execution and delivery of such form to the Company shall be an irrevocable direction by the Participant to his or her Participating Employer to defer payment of an amount which is equal to (a) the difference between the Participant's Compensation and the applicable annual compensation limit under Section 401(a)(17) of the Code, times (b) the maximum percentage of Base Pay which may constitute Regular 401(k) Plan Matched Contributions until the earlier of the date the Participant's employment with all Participating Employers ends, the date of suspension of the Participant's contributions pursuant to Section 3.4 or the date of cessation of the Participant's Personal Salary Deferral Contributions pursuant to Section 4.4. 4.2. Time For Making Election. In general, the election described in ------------------------ Section 4.1 must be made not later than the Election Date which immediately precedes the Plan Year in which the Participant wishes to begin or resume making Personal Salary Deferral Contributions. In the case of an Employee who becomes an Eligible Employee after the Effective Date, the election to begin making Personal Salary Deferral Contributions described in Section 4.1 must be made not later than the Election Date which coincides with such Employee's initial eligibility, and will apply to defer amounts attributable to services performed after such Election Date. 4.3. Special Rule for Reporting Persons. Notwithstanding anything, ---------------------------------- an election described in Section 4.1 by a Reporting Person shall not be effective as to Compensation payable prior to the first day of the month following the calendar month in which the election is executed and delivered. 4 6 4.4. Cessation of Personal Salary Deferral Contributions. A --------------------------------------------------- Participant may cease making Personal Salary Deferral Contributions as of the first day of any Plan Year, provided that the Participant executes and delivers the appropriate form promulgated by the Company not later than the Election Date which immediately precedes the Plan Year. An election under this Section 4.4 does not constitute a termination of participation in the Plan. ARTICLE V COMPANY CONTRIBUTIONS --------------------- Each Participant's Account will be credited with a Company Matching Contribution which is equal to (a) the amount of such Participant's Personal Salary Deferral Contribution, times (b) the Match Rate, all as determined from time to time. Each Participant's Account will be credited with a Supplemental Contribution for each Plan Year at the same rate as the Supplemental Contribution under the Regular 401(k) Plan for the Regular 401(k) Plan's plan year within which the Plan Year of this Plan ends. ARTICLE VI ACCOUNTS -------- 6.1. Establishment of Accounts. The Company will establish an ------------------------- Account for the benefit of each Participant. 6.2. Crediting of Personal Salary Deferral Contributions. Each --------------------------------------------------- Participant's Account shall be credited with his or her Personal Salary Deferral Contributions at the same time as accounts under the Regular 401(k) Plan are credited with Personal Contributions. 6.3. Crediting of Company Contributions. Each Participant's Account ---------------------------------- will also be credited with Company Matching Contributions and Supplemental Contributions in accordance with Article V, at the same times as accounts under the Regular 401(k) Plan are credited therewith. 6.4. Crediting or Debiting of Investment Returns. The Company shall ------------------------------------------- credit or debit, as the case may be, each Participant's Account to reflect the return on hypothetical investments provided in Article VII. 6.5. Debiting of Payments. Each Participant's Account shall be -------------------- debited by the amount of any payments of benefits pursuant to Article IX at the time of any such payments. 5 7 ARTICLE VII HYPOTHETICAL INVESTMENTS ------------------------ 7.1. Election of Hypothetical Investments. Prior to becoming a ------------------------------------ Participant, each Participant must (and at such times as the Company may thereafter allow, each Participant may) select the combination of Investment Funds in which he or she wishes hypothetically to invest, subject to the following limitations: (a) The portion of each Participant's Account which is attributable to Company Contributions, including earnings thereon, shall be hypothetically invested at all times in the Company Stock Fund. (b) At least 50% of the portion of each Participant's Account which is attributable to Personal Salary Deferral Contributions, including earnings thereon, shall be hypothetically invested in the Company Stock Fund for at least one complete Plan Year after the Plan Year of contribution. (c) Notwithstanding (b) above, no part of the value of a Reporting Person's Account which is attributable to Personal Salary Deferral Contributions shall be hypothetically invested in the Company Stock Fund at any time. (d) A Participant's elections respecting hypothetical investment of future deferrals and hypothetical investment of the Participant's existing Account shall be made separately and independently in accordance with the rules and regulations of the Regular 401(k) Plan. (e) If a Participant dies before distribution of the Participant's entire Account is complete, the Participant's Beneficiary shall have the right to make the elections reserved to the Participant in the foregoing subsections of this Section 7.1 from the date the Employee Stock Plans Department of the Company receives written notice of the Participant's death through the date of final distribution; provided: (i) if a deceased Participant has two or more Beneficiaries, the Beneficiaries shall have the right to make such elections with respect to the portions of the Participant's Account to which they are respectively entitled; and (ii) if the Beneficiary is a minor or otherwise legally incompetent, a parent or legal guardian of the Beneficiary, as the case may be, shall exercise such right on behalf of the Beneficiary. 7.2. Crediting of Investment Returns. The Company shall, at such ------------------------------- times and in such manner as it in its sole discretion determines to be appropriate, credit or debit each Participant's Account, as the case may be, with the appropriate amount of income, gain or loss, as if such Account had been invested in the combination of Investment Funds he or she has selected in accordance with Section 7.1. 6 8 ARTICLE VIII VESTING ------- 8.1. Personal Salary Deferral Contributions. The portion of a -------------------------------------- Participant's Account which is attributable to the Participant's Personal Salary Deferral Contributions, together with all earnings thereon, shall be fully vested and non-forfeitable at all times. 8.2. Company Contributions. The portion of a Participant's Account --------------------- which is attributable to Company Contributions, together with all earnings thereon, shall vest and become non-forfeitable when the portion of such Participant's Regular 401(k) Plan account which is attributable to Company Matching Contributions and Supplemental Contributions vests and becomes non-forfeitable. ARTICLE IX PAYMENT OF BENEFITS ------------------- 9.1. Election. -------- (a) At the time an Eligible Employee makes the initial election to participate in the Plan which is described in Section 4.1, he or she shall also irrevocably elect whether amounts deferred under the Plan during the initial Plan Year and subsequent Plan Years shall be made in a single sum, or five (5) installments, and whether payment shall begin as of the first day of the calendar month following termination of the Participant's employment with all Employing Companies or as of the January 1 following the termination, all subject to acceleration as provided for in Sections 9.6, 9.7 and 9.8. (b) A Participant may change any prior election made pursuant to Section 9.1(a) or any election pursuant to this Section 9.1(b), effective as to the value of the Participant's Account which is attributable to contributions made on and after the first day of any succeeding Plan Year. Notice of any such change shall be filed by the Election Date for such Plan Year on a form prescribed by the Company. 9.2. Commencement of Payments. Subject to the remaining provisions ------------------------ of this Article IX, payments under the Plan shall begin as of the first day of the calendar month following the Participant's termination of employment with all Employing Companies or as of the January 1 following the termination, as elected by the Participant. 7 9 9.3. Timing of Payments. ------------------ (a) If a Participant has elected payment of any portion of the Participant's Account in a single sum pursuant to Section 9.1, such single sum amount shall be due and payable as of the first day of the calendar month following termination of the Participant's employment with all Employing Companies or as of the January 1 following the termination, as elected by the Participant. (b) If a Participant has elected payment of any portion of the Participant's Account in installments pursuant to Section 9.1, the initial installment shall be due and payable as of the first day of the calendar month following the Participant's termination of employment with all Employing Companies or as of the January 1 following the termination, as elected by the Participant, and the remaining four (4) installments shall be due and payable as of January 1 of the next four (4) Plan Years. (c) Notwithstanding Section 9.3(b), if the Participant's employment with all Employing Companies terminates before age fifty-five (55) for any reason other than the Participant's death or disability, the Company may determine that payment of the Participant's entire Account balance shall be paid in a single sum, notwithstanding any election by the Participant to the contrary. 9.4. Set Off and Withholding. ----------------------- (a) Any amount then due and payable by the Company to any Participant and/or Beneficiary under this Plan may be offset by any amount owed to any Employing Company by the Participant and/or Beneficiary for any reason and in any capacity whatsoever, as the Company may determine in its sole and absolute discretion. (b) There shall be deducted from any amount payable under this Plan all taxes required to be withheld by any federal, state or local government. Participants and their Beneficiaries shall bear any and all federal, state, local and other income taxes and other taxes imposed on amounts paid under the Plan, whether or not withholding is required or carried out in accordance with this provision. 9.5. Determination of Payment Amounts. -------------------------------- (a) If payment to a Participant or Beneficiary occurs in a single sum, the amount of such single sum shall be equal to the Participant's vested Account balance as of the Plan's valuation date immediately preceding the payment date. (b) If payment to a Participant or Beneficiary occurs in annual installments, the amount of each installment shall be equal to the Participant's vested Account balance as of the Plan's 8 10 valuation date immediately preceding the payment date, divided by the number of installments then remaining to be paid. For example, to determine the amount of the first installment, divide the Participant's vested Account balance by five (5); to determine the amount of the second installment, divide the Participant's vested Account balance by four (4), and so on. 9.6. Unforeseeable Emergency. ----------------------- (a) Notwithstanding Sections 9.1, 9.2 and 9.3 above, the Company may determine that payment of any portion of the amount then due a Participant or Beneficiary under the Plan shall be accelerated on application of the Participant or Beneficiary on account of and subject to reasonable proof of unforeseeable emergency. (b) For purposes of this Section 9.6, an unforeseeable emergency is a severe financial hardship to the Participant or Beneficiary resulting from a sudden and unexpected illness or accident of the Participant or Beneficiary or of a dependent (as defined in section 152(a) of the Internal Revenue Code) of the Participant or Beneficiary, loss of the Participant's or Beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved-- (i) Through reimbursement or compensation by insurance or otherwise, (ii) By liquidation of the Participant's or Beneficiary's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (iii) By cessation of Personal Salary Deferral Contributions under the Plan if and when possible under the remaining provisions of the Plan, or by cessation of elective deferrals if and when possible under any other deferred compensation plan for which the Participant or Beneficiary is eligible. Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant's or Beneficiary's child to college or the desire to purchase a home. (c) Withdrawal of amounts because of an unforeseeable emergency shall be permitted only to the extent reasonably needed to satisfy the emergency. If the Company determines that an unforeseeable emergency requires and can be satisfied by cessation of deferrals under this Plan and any other deferred compensation plan without withdrawal under this Plan, the Company shall direct 9 11 cessation of such deferrals under this Plan and any other such plan if and to the extent permitted under the provisions thereof, and shall not direct acceleration of payment under this Section 9.6. (d) All determinations under this Section 9.6 shall be made by an Administrative Committee appointed pursuant to Section 11.1(c). 9.7. Change in Control. ----------------- (a) If a Change in Control (as defined in Sec. 9.7(b)) shall occur, then, notwithstanding anything to the contrary herein, the entire amount accrued on behalf of a Participant under the Plan as of the Change in Control Date shall be paid in a single sum within 30 days after the Change in Control Date. (b) For purposes of this Plan, a "Change in Control" shall occur automatically if and when an "Acceleration Date" occurs as defined in the Company's 1998 Incentive Stock Plan or if and when an analogous change in control event occurs as defined in any successor to such plan, and the Change in Control Date shall be the Acceleration Date or analogous date as defined therein. (c) This Sec. 9.7 may be deleted or amended in any way pursuant to Article XII at any time prior to a Change in Control. Notwithstanding Article XII, following a Change in Control, the provisions of this Sec. 9.7 cannot, after the Change in Control Date, be amended in any manner without the written consent of each individual who was a Participant immediately prior to a Change in Control. (d) Following a Change in Control, this Plan may continue in effect, notwithstanding that payment of benefits shall have been made under Sec. 9.7(a). (e) If, by reason of this Section 9.7, an excise or other special tax ("Excise Tax") is imposed on any payment under the Plan (a "Required Payment"), the amount of each Required Payment shall be increased by an amount which, after payment of income taxes, payroll taxes and Excise Tax on such additional amount, will equal such Excise Tax on the Required Payment. 9.8. General Right to Accelerate Payment. Notwithstanding Sections ----------------------------------- 9.2 and 9.3, the Company by its proper officers in its sole discretion may direct current payment of all amounts then credited to all Participants' Accounts under the Plan. 10 12 9.9. Payments After Death. -------------------- (a) Except as otherwise provided in this Section 9.9, any amount payable under this Plan as a result of or following the death of a Participant shall be applied only for the benefit of the Beneficiary or Beneficiaries designated by the Participant pursuant to this Section 9.9 or any other person deemed to be a Beneficiary under any other provision of this Plan or by law. Each Participant shall specifically designate, by name, on forms provided by the Company, the Beneficiary(ies) to whom any such amounts shall be paid. A Participant may change or revoke a Beneficiary designation without the consent of the Beneficiary(ies) at the time by filing a new Beneficiary designation form with the Company. The filing of a new form shall automatically revoke any forms previously filed with the Company. A Beneficiary designation form not properly filed with the Company prior to the death of the Participant shall have no validity under the Plan. (b) Any such designation shall be contingent on the designated Beneficiary surviving the Participant. If the designated Beneficiary survives the Participant but dies before receiving the entire amount payable to the designated Beneficiary hereunder, the amount which would otherwise have been so paid shall be paid to the estate of the deceased Beneficiary unless a contrary direction was made by the Participant, in which case such direction shall control. More than one Beneficiary, and alternative or contingent Beneficiaries may be designated, in which case the Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple or alternative or contingent Beneficiaries, all of which must be satisfactory to the Company. (c) If no Beneficiary designation is on file with the Company at the time of the Participant's death, the beneficiary(ies) for purposes of the Regular 401(k) Plan shall be deemed to be the Beneficiary designated to receive any amounts then remaining payable under this Plan. (d) If no Beneficiary designated by the Participant under this Plan or the Regular 401(k) Plan survives the Participant, the Participant's estate shall be deemed to be the Beneficiary designated to receive any amounts then remaining payable under this Plan. (e) In determining any question concerning a Participant's Beneficiary, the latest designation filed with the Company shall control and intervening changes in circumstances shall be ignored; provided, if a Participant's spouse is designated as Beneficiary but thereafter is divorced from the Participant, such designation shall become invalid as of the date of divorce unless the Participant files a Beneficiary designation form with the Company after the date of divorce confirming designation of such former spouse as Beneficiary. 11 13 (f) Any check issued on or before the date of a Participant's death shall remain payable to the Participant whether or not the check is received by the Participant prior to death. Any check issued after the date of the Participant's death shall be the property of the Participant's Beneficiaries determined in accordance with this Section 9.9. (g) A Participant's election of payment in installments shall not be altered by reason of the Participant's death. 9.10. All Payments to be Made by the Company. All payments due any -------------------------------------- Participant or Beneficiary under this Plan shall be the sole responsibility of the Company. 9.11. Special Rule for Non-deductible Amounts. Any amount otherwise --------------------------------------- payable under the Plan in a Plan Year for which the Company determines that the amount would not be deductible by any Participating Employer under section 162(m) of the Internal Revenue Code shall not be paid until such Plan Year as the Company determines that the amount has ceased to be non-deductible by any Participating Employer under section 162(m) of the Internal Revenue Code. In the case of any inconsistency between this Section 9.11 and any other provision of the Plan, this Section 9.11 shall govern, except in the case that Section 9.7 is effective. 9.12. Special Rule for Reporting Persons. Notwithstanding any other ---------------------------------- provision of the Plan, including without limitation Sections 9.6, 9.7 and 9.8, no amount shall be distributed from a Reporting Person's HCSF Sub-Account until the affected Participant either ceases to be a Reporting Person or ceases to be an Employee, whichever occurs first. ARTICLE X PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY ---------------------------------------------- 10.1. Adoption. A Participating Employer other than the Company shall -------- adopt this Plan by written instrument executed by its proper officers, subject to the written approval of the Company by its proper officers or their delegates. Adoption of the Plan by a Participating Employer shall constitute automatic delegation of all rights and duties it might otherwise reserve to itself under the Plan to the Company, including full authority to amend or terminate the Plan. 10.2. Withdrawal. A Participating Employer shall automatically ---------- withdraw from the Plan if and when it ceases to be a Participating Employer under the Regular 401(k) Plan, without the execution of any other instrument. A Participating Employer may voluntarily withdraw from the Plan on not less than thirty (30) 12 14 days' written notice from its proper officers. 10.3. Succession. In the event of dissolution, merger, consolidation, ---------- or spin-off involving a Participating Employer, the entity surviving the transaction shall succeed to the rights and duties of the affected Participating Employer without the execution of any other instrument. ARTICLE XI ADMINISTRATION AND CLAIMS PROCEDURES ------------------------------------ 11.1. Administrative Duties of the Company. ------------------------------------ (a) The Company shall have sole responsibility for the administration of the Plan. (b) The Company shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. The Company shall interpret the Plan; shall determine all questions arising in the administration, interpretation, and application of the Plan; and shall construe any ambiguity, supply any omission, and reconcile any inconsistency in such manner and to such extent as the Company deems proper. Any interpretation or construction placed upon any term or provision of the Plan by the Company, any decisions and determinations of the Company arising under the Plan, including without limiting the generality of the foregoing: (i) the eligibility of any individual to become or remain a Participant, a Participant's status as such and the amount of a Participant's Compensation for any Plan Year, (ii) the time, method and amounts of payments payable under the Plan; (iii) the rights of Participants; and (iv) any other action or determination or decision whatsoever taken or made by the Company in good faith, shall be final, conclusive, and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers and all Participants and Beneficiaries. (c) The Chief Financial Officer of the Company shall appoint one or more Employees to carry out the Company's duties hereunder. (d) The Company may employ accountants, counsel, specialists, and other persons necessary to help carry out its duties and responsibilities under the Plan. The Company or any appointee shall be entitled to rely conclusively upon any opinions or reports which shall be furnished to it or him by such accountants, counsel, specialists, and other persons. (e) No Employee shall participate in determining his or her own entitlement under the Plan. 13 15 11.2. Claims Procedures. ----------------- (a) The Company shall make all decisions and determinations respecting the right of any person to a payment under the Plan. (b) The following procedure shall be followed with respect to claims under the Plan: (i) Any claimant who believes he or she is entitled to a payment under this Plan shall submit a claim for such payment in writing to the Company. (ii) Any decision by the Company denying a claim in whole or in part shall be stated in writing by the Company and delivered or mailed to the claimant within ninety (90) days after receipt of the claim by the Company unless special circumstances require an extension of time for processing, but in any event within one hundred eighty (180) days after such receipt. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial ninety (90) day period, including the reasons therefor and the date by which the Company expects to render a decision. Any decision denying a claim shall set forth the specific reasons for the denial with specific references to Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim and the reasons therefor, and an explanation of the Plan's claim review procedure as provided for in Section 11.2(b)(iii), all written in a manner calculated to be understood by the claimant. If the Company does not notify the claimant of denial of the claim or the need for an extension of time within the initial ninety (90) day period, the claim shall be deemed denied. (iii) If a claim is denied in whole or in part, the claimant or his or her duly authorized representative may request a review by the Company of the decision upon written application to the Company within sixty (60) days after notification of the decision. The claimant or his or her duly authorized representative may review pertinent documents and submit issues and comments in writing. The Company shall make its decision on review not later than sixty (60) days after receipt of the request for review unless special circumstances require an extension of time for processing, in which case its decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of the request for review. If such an extension of time is taken, the Company shall inform the claimant of the delay in writing before the expiration of the initial sixty (60) day period. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant and specific references to the pertinent plan provisions on which the decision is based. If the Company does not notify the claimant of its decision on review within the period herein 14 16 provided for, the claim shall be deemed denied on review. (c) The Company may adopt such rules as it deems necessary, desirable, or appropriate to carry out its duties under this Section 11.2. All rules, decisions and determinations of the Company under this Section 11.2 shall be uniformly and consistently applied. Any action or determination or decision whatsoever taken or made by the Company under this Section 11.2 in good faith shall be final, conclusive and binding upon all persons concerned, including, but not limited to, the Company, all Participating Employers, and all Participants and Beneficiaries. (d) The procedure provided for in this Section 11.2 shall be the sole, exclusive and mandatory procedure for resolving any dispute under this Plan; provided, that if a Participant wishes to make a valid legal challenge to the Company's determination and he has entered into an agreement with the Company to arbitrate disputes arising from his employment with the Company, such legal challenge shall be resolved pursuant to the arbitration procedures in that agreement and the Participant's burden of proof in any arbitration shall be the same as if the dispute were tried in a court proceeding. (e) Notwithstanding the foregoing, upon a Change in Control as defined in Section 9.7, Section (d) above shall not apply. 11.3. Books and Records. ----------------- (a) The Company shall keep such books, records, and other data as it deems necessary for proper administration of the Plan, including but not limited to records of each Participant's Personal Salary Deferral Contributions, hypothetical Investment Fund and payment elections, Account balance and payment record. (b) The records of the Company shall be binding on all persons unless proved incorrect to the satisfaction of the Company. (c) The Company shall comply with all reporting and disclosure requirements of the law and shall maintain all records required by law. 11.4. Notices. ------- (a) Any notice from the Company to any Participant shall be in writing and shall be given by delivery to the Participant, or by mailing to the last known residence address of the Participant. Any notice from a Participant to the Company shall be in writing and shall be given by delivery to the Employee Stock Plans Department of the Company at the Company's headquarters, except as otherwise designated by the Company. Notices shall be effective on the date of actual delivery. 15 17 (b) Each Participant shall furnish all information, including post office address and each change of post office address, proofs, receipts and releases, as may be required by the Company. (c) Any communication, statement or notice addressed to any individual at the last post office address filed with the Company shall be binding for all purposes of the Plan, and the Company shall not be obligated to search for or ascertain the whereabouts of any such individual. (d) Except as provided for in Article IV, any notice required by the Plan may be waived by the Company or any Participant. (e) Notwithstanding any other provision of this Section 11.4, in the event and to the extent permitted under the Regular 401(k) Plan, notices may be made by electronic means. ARTICLE XII AMENDMENT AND TERMINATION ------------------------- The Chief Financial Officer of the Company shall have authority to amend or terminate the Plan on behalf of the Company in his or her sole discretion at any time, except as follows: (a) Any amendment that sets a Match Rate or Supplemental Contribution Rate under the Plan that is different from those applied under the Regular 401(k) Plan from time to time shall require approval by the Compensation Committee of the Board of Directors of the Company; and (b) No amendment shall retroactively reduce any Participant's Account under the Plan, except as provided for in Section 13.12. All Participants shall be bound by any amendment to the Plan without the execution of any other instrument. 16 18 ARTICLE XIII MISCELLANEOUS ------------- 13.1. Company's Obligations Unsecured. It is the intention of the ------------------------------- Company and all Participants that the Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974. Amounts payable to Participants under this Plan shall be paid solely from the general assets of the Company as they come due from time to time. No Participant or Beneficiary shall have any property interest whatsoever in any asset of the Company on account of participation in this Plan. Participants' rights under this Plan shall be no greater than the right of an unsecured general creditor of the Company. Nothing in this Plan shall require the Company to invest any amount in any asset or type of asset. 13.2. No Alienation. Except as required by law, amounts payable under ------------- this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to payment hereunder shall be void, and the Company shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any Participant or other person. 13.3. No Waiver of Rights. Except as provided for in Section 11.2, no ------------------- failure or delay by the Company or any Participant to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 13.4. Severability. The invalidity of any particular clause, ------------ provision or covenant herein shall not invalidate all or any part of the remainder of this Plan, but such remainder shall be and remain valid in all respects as fully as the law will permit. 13.5. Legal Expenses. In any proceeding to enforce rights and -------------- obligations hereunder, the unsuccessful party shall pay the successful party an amount equal to all reasonable out-of-pocket expenses (including reasonable legal expenses and court costs) incurred by the successful party. 13.6. Presumption of Competence. Every person receiving or ------------------------- claiming amounts payable under this Plan shall be conclusively presumed to be mentally competent and of legal age unless and until the Company receives proof satisfactory to the Company that the person is incompetent or is a minor or that a guardian or other person legally vested with the care of the person's estate 17 19 has been appointed. 13.7. Facility of Payment. If any amount is payable hereunder to a ------------------- minor or other person under legal disability or otherwise incapable of managing his or her own affairs, as determined by the Company in its sole discretion, payment thereof shall be made in one (or any combination) of the following ways, as the Company shall determine in its sole discretion: (a) directly to said minor or other person; (b) to a custodian for said minor or other person (whether designated by the Company or any other person) under the Missouri Transfers to Minors Law, the Missouri Personal Custodian Law or a similar law of any jurisdiction; (c) to the conservator of the estate of said minor or other person; or (d) to some relative or friend of such minor or other person for the support, welfare or education of such minor or other person. The Company shall not be required to see to the application of any payment so made, and payment to the person determined by the Company shall fully discharge the Company from any further accountability or responsibility with respect to the amount so paid. 13.8. No Guarantee of Employment or Compensation. No provision of ------------------------------------------ this Plan shall restrict any Employing Company from discharging a Participant from employment or restrict any Participant from resigning from employment with any Participating Employer. No provision of this Plan shall restrict any Employing Company from increasing or decreasing the compensation of any Employee. 13.9. Plan Provisions Binding. The provisions of the Plan shall be ----------------------- binding upon the Company, all Participating Employers and all persons entitled to benefits under the Plan and their respective successors, heirs and legal representatives. 13.10. Rules of Interpretation. Words of gender shall include persons ----------------------- and entities of any gender, the plural shall include the singular, and the singular shall include the plural. Captions are intended to assist in reference and shall not be interpreted as part of the Plan. 13.11. Missouri Law Controls. Subject to the applicable provisions of --------------------- the Employee Retirement Income Security Act of 1974 which provide to the contrary, this Plan shall be administered, construed, and enforced according to the laws of the State of Missouri (other than choice of law) and in Courts situated in that State. 18 20 13.12. Reporting Persons. It is intended that the interests of ----------------- Reporting Persons in the Plan qualify for exclusion from the definition of "derivative securities" contained in Rule 16a-1(c) of the Securities and Exchange Commission; the Plan shall be interpreted in a manner consistent with that intent. Moreover, the Chief Financial Officer of the Company may amend the Plan, retroactively if deemed prudent, as such Officer deems appropriate to ensure the continuation of such qualification. 13.13. Counterparts. This Plan may be executed in two or more ------------ counterparts, any one of which shall constitute an original without reference to the others. IN WITNESS WHEREOF, the Company has executed this Plan this 9th day of March, 2000, effective as of the 1st day of March, 2000. ANHEUSER-BUSCH COMPANIES, INC. BY: /s/ W. Randolph Baker ------------------------------------- W. Randolph Baker Chief Financial Officer 19 21 TABLE OF CONTENTS ----------------- ARTICLE I RESTATEMENT OF PLAN 1 1.1. Action By Company 1 1.2. Purpose of the Plan 1 ARTICLE II DEFINITIONS 1 2.1. Account 1 2.2. Beneficiary 1 2.3. Company Contributions 1 2.4. Compensation 1 2.5. Effective Date 1 2.6. Election Date 2 2.7. Eligible Employee 2 2.8. Employee 2 2.9. Investment Fund 2 2.10. Match Rate 2 2.11. Participant 2 2.12. Participating Employer 2 2.13. Personal Salary Deferral Contributions 2 2.14. Plan Year 2 2.15. Regular 401(k) Plan 2 2.16. Regular 401(k) Plan Matched Contributions 2 2.17. Reporting Person 2 2.18. Reporting Person's HCSF Sub-Account 2 ARTICLE III ELIGIBILITY 3 3.1. Eligibility on Election Dates 3 3.2. Eligibility Requirements 3 3.3. Participation 3 3.4. Suspension 3 ARTICLE IV PARTICIPANT DEFERRAL OF COMPENSATION 4 4.1. Election 4 4.2. Time For Making Election 4 4.3. Special Rule for Reporting Persons 4 4.4. Cessation of Personal Salary Deferral Contributions 5 i 22 ARTICLE V COMPANY CONTRIBUTIONS 5 ARTICLE VI ACCOUNTS 5 6.1. Establishment of Accounts 5 6.2. Crediting of Personal Salary Deferral Contributions 5 6.3. Crediting of Company Contributions 5 6.4. Crediting or Debiting of Investment Returns 5 6.5. Debiting of Payments 5 ARTICLE VII HYPOTHETICAL INVESTMENTS 6 7.1. Election of Hypothetical Investments 6 7.2. Crediting of Investment Returns 6 ARTICLE VIII VESTING 7 8.1. Personal Salary Deferral Contributions 7 8.2. Company Contributions 7 ARTICLE IX PAYMENT OF BENEFITS 7 9.1. Election 7 9.2. Commencement of Payments 7 9.3. Timing of Payments 8 9.4. Set Off and Withholding 8 9.5. Determination of Payment Amounts 8 9.6. Unforeseeable Emergency 9 9.7. Change in Control 10 9.8. General Right to Accelerate Payment 10 9.9. Payments After Death 11 9.10. All Payments to be Made by the Company 12 9.11. Special Rule for Non-deductible Amounts 12 9.12. Special Rule for Reporting Persons 12 ARTICLE X PARTICIPATING EMPLOYERS OTHER THAN THE COMPANY 12 10.1. Adoption 12 10.2. Withdrawal 12 10.3. Succession 13 ii 23 ARTICLE XI ADMINISTRATION AND CLAIMS PROCEDURES 13 11.1. Administrative Duties of the Company 13 11.2. Claims Procedures 14 11.3. Books and Records 15 11.4. Notices 15 ARTICLE XII AMENDMENT AND TERMINATION 16 ARTICLE XIII MISCELLANEOUS 17 13.1. Company's Obligations Unsecured 17 13.2. No Alienation 17 13.3. No Waiver of Rights 17 13.4. Severability 17 13.5. Legal Expenses 17 13.6. Presumption of Competence 17 13.7. Facility of Payment 18 13.8. No Guarantee of Employment or Compensation 18 13.9. Plan Provisions Binding 18 13.10. Rules of Interpretation 18 13.11. Missouri Law Controls 18 13.12. Reporting Persons 19 13.13. Counterparts 19
iii EX-10.13 11 INDEMNIFICATION AGREEMENT 1 INDEMNIFICATION AGREEMENT ------------------------- AGREEMENT, effective as of --------------, 19----, between Anheuser-Busch Companies, Inc., a Delaware corporation (the "Company"), and --------------- (the "Indemnitee"). WHEREAS, it is essential to the Company to retain and attract as directors [and executive officers] the most capable persons available; WHEREAS, Indemnitee is a [director/executive officer] of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors of public companies in today's environment; WHEREAS, the Restated Certificate of Incorporation and the By-laws of the Company require the Company to indemnify and advance expenses to its directors to the full extent permitted by law and the Indemnitee has been serving and continues to serve as a director [or executive officer] of the Company in part in reliance on such Restated Certificate of Incorporation and By-laws; 2 WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in Order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the aforesaid Restated Certificate of Incorporation and By-laws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Restated Certificate of Incorporation and By-laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Restated Certificate of Incorporation and By-laws or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), and in order to induce Indemnitee to continue to provide services to the Company as a director [or executive officer] thereof, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the full extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; 2 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-10.15 12 INVESTMENT AGREEMENT 1 EXECUTION COPY - ----------------------------------------------------------------- INVESTMENT AGREEMENT By and Among ANHEUSER-BUSCH COMPANIES, INC., ANHEUSER-BUSCH INTERNATIONAL, INC. and ANHEUSER-BUSCH INTERNATIONAL HOLDINGS, INC. and GRUPO MODELO, S.A. DE C.V., DIBLO, S.A. DE C.V. and CERTAIN SHAREHOLDERS THEREOF Dated as of June 16, 1993 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 thereof, 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 shareholders, the directors or the sole administrator of the G-Modelo Corporations identified on Schedule 3.2(c) to Srs. Antonino Fernandez R., Pablo Aramburuzabala, Nemesio Diez R., Juan Sanchez-Navarro y P. or Valentin Diez M. and to provide such information to A-B. (d) Except as provided in this Agreement and the Banamex Trust Agreement, the Banamex Trust is not 14 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 through- out the periods covered, except as otherwise noted therein and except that the Unaudited Consolidated Finan- cial Statements are subject to any normal and recurring adjustments which may arise from the audit of the fiscal year ended December 31, 1993. The consolidated books and records of G-Modelo and its subsidiaries reflect that as of December 31, 1992, G-Modelo and the G-Modelo Corpora- tions had cufine (Cuenta De Utilidad Fiscal Neta) in an aggregate amount equal to 2,216,147,495 Mexican Pesos. 3.8. Undisclosed Liabilities; Absence of ----------------------------------- Certain Changes. Neither G-Modelo nor any G-Modelo --------------- Corporation has any liabilities or obligations of any nature, secured or unsecured (absolute, accrued, contin- 19 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 Treas- ury and the aggregate amount of which claimed by the Ministry to be due does not exceed 3,500,000 Mexican Pesos in any year; (c) There are no liens for Taxes upon the assets of any of the Taxpayers; (d) The Taxpayers have complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes pursuant to all applicable tax provisions concern- ing tax withholding or similar provisions and have, within the time and in the manner prescribed by law, paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all appli- cable laws; (e) (i) Except for the tax years 1988 through 1992, the statute of limitations for the assess- ment of all Taxes under the Mexican income tax and the United States federal income tax laws have expired for all applicable returns of the Taxpayers or an audit of those returns has been completed by the appropriate taxing authorities for all periods ending on or before the Closing Date, (ii) no deficiency for any Taxes has been proposed, asserted or assessed which has not been finally resolved, (iii) neither the Controlling Share- holders nor the Taxpayers know of any facts that are likely to result in any assertion or assessment of a Tax with respect to any past taxable period, and (iv) no taxing authority has successfully asserted any issue concerning the liability of the Taxpayers for Taxes that by application of similar principles could result in any 23 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-10.16 13 MATERIAL CONTRACT 1 January 24, 1994 Antonino Fernandez R. Grupo Modelo, S.A. de C.V. Campos Eliseos 400 11000 Mexico, D.F. Dear Don Antonino: This letter shall serve to confirm the understanding and agreement between A-B and the Controlling Shareholders regarding Section 5.5 of the Investment Agreement, which reads as follows: "5.5 Election of A-B Director. The Controlling Shareholders shall be ------------------------- entitled to designate a G-Modelo director for election to the A-B Board of Directors. Following such designation, A-B will use its best efforts to nominate and cause such designee to be elected to the A-B Board of Directors at the Annual Meeting of Shareholders of A-B next succeeding such designation and to continue to nominate and cause such a designee to be elected for so long as the Investor owns ten percent or more of the total outstanding shares of G-Modelo capital stock." It is acknowledged and agreed that Anheuser-Busch fulfilled its obligations under Section 5.5 when Pablo Aramburuzabala was appointed to the A-B Board as a Class I Director, with a term continuing until the Annual Meeting of Shareholders in 1995. A-B will use its best efforts to cause Pablo Aramburuzabala (or another designee of the Controlling Shareholders) to be nominated and elected to the A-B Board at the Annual Meeting of Shareholders in 1995 and future years as long as the Investor owns ten percent or more of the total outstanding shares of G-Modelo capital stock. Capitalized terms used in this letter shall have the meanings given such terms in the Investment Agreement. Please indicate the Controlling Shareholders' agreement with the foregoing by signing and returning the attached copy. Sincerely, ANHEUSER-BUSCH COMPANIES, INC. S/JOHN H. PURNELL - --------------------------------------------------- John H. Purnell, Vice President and Group Executive ACKNOWLEDGED AND AGREED as of the date above. S/ANTONINO FERNANDEZ R. - --------------------------------------------------- Antonino Fernandez R., on behalf of the Controlling Shareholders EX-10.17 14 FOURTH AMENDMENT TO ANHEUSER-BUSCH 1 FOURTH AMENDMENT TO THE ANHEUSER-BUSCH DEFERRED INCOME STOCK PURCHASE & SAVINGS PLAN AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996 Effective as of April 1, 1996, Anheuser-Busch Companies, Inc. (the "Company") amended and restated the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan ("the Plan") and has subsequently amended the Plan three times. The Company reserved the right to further amend the Plan from time to time and hereby amends the Plan effective April 1, 1999 unless expressly noted otherwise as follows: 1. Effective July 1, 1999, Section 2.17 is amended to read as follows: 2.17 "Employee". An individual classified as a direct employee on the ----------- books and records of a Participating Employer and employed in any capacity other than (a) A person employed outside the United States or Puerto Rico, except that persons who are employed outside the United States whose Base Pay is paid through the United States salaried payroll shall be considered "Employees" unless excluded from participation in the Plan by individual agreement, requirements of law or practical impediment as determined by the Committee. (b) A person employed in a branch operation of Wholesaler Equity Development Corporation; or (c) A person employed by a Participating Employer to replace a collective bargaining unit employee during a work stoppage, even if such person was a former Employee or Participant. An individual who is not classified as a direct employee on the books and records of a Participating Employer, but who for some other purpose is found or deemed to be an employee, shall not be an "Employee" for purposes of this Plan notwithstanding such finding or determination. 2. Section 2.26 is amended effective October 1, 1998, by adding a subsection (j) as follows: (j) In determining the Hours of Service of any individual employed by Anheuser-Busch, Inc. as of October 1, 1998, hours of service with M&R Advertising Warehouse, Inc. shall be considered Hours of Service in accordance with this Section. This provision shall be effective for purposes of both Article III and Article XI. 2 3. Sections 6.1, 6.2 and 6.3 of the Plan are amended to read in their entirety as follows: 6.1 Required Contributions. (a) Each Participating Employer shall ----------------------- contribute, as its share of Company Matching Contributions, for each Plan Year (or portion thereof) of its participation in this Plan, either directly or indirectly by way of (i) release of available Unallocated Shares having an equivalent value, or (ii) the access or use of any funds held in the ESOP Loan Payment Accumulation Account, the "formula amount", less the aggregate amount of forfeitures attributable to Participants employed by it. The "formula amount" is that amount determined by multiplying (i) the total amount of matched Personal Contributions actually deferred or withheld during such period from the Base Pay of all Participants employed by such Participating Employer, by (ii) the contribution rate in effect for such period. (b) Each Participating Employer shall also contribute, directly or indirectly by way of (i) release of available Unallocated Shares having an equivalent value, or (ii) the access or use of any funds held in the ESOP Loan Payment Accumulation Account, for each Plan Year (or portion thereof) of its participation in this Plan, its proportionate share of any Supplemental Contribution for any Plan Year. Supplemental Contributions shall be determined by the Committee under Section 6.3. Supplemental Contributions shall equal the greater of the Adjusted Tentative Supplement Contribution or the value of all shares required to be, but not yet released from this Plan's ESOP Loan Suspense Account for a Plan Year. Section 6.3 describes the method for calculating the Supplemental Contribution. (c) If so directed by the Company from time to time, each Participating Employer shall also contribute for each Plan Year (or portion thereof) of its participation in this Plan, either directly or indirectly by access or use of any funds held in the ESOP Loan Payment Accumulation Account, its proportionate share of the amount, if any, by which dividends transferred to the ESOP Loan Payment Accumulation Account for such year exceeds the value of Shares available for release from the ESOP Loan Suspense Account in connection with such transfer. (d) If so directed by the Company from time to time, each Participating Employer shall make its proportionate share of any additional contributions determined by the Company, in its absolute discretion. 2 3 (e) For purposes of Sections 6.1 and 6.3, the value of such Shares released from the ESOP Loan Suspense Account shall be the Closing Price on the last trading day prior to the date of release or such other date as may be determined by the Committee for this purpose. 6.2 Contribution Rate for Company Matching Contributions. The ----------------------------------------------------- contribution rate for Company Matching Contributions is a decimal fraction, expressed to two places, determined by the Committee prior to the beginning of each Plan Year, which shall not change during a Plan Year. Such contribution rate shall be established by adding .10 to the quotient resulting from dividing (a) by (b) where (a) is the Income from Continuing Operations as shown in the Consolidated Statement of Income in the Company's annual report for the Company Year most recently ended, and (b) is the "Employee-Related Costs" taken from "Management's Discussion and Analysis of Operations and Financial Condition" in the Company's annual report for such Company Year, but shall never be less than .3333 nor more than 1.0. 6.3 Determination of Supplemental Contribution. (a) As soon as ------------------------------------------- practicable on or after the last Processing Period of each Plan Year, the Committee shall determine the amount of the Supplemental Contribution, if any, for such Plan Year. The Supplemental Contribution for this Plan shall be an amount equal to the greater of (a) or (b) where (a) is the Adjusted Tentative Supplemental Contribution and (b) is the value of all shares required to be, but not yet released from the ESOP Loan Suspense Account for the Plan Year. Such value shall be determined using the Closing Price as of the last trading day of the last Processing Period of the Plan Year. The Tentative Supplemental Contribution shall be computed as follows: first, the average Closing Price of Shares released from the ESOP Loan Suspense Account for the Plan Year for this Plan and each Related Plan shall be determined. Second, the ESOP Share Cost of such released Shares shall be increased by (i) five percent (5%) for the first Plan Year, and (ii) ten percent (10%) compounded annually for each full Plan Year which has elapsed since the ESOP Loan proceeds were received by the Trustee, or for any Plan Year, such other percentage as may be determined by the Committee from time to time. (For partial years, a proportional part of the applicable percentage increase shall be used based on the number of full months in the Plan Year during which the ESOP Loan is outstanding). The ESOP Share Cost so increased shall be referred to as the Hurdle ESOP Share Price for such Plan Year. If the average Closing Price of the shares released from the ESOP Loan Suspense Account for the Plan Year is equal to or less than the Hurdle ESOP Share Price for the Plan Year, there shall be no Tentative 3 4 Supplemental Contribution for such Year. If such average Closing Price is greater than the Hurdle ESOP Share Price for the Plan Year, the difference shall be computed and multiplied by the number of Shares actually released from the ESOP Loan Suspense Account for this Plan and each Related Plan during the Plan Year. The figure so obtained shall be apportioned among this plan and the Related Plans based on the ratio that the aggregate formula amount (as defined in Section 6.1(a)) of each plan attributable to those Participants eligible to have a Supplemental Contribution allocated to their Accounts for such Plan Year bears to the combined aggregate formula amount of all plans attributable to those Participants eligible to have a Supplemental Contribution allocated to their Accounts for such Plan Year, and the portion allocated to this Plan shall be this Plan's Tentative Supplemental Contribution for the Plan Year. If there is more than one ESOP Loan outstanding for any Plan Year, the Tentative Supplemental Contribution shall be the sum of the amounts computed under this Section with respect to the Shares in the separate ESOP Loan Suspense Accounts. This Plan's Tentative Supplemental Contribution shall then be reduced by the amount of this Plan's "Carryover Amount", if any, for the Plan Year. The resulting amount shall be this Plan's Adjusted Tentative Supplemental Contribution. (b) For purposes of this Section, the "Carryover Amount" shall be equal to the excess, if any, of (i) the total Supplemental Contributions of this Plan for all prior Plan Years (without regard to forfeitures) over (ii) the total Tentative Supplemental Contributions of this Plan for all prior Plan Years (without regard to forfeitures). (c) For purposes of this Section, the "ESOP Share Cost" shall be the average price at which the Trustee acquires Shares with the proceeds of an ESOP Loan. For each ESOP Loan entered into by the Trustee there shall be a separate ESOP Share Cost which shall be uniform for each Share acquired with the proceeds of such loan. 4. Section 6.5 of the Plan is amended to read in its entirety as follows: 6.5. Allocation to Participants' Accounts. (a) Company Matching ------------------------------------- Contributions shall be allocated to the Accounts of Participants as of the end of each Processing Period in accordance with the contribution rate in effect for the Plan Year in which such Processing Period falls. Thus, if the contribution rate for a Plan Year is .3500, each Participant shall have allocated to such Participant's Account from the Company Matching Contributions for any Processing Period of such Plan Year an amount equal to thirty-five percent of such Participant's matched Personal Contributions actually withheld during such Processing Period. 4 5 (b) Supplemental Contributions for each Participant shall be determined as of the end of the last Processing Period of each Plan Year in accordance with the ratio that the sum of the individual Participant's Company Matching Contributions allocated (and not then forfeited) for such Plan Year bears to the total Company Matching Contributions allocated (and not then forfeited) for such Plan Year. In order to receive a Supplemental Contribution allocation for a Plan Year, a Participant (or the Participant's Beneficiary) must have an existing Account balance in the Plan as of the last day of the last Processing Period of such Plan Year. Supplemental Contributions shall be allocated to eligible Participant Accounts when the contributions are delivered to the Trustee in accordance with Section 6.4. Notwithstanding anything to the contrary in this Plan, no Supplemental Contribution shall be allocated to the Account of an alternate payee under a qualified domestic relations order (as described in Section 414(p) of the Code) unless otherwise specifically required under such order. 5. Section 8.4 of the Plan is amended to read in its entirety as follows: 8.4 Release from ESOP Loan Suspense Account. Each year a number of ---------------------------------------- Shares shall be released from the ESOP Loan Suspense Account. Such number shall be determined as follows: the number of Shares held in the ESOP Loan Suspense Account at the beginning of the applicable Plan Year shall be multiplied by a fraction, the numerator of which shall be the amount of principal and interest due under the loan amortization payment schedule for the current Plan Year, and the denominator shall be the numerator plus the principal and interest to be paid on the loan amortization payment schedule for all future Plan Years. Unless otherwise determined by the Committee, a substantially equal number of Shares shall be released from the ESOP Loan Suspense Account for each calendar quarter during the Plan Year. Such Shares shall be deemed acquired by the Company Stock Fund at the Closing Price on the last trading day prior to the date of release or such other date as may be determined by the Committee for this purpose. In connection with such releases, it is intended that the Trustee will transfer funds to the ESOP Loan Payment Accumulation Account for each Processing Period equal to the total value of Shares released from the ESOP Loan Suspense Account for such Processing Period but only to the extent necessary to accumulate sufficient funds for ESOP loan repayment, unless otherwise determined by the Committee. Such transferred funds shall represent Company Contributions, Personal Contributions and dividends that are required to be invested in the Company Stock Fund and allocated to the Accounts of Participants. 5 6 6. Section 15.1 of the Plan is amended by deleting subsection (k) and renaming the remaining subsections (k), (l) and (m). IN WITNESS WHEREOF, the Company has executed this Amendment effective as stated herein. Anheuser-Busch Companies, Inc. By: /s/ William L. Rammes ------------------------------- William L. Rammes Vice-President-Human Resources 6 EX-10.18 15 FIFTH AMENDMENT TO ANHEUSER-BUSCH 1 FIFTH AMENDMENT TO THE ANHEUSER-BUSCH DEFERRED INCOME STOCK PURCHASE AND SAVINGS PLAN AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996 Effective as of April 1, 1996, Anheuser-Busch Companies, Inc. (the "Company") amended and restated the Anheuser-Busch Deferred Income Stock Purchase and Savings Plan (the "Plan") and has subsequently amended the Plan four times. The Company reserved the right to further amend the Plan from time to time and hereby amends the Plan effective April 1, 1997, unless expressly noted otherwise, as follows: 1. Effective April 1, 1999, subsection (d) of Section 2.5 of the Plan is amended to read in its entirety as follows: (d) Other Items Excluded from Base Pay For All ------------------------------------------ Participants. Base Pay does not include any bonus, pay in lieu of ------------- vacation, service allowance, severance pay, premium pay for shift or other specialized work, Company Matching, Supplemental, Incentive or Transitional Contributions to this Plan, Company contributions to any other pension, retirement, group insurance, health and welfare or similar plan, cash payments pursuant to a plan designed to comply with Section 125 of the Code, any other so-called "fringe benefits," any income attributable to the award or exercise of a stock option or the premature disposition of stock option stock, any other amount which does not constitute "compensation" within the meaning of Section 415 of the Code, any type of remuneration not otherwise described in this Section, or any expense allowance or reimbursements of expenses paid on behalf of a Participant (even if subsequently not allowed as such and treated as additional compensation for federal income tax purposes). Base Pay does not include any vacation pay which becomes payable on account of termination of employment nor does it include payments for any unused sick day, whether before or after termination of employment. 2. Section 2.25 of the Plan is amended to read in its entirety as follows: 2.25 "Highly Compensated Employee". (a) The term Highly ------------------------------ Compensated Employee includes Highly Compensated Employees who are active and certain former Highly Compensated Employees as described in this Section. (b) An active Highly Compensated Employee includes any individual who performs service for any of the Employing Companies during the determination year and who: (i) received compensation from the Employing Companies in excess of $80,000 (as adjusted pursuant to Section 415(d) of the Code) during the look-back year; or (ii) was a 5-percent owner, as defined in Section 24.1(f), at any time during the look-back year or the determination year. (c) For purposes of this Section, (i) the determination year shall be the Plan Year; (ii) the look-back year shall be the twelve-month period immediately 2 preceding the determination year; and (iii) compensation shall mean compensation as defined in Section 414(q)(4) of the Code and regulations thereunder. (d) A former Highly Compensated Employee includes any individual who separated from service with an Employing Company (or was deemed to have separated) prior to the determination year, performs no service for an Employing Company during the determination year, and was an active Highly Compensated Employee for either the separation year or any determination year ending on or after the employee's 55th birthday. (e) The determination of who is a Highly Compensated Employee, including the determinations of any 5-percent owner and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and applicable Treasury Regulations. 3. Section 2.30 of the Plan is amended to read in its entirety as follows: 2.30 "Non-Highly Compensated Employee". An Employee who is not ---------------------------------- a Highly Compensated Employee. 4. Effective April 1, 1998, Section 2.43 of the Plan is amended to read in its entirety as follows: 2.43 "Taxable Compensation". The amount of compensation ----------------------- determined under the provisions of Section 414(s) of the Code and regulations thereunder. In no event shall an Employee's Taxable Compensation exceed the amount specified in Section 401(a)(17) of the Code as adjusted for any applicable increases in the cost of living. 5. Effective April 1, 1999, Article II of the Plan is amended by adding to the end of such Article the following new Sections 2.47, 2.48, 2.49, 2.50, 2.51 and 2.52: 2.47. "ABI". Anheuser-Busch, Incorporated, a corporation ------ organized and existing under the laws of the State of Missouri, and any successor corporation which assumes this Plan and agrees to be bound by the terms and provisions hereof as a Participating Employer. 2.48. "Incentive Contribution Base Pay". Subject to Section ---------------------------------- 2.5(e), Base Pay as defined in Section 2.5(a), (c) and (d) plus Impact Selling incentives paid by ABI. 2.49. "Incentive Contributions". The amounts contributed to this -------------------------- Plan by ABI pursuant to Section 6.1(f). 2.50. "Transitional Contributions". The amounts contributed to ----------------------------- this Plan by ABI pursuant to Section 6.1(g). - 2 - 3 2.51. "Wholesale Employees". Employees paid on an hourly basis ---------------------- who are employed by ABI at a Wholesale Operation; provided, however, that an Employee who is a Participant in the Retirement Plan for Certain Hourly Employees of Anheuser-Busch, Incorporated, as defined therein, shall not be a Wholesale Employee. Wholesale Employees who receive an allocation of an Incentive Contribution shall be treated as Participants in this Plan regardless of whether they have otherwise elected to participate in this Plan. Wholesale Employees who do not receive an allocation of any Incentive Contribution for any reason whatsoever shall not be treated as Participants in this Plan unless they otherwise participate. 2.52. "Wholesale Operation". A wholesale operation of ABI which ---------------------- has implemented an incentive program under which Incentive Contributions are to be made to this Plan. 6. Effective October 13, 1996, Article IV of the Plan is amended by adding to the end of such Article the following new Section 4.4: 4.4. Matched Contributions for Periods of Military Service. Any ------------------------------------------------------ Eligible Employee who is reemployed after a period of military service while entitled to re-employment rights under Federal law shall be permitted to make the matched Personal Contributions described in Sections 4.1 and 4.2 with respect to the period of the Eligible Employee's military service during the period which begins on the Eligible Employee's date of reemployment with a Participating Employer and ends upon the earlier of (i) the period equal to three times the Eligible Employee's period of military service, and (ii) five years. The maximum amount of matched Personal Contributions that the Eligible Employee can make during this period shall be the maximum amount of matched Personal Contributions that the Eligible Employee would have been permitted to make to the Plan during the period of military service if the Eligible Employee had continued to be employed by a Participating Employer during such period and received Base Pay during such period equal to the Base Pay the Eligible Employee would have received during the period of military service had the Eligible Employee worked for a Participating Employer during such period. If the Base Pay the Eligible Employee would have received during the period was not reasonably certain, the Eligible Employee's average Base Pay from the Employing Companies during the 12-month period immediately preceding the period of military service shall be deemed to be such Base Pay. 7. Effective January 1, 2000, subsection (b) of Section 5.5 of the Plan is amended to read in its entirety as follows: (b) The term "Eligible Rollover Contribution" means any part of a distribution which meets the requirements of Section 402(c)(4) or Section 408(d)(3)(A)(ii) of the Code and which is transferred to this Plan from the Retirement Plan for Certain Hourly Employees of the Wholesale Operation Division of Anheuser-Busch, Incorporated by a Wholesale Employee in an elective transfer, within the meaning - 3 - 4 of Treasury Regulations Section 1.411(d)-4, Q&A-3(b), as a result of the termination of such plan. 8. Effective October 13, 1996, Article V of the Plan is amended by adding to the end of such Article the following new Section 5.6: 5.6. Unmatched Contributions for Periods of Military Service. -------------------------------------------------------- Any Eligible Employee who is reemployed after a period of military service while entitled to re-employment rights under Federal law shall be permitted to make the unmatched Personal Contributions described in Sections 5.2 and 5.3 with respect to the period of the Eligible Employee's military service during the period which begins on the Eligible Employee's date of reemployment with a Participating Employer and ends upon the earlier of (i) the period equal to three times the Eligible Employee's period of military service, and (ii) five years. The maximum amount of unmatched Personal Contributions that the Eligible Employee can make during this period shall be the maximum amount of unmatched Personal Contributions that the Eligible Employee would have been permitted to make to the Plan during the period of military service if the Eligible Employee had continued to be employed by a Participating Employer during such period and received Base Pay during such period equal to the Base Pay the Eligible Employee would have received during the period of military service had the Eligible Employee worked for a Participating Employer during such period. If the Base Pay the Eligible Employee would have received during the period was not reasonably certain, the Eligible Employee's average Base Pay from the Employing Companies during the 12 month period immediately preceding the period of military service shall be deemed to be such Base Pay. 9. Effective April 1, 1999, Section 6.1 of the Plan is amended by adding to the end of such Section the following new subsections (f) and (g): (f) In addition to any other contribution required under this Section, except as otherwise provided in Section 6.4, ABI shall also contribute for each Plan Year of its participation in this Plan an Incentive Contribution on behalf of Wholesale Employees at each Wholesale Operation, regardless of whether they are Participants or Eligible Employees, who are Employees on the last day of the Company Year ending in such Plan Year, or who ceased to be an Employee during such Company Year because of death or total and presumably permanent disability (as determined pursuant to Section 12.4) or after attainment of age 60. The amount, if any, of the Incentive Contribution for each Plan Year with respect to each Wholesale Operation shall be established by ABI in its sole discretion. (g) In addition to any other contribution required under this Section, ABI shall also contribute for the Plan Year ending March 31, 2000 a Transitional Contribution on behalf of those Wholesale Employees designated on Exhibit A. The amount of the Transitional Contribution for each such Wholesale Employee shall be established by ABI in its sole discretion. - 4 - 5 10. Effective April 1, 1999, Section 6.4 of the Plan is amended to read in its entirety as follows: 6.4. Payment and Payment Date. Each Participating Employer's ------------------------- Company Matching, Supplemental, Incentive, Transitional and any other type of contribution for the Plan Year, to the extent actually required to be contributed under Section 6.1, shall be delivered to the Trustee as and when determined by the Committee but not later than 180 days after the end of such Plan Year. Notwithstanding the foregoing, the amount of any Incentive Contribution allocable to the Account of a Wholesale Employee who is not an Eligible Employee at the time the Incentive Contribution is delivered to the Trustee pursuant to this Section 6.4 shall not be so delivered until such time, if any, as such Wholesale Employee becomes an Eligible Employee. If a Wholesale Employee ceases to be an Employee of any Employing Company prior to becoming an Eligible Employee, the amount of any Incentive Contribution otherwise allocable to such Wholesale Employee's Account shall not be contributed to the Plan. Any delivery under this Section 6.4 shall be either in cash or in Shares (from authorized but unissued Shares or out of Shares held in the Company's treasury), or a combination of both, and if delivered wholly or partially in Shares, such Shares shall be valued at the Closing Price on the date of delivery or on the last business day prior to the date of delivery as determined by the Committee on a uniform and consistent basis. 11. Effective April 1, 1999, Section 6.5 of the Plan is amended by adding to the end of such Section the following new subsections (c) and (d): (c) Incentive Contributions for each Wholesale Employee described in Section 6.1(f) for a Plan Year shall be allocated in one of the following ways depending on the incentive program then in effect at the applicable Wholesale Operation: (i) in accordance with the ratio that the Incentive Compensation Base Pay for such Company Year of each such Wholesale Employee at the applicable Wholesale Operation bears to the total Incentive Compensation Base Pay of all such Wholesale Employees at the applicable Wholesale Operation; (ii) per capita; or (iii) such other method published at the applicable Wholesale Operation. Incentive Contributions shall be allocated to eligible Participant Accounts when the contributions are delivered to the Trustee in accordance with Section 6.4. (d) The Transitional Contribution for each Wholesale Employee designated on Exhibit A shall be allocated solely to the Account of each such Wholesale Employee. 12. Effective October 13, 1996, Article VI of the Plan is amended by adding to the end of such Article the following new Section 6.6: 6.6 Company Contributions for Periods of Military Service. ------------------------------------------------------ (a) If any Eligible Employee who is reemployed after a period of military service while entitled to re-employment rights under Federal law makes the Before-Tax Matched Contributions or After-Tax Matched Contributions described in Sections 4.1 and 4.2 for that period, the - 5 - 6 Participating Employer shall make those Company Matching and Supplemental Contributions on behalf of the Eligible Employee as would have been made had the Eligible Employee's contributions actually been made during the period of military service. (b) If any Eligible Employee is reemployed after a period of military service while entitled to re-employment rights under Federal law, the Participating Employer shall make any other contributions required under Section 6.1 on behalf of the Eligible Employee for each partial and full Plan Year in the Eligible Employee's period of military service for which the Eligible Employee did not receive a contribution. Such contributions shall be equal to the amount of contributions which would have been made had the Eligible Employee continued to be employed by a Participating Employer during such period of military service and shall be determined as though the Eligible Employee received Compensation equal to the amount the Eligible Employee would have received if the Eligible Employee were not in military service. If the Base Pay the Eligible Employee would have received during the period was not reasonably certain, the Eligible Employee's average Base Pay from the Employing Companies during the 12 month period immediately preceding the period of military service shall be deemed to be such Base Pay. 13. Effective January 1, 1997, subsection (b) of Section 7.2 of the Plan is amended to read in its entirety as follows: (b) If the Committee is notified, pursuant to Section 402(g)(2) of the Code and prior to April 15, that a Participant has made elective deferrals (within the meaning of Section 402(g)(3) of the Code and regulations thereunder) in the immediately preceding calendar year under two or more plans which, in the aggregate, would exceed the limitations of subsection (a), a portion of such excess deferrals, as directed by the Participant, shall be handled in accordance with subsection (c) of this Section. 14. Effective January 1, 1997, subsection (c) of Section 7.2 of the Plan is amended by adding at the end of such subsection the following new sentence: A Highly Compensated Employee shall forfeit any Company Matching Contributions which were contributed on account of any Before-Tax Matched Contributions that are refunded under this Section, even if such Company Matching Contributions are vested. 15. Subsection (b) of Section 7.3 of the Plan is amended by adding at the end of such subsection the following new sentence: A Highly Compensated Employee shall forfeit any Company Matching Contributions which were contributed on account of any Before-Tax Matched Contributions that are refunded under this Section, even if such Company Matching Contributions are vested. 16. Subsection (e) of Section 7.3 of the Plan is amended to read in its entirety as follows: - 6 - 7 (e) The determination of the amount of excess Before-Tax Contributions for each Highly Compensated Employee under subsection (b) shall be made in a two step process. First, the aggregate amount of excess Before-Tax Contributions shall be calculated. This shall be done by reducing the actual deferral ratios of those Highly Compensated Employees with the highest actual deferral ratios to the extent necessary but not below the next highest level of actual deferral ratios of Highly Compensated Employees. This process shall be repeated, to the extent necessary, until the actual Before-Tax Contribution rate for the Highly Compensated group satisfies one of the tests set forth in subsection (b). The aggregate amount of excess Before-Tax Contributions shall be calculated by multiplying the actual deferral ratio reduction for each Highly Compensated Employee by the Highly Compensated Employee's Taxable Compensation for the Plan Year and adding the product of each such multiplication. Second, the aggregate amount of excess Before-Tax Contributions to be refunded shall be allocated by reducing the Before-Tax Contributions of those Highly Compensated Employees with the highest amount of Before-Tax Contributions to the extent necessary but not below the next highest amount of Before-Tax Contributions of Highly Compensated Employees. This process shall be repeated, to the extent necessary, until all excess Before-Tax Contributions to be refunded shall be allocated among the Highly Compensated Employees. 17. Section 7.3 of the Plan is amended by deleting subsection (g). 18. Subsection (h) of Section 7.3 of the Plan is amended to read in its entirety as follows: (h) In determining the actual Before-Tax Contribution rate for any Highly Compensated Employee, salary deferral contributions under each plan maintained by an Employing Company shall be aggregated. 19. Effective April 1, 1999, Section 7.3 of the Plan is amended by adding to the end of such Section the following new subsection (i): (i) If Code Section 410(b)(4)(B) is applied in determining whether the Plan satisfies Code Section 410(b) by excluding from consideration Eligible Employees who have not met the minimum age requirement of Code Section 410(a)(1)(A)(i), all Non-Highly Compensated Employees who have not met such minimum age requirement may be excluded from consideration for purposes of satisfying the tests in subsection (b). 20. Paragraph (bb) of subsection (b) of Section 7.3 of the Plan is amended by adding at the end of such paragraph the following new sentence: A Highly Compensated Employee shall forfeit any Company Matching Contributions which were contributed on account of any After-Tax Matched Contributions that are refunded under this Section, even if such Company Matching Contributions are vested. - 7 - 8 21. Subsection (g) of Section 7.4 of the Plan is amended to read in its entirety as follows: (g) The determination of the amount of excess After-Tax Contributions for each Highly Compensated Employee under subsection (b) shall be made in a two step process. First, the aggregate amount of excess After-Tax Contributions shall be calculated. This shall be done by reducing the actual contribution percentages of those Highly Compensated Employees with the highest actual contribution percentages to the extent necessary but not below the next highest level of actual contribution percentages of Highly Compensated Employees. This process shall be repeated, to the extent necessary, until the actual After-Tax Contribution rate for the Highly Compensated group satisfies one of the tests set forth in subsection (b). The aggregate amount of excess After-Tax Contributions shall be calculated by multiplying the actual contribution percentage reduction for each Highly Compensated Employee by the Highly Compensated Employee's Taxable Compensation for the Plan Year and adding the product of each such multiplication. Second, the aggregate amount of excess After-Tax Contributions to be refunded shall be allocated by reducing the After-Tax Contributions of those Highly Compensated Employees with the highest amount of After-Tax Contributions to the extent necessary but not below the next highest amount of After-Tax Contributions of Highly Compensated Employees. This process shall be repeated, to the extent necessary, until all excess After-Tax Contributions to be refunded shall be allocated among the Highly Compensated Employees. 22. Subsection (j) of Section 7.4 of the Plan is amended to read in its entirety as follows: (j) In determining the actual After-Tax Contribution rate for any Highly Compensated Employee, employee and matching contributions under each plan maintained by an Employing Company shall be aggregated. 23. Effective April 1, 1999, Section 7.4 of the Plan is amended by adding to the end of such Section the following new subsection (k): (k) If Code Section 410(b)(4)(B) is applied in determining whether the Plan satisfies Code Section 410(b) by excluding from consideration Eligible Employees who have not met the minimum age requirement of Code Section 410(a)(1)(A)(i), all Non-Highly Compensated Employees who have not met such minimum age requirement may be excluded from consideration for purposes of satisfying the tests in subsection (b). 24. Effective April 1, 1999, Section 8.1 of the Plan is amended to read in its entirety as follows: 8.1. Terms of ESOP Loan. The Trustee will be specifically ------------------- empowered to borrow funds (including a borrowing from the Company or any other of the Employing Companies) to acquire Shares or repay a prior ESOP Loan, subject to the conditions set forth in this Section 8.1. The terms of each ESOP Loan must, at the time the loan is made, be at least as favorable to the Trust as the terms of a comparable loan resulting - 8 - 9 from arm's length negotiations between independent parties. Each ESOP Loan shall be for a specific term, shall bear a reasonable rate of interest, and shall be without recourse against the Trust or the Participants' Accounts, except that an ESOP Loan may be guaranteed by the Company and may be secured by a pledge of the Shares acquired with the proceeds of the ESOP Loan (or acquired with the proceeds of a prior ESOP Loan which is being refinanced). No other Trust assets may be pledged as collateral for an ESOP Loan, and no lender shall have recourse against Trust assets other than (a) collateral given for the ESOP Loan, (b) amounts held under the ESOP Loan Payment Accumulation Account (other than Company Matching, Supplemental, Incentive or Transitional Contributions of Shares), and (c) earnings attributable to such collateral. An ESOP Loan shall not be payable on demand except in the event of default. In the event of default, the value of Plan assets transferred in satisfaction of the ESOP Loan shall not exceed the amount of the default plus any applicable prepayment or similar penalties or premiums. If the lender is a disqualified person within the meaning of Code Section 4975(e)(2), the ESOP Loan must provide for a transfer of Trust assets on default only upon and to the extent of the failure of the Trust to meet the payment schedule of the ESOP loan. Payments of principal and/or interest on any ESOP Loan shall be made by the Trustee in accordance with Section 8.7. The Committee shall direct the Trustee to enter into any loan transaction approved by the Board and conforming with the provisions hereof. 25. Effective April 1, 1999, Section 8.7 of the Plan is amended to read in its entirety as follows: 8.7. ESOP Loan Payments. The Trustee shall, from time to time, ------------------- transfer sufficient funds to the ESOP Loan Payment Accumulation Account or ESOP Loan Suspense Account to provide funds for ESOP Loan payments required for the Plan Year. Such transfers (including the transfers described in Section 8.4) and the corresponding ESOP loan payments, shall be treated as derived from the following sources in the following order to the extent of assets available from such sources at the time of transfer: (a) First, if directed by the Committee, proceeds from the sale, exchange, or disposition of Shares or other assets held in the ESOP Loan Suspense Account and earnings thereon; (b) Second, from dividends on Shares in accordance with Section 8.6 and, to the extent permitted under applicable law, earnings thereon; (c) Third, from Company Contributions under Section 6.1(d) and earnings thereon; (d) Fourth, from Company Matching Contributions and earnings thereon; (e) Fifth, from Supplemental Contributions and earnings thereon; (f) Sixth, from Incentive Contributions and earnings thereon; (g) Seventh, from Transitional Contributions and earnings thereon; and (h) Eighth, from Before-Tax Personal Contributions made by Participants and earnings thereon. - 9 - 10 This provision shall not be construed to preclude the transfer of funds out of the ESOP Loan Payment Accumulation Account or ESOP Loan Suspense Account for other Plan purposes, provided that no such transfer shall alter the order of priority established by this provision. Further, any funds remaining in the ESOP Loan Payment Accumulation Account or ESOP Loan Suspense Account at the end of the Plan Year and not applied to ESOP loan repayment shall be used as otherwise provided in this Plan. 26. Effective April 1, 1999, Article IX of the Plan is amended by adding to the end of such Article the following new Section 9.19: 9.19. Investment of the Incentive and Transitional Contributions ---------------------------------------------------------- Part of an Account. Incentive and Transitional Contributions for each ------------------- Plan Year allocated to the Account of a Wholesale Employee shall initially be invested in accordance with the then current method of investment of such Wholesale Employee's Before-Tax Matched Contributions. If no Before-Tax Matched Contributions are then being made by such Wholesale Employee, such Incentive and Transitional Contributions shall initially be invested in accordance with the then current method of investment of such Wholesale Employee's After-Tax Matched Contributions. If no After-Tax Matched Contributions are then being made by such Wholesale Employee, the one-half of such Incentive and Transitional Contributions which are not invested in the Company Stock Fund shall be invested in the Short-Term Fixed Income Fund. Once Incentive and Transitional Contributions have been initially invested in accordance with the foregoing, they may be immediately reinvested in any Investment Fund other than the Earthgrains Stock Fund. There shall be no requirement that any portion of any Incentive or Transitional Contributions remain invested in the Company Stock Fund. 27. Effective April 1, 1999, Section 11.2 of the Plan is amended to read in its entirety as follows: 11.2. Company Matching, Supplemental, Incentive and Transitional ---------------------------------------------------------- Contributions. The portion of a Participant's Account which is -------------- attributable to Company Matching, Supplemental, Incentive and Transitional Contributions for any Plan Year (including earnings thereon) shall vest and become non-forfeitable when such Participant completes two years of Vesting Service. 28. Effective April 1, 1999, Subsection (i) of Section 11.3 of the Plan is amended to read in its entirety as follows: (i) If a Participant has a Period of Severance and is thereafter re-employed, all years of Vesting Service prior to the Period of Severance shall be taken into account in determining the Participant's vested interest in the Company Matching, Supplemental, Incentive and Transitional Contributions portion of the Participant's Account, as accumulated prior to such severance. The foregoing sentence shall not apply to any Participant whose entire account balance is not vested on the Participant's Severance from Service Date and who incurs a Period of Severance exceeding five years. During the period when any unvested amount is being held pending a determination of whether a Period of Severance exceeding five years occurs, the Participant's interest in - 10 - 11 such amount shall be immediately terminated subject to reinstatement if the Participant is re-employed by an Employing Company prior to incurring a five-year Period of Severance. If the amount does not subsequently vest, it shall be treated as a forfeiture. Any amount reinstated hereunder shall be the fair market value of the forfeited amount on the date of forfeiture, without any interest or other addition thereto for the period prior to reinstatement. Forfeitures shall be applied to reduce the Company's Contributions to this Plan. 29. Effective April 1, 1999, Section 11.4 of the Plan is amended to read in its entirety as follows: 11.4. Change in Control of the Company. Notwithstanding the --------------------------------- foregoing provisions of this Article XI, in the event of a "Change in Control of the Company" (as defined herein), the nonvested portion of a Participant's Account which is attributable to Company Matching, Supplemental, Incentive and Transitional Contributions for any Plan Year or part thereof (including earnings thereon) shall immediately vest and become nonforfeitable. The portion of the Participant's Account which shall vest and become nonforfeitable under this Section shall be determined as of the end of the month during which the Change in Control of the Company occurs. For purposes hereof, a "Change in Control of the Company" shall occur if any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than fifty percent (50%) of the then outstanding voting stock of the Company. This Section shall not apply to any Participant who is not employed by an Employing Company at the time the Change in Control of the Company occurs. 30. Effective April 1, 1999, Section 12.1 of the Plan is amended to read in its entirety as follows: 12.1. Distributions Upon Termination of Employment. A Participant --------------------------------------------- who ceases to be an Employee of any Employing Company because of death, total and presumably permanent disability, entry into active duty with any branch of the military services of the United States, or who has been laid off for a period exceeding twelve consecutive months, or who has attained the age of 60 years at the time the Participant ceases to be an Employee, or who has completed two years of Vesting Service or is otherwise vested under the provisions of Article XI, shall receive (or if not then living, the Participant's Beneficiary shall receive), at the time provided in Section 12.2 hereof, in a single distribution, the Participant's entire Account. A cessation of employment with all Employing Companies for any reason or at any time described in the preceding sentence is referred to as a "vested termination." A Participant who ceases to be an Employee of any Employing Company under any other circumstances shall receive (or if the Participant is not living at the time of distribution the Participant's Beneficiary shall receive), at the time provided in Section 12.2 hereof, in a single distribution, the portions of the Participant's Account attributable to Personal Contributions. Such Participant shall forfeit the portion of the Participant's Account which is attributable to Company - 11 - 12 Matching, Supplemental, Incentive and Transitional Contributions in accordance with Section 11.3(i). 31. Effective January 1, 1997, the second paragraph of subsection (a) of Section 12.2 of the Plan is amended to read in its entirety as follows: Notwithstanding anything to the contrary herein, distributions under this Plan shall commence not later than April 1 following the calendar year in which occurs (x) in the case of a Participant who is a 5-percent owner, as defined in Section 24.1(f), with respect to the Plan Year ending in the calendar year in which the Participant attains age 70-1/2, the Participant attains age 70-1/2, and (y) in the case of a Participant who is not a 5-percent owner with respect to the Plan Year ending in the calendar year in which the Participant attains age 70-1/2, the later of the date the Participant attains age 70-1/2 and the date on which the Participant ceases to be an Employee of any Employing Company; provided, however, that a Participant who attained age 70-1/2 prior to 1996 and who was not a 5-percent owner with respect to the Plan Year ending in the calendar year in which the Participant attained age 70-1/2 may elect in accordance with procedures established by the Committee to stop distributions until a date not later than April 1 following the calendar year in which the Participant ceases to be an Employee of any Employing Company. 32. Effective April 1, 1998, subsections (b) and (c) of Section 12.2 of the Plan are amended by changing the references to "$3,500" therein to "$5,000." 33. Effective March 22, 1999, subsection (c) of Section 12.2 of the Plan is amended to read in its entirety as follows: (c) Notwithstanding any other provision of the Plan, if a Participant's vested Account balance exceeds $5,000, amounts payable to such Participant shall not be distributed before the Participant attains age 62 without the consent of the Participant. The Participant's consent to distribution must be made in accordance with procedures promulgated by the Committee after the Participant receives a notice as described in subsection (d) below and must be made within the 90-day period ending on the last day of the Processing Period as of which the amount of the distribution is determined and made. 34. Effective April 1, 1999, subsection (e) of Section 12.2 of the Plan is amended to read in its entirety as follows: (e) Any Participant not consenting to a distribution hereunder shall become an inactive Participant, but notwithstanding any provision of this Plan to the contrary, such Participant shall have only the following rights under this Plan: (i) the right to receive a distribution of all (but not less than all) of the vested portion of the Participant's Account as of the end of any Processing Period permitted under this Section; - 12 - 13 (ii) the right to make changes in the investments of the Participant's Account in accordance with Article IX; (iii) the right to vote and tender Share Equivalents held in the Participant's Account in accordance with Sections 9.15 and 9.16, respectively; (iv) the right to change the Participant's designated Beneficiary or Beneficiaries from time to time in accordance with Section 16.1; (v) the right to have Supplemental and Transitional Contributions allocated to the Participant's Account for the Plan Year in which the Participant's termination occurred; (vi) the right to have Incentive Contributions allocated to the Participant's Account for the Plan Year in which ended the Company Year in which the Participant's termination because of death or total and presumably permanent disability (as determined pursuant to Section 12.4) or after attainment of age 60 occurred; and (vii) any other right required by law to be given to an inactive Participant with an undistributed vested account in a defined contribution plan qualified under Section 401(a) of the Code. 35. Effective January 1, 2000, subsection (b) of Section 12.3 of the Plan is amended to read in its entirety as follows: (b) An eligible rollover distribution is any distribution of all or any portion of a Participant's Account, except that an eligible rollover distribution does not include any distribution required under Section 401(a)(9) of the Code, the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Shares) and any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code. 36. Effective April 1, 1999, Subsection (b) of Section 13.1 of the Plan is amended to read in its entirety as follows: (b) In addition to the rights set forth in subsection (a), any Participant may withdraw any part of the Participant's Account which is attributable to (i) Company Matching Contributions attributable to Personal Before-Tax Contributions made before April 1, 1994, which have been in the Participant's Account for at least two full Plan Years after the contributions were made, and (ii) after a Participant has attained age 59-1/2, (A) Before-Tax Matched Contributions which have been in the Participant's Account for at least one full Plan Year after the contributions were made, (B) Before-Tax Unmatched Contributions, - 13 - 14 (C) Incentive Contributions, (D) Transitional Contributions, and (E) Company Matching Contributions which have been in the Participant's Account for at least one full Plan Year after the contributions were made. Withdrawals under this subsection (b) shall be deemed made in the order listed above. 37. Effective August 6, 1997, Section 20.1 of the Plan is amended by adding to the end of such Section the following new paragraph: Notwithstanding the above, effective with respect to judgments, orders and decrees issued on or after August 5, 1997, and settlement agreements entered on or after August 5, 1997, a Participant's benefit will be offset against any amount he or she is ordered or required to pay to the Plan pursuant to an order or requirement which arises under a judgment of conviction for a crime involving the Plan, under a civil judgment entered by a court in an action involving a fiduciary breach, or pursuant to a settlement agreement between the Participant and the Department of Labor or the Pension Benefit Guaranty Corporation. Any such offset shall be made pursuant to Section 206(d) of ERISA. 38. Effective April 1, 1999, Subsection (d) of Section 23.1 of the Plan is amended in its entirety to read as follows: (d) For purposes of this Section, "annual addition" shall mean the sum of the Before-Tax Contributions, After-Tax Contributions, Company Matching, Supplemental, Incentive and Transitional Contributions allocated to the account of a Participant for the limitation year. The terms compensation, defined benefit plan fraction and defined contribution plan fraction shall have the meanings provided in Section 415 of the Code. Section 415 of the Code, as in effect from time to time, and regulations promulgated thereunder, are incorporated herein by reference. 39. Effective April 1, 1999, Subsection (a) of Section 24.2 of the Plan is amended in its entirety to read as follows: (a) Notwithstanding any provisions herein to the contrary, no Key Employee may have allocated to the Key Employee's Account for such Plan Year Before-Tax, Company Matching, Supplemental, Incentive or Transitional Contributions which, expressed as a percentage of the Key Employee's Compensation, exceed the Company Matching, Supplemental, Incentive and Transitional Contribution also expressed as a percentage of Compensation, of that Non-Key Eligible Employee whose Company Matching, Supplemental, Incentive and Transitional Contribution is the lowest percentage. The percentage calculations required by this subsection shall be made treating all defined contribution plans of the Company included in the aggregation group - 14 - 15 of plans as if they were a single plan, and any reduction in Before-Tax, Company Matching, Supplemental, Incentive and Transitional Contributions required by this provision shall be effected out of Before-Tax, Company Matching, Supplemental, Incentive and Transitional Contributions to this Plan first, before being allocated to any other plan. If the Before-Tax, Company Matching, Supplemental, Incentive and Transitional Contributions which would otherwise be allocated to a Key Employee are reduced by operation of this provision, excess Personal Contributions shall be refunded to the Participant without penalty, to the end that the Participant's Personal Contributions for the Plan Year in question do not exceed the amount the Key Employee would have contributed in order to receive only the recalculated Company Matching and Supplemental Contribution amount; 40. Effective April 1, 1999, Subsection (b) of Section 25.1 of the Plan is amended in its entirety to read as follows: (b) Notwithstanding the foregoing or any other contrary provision herein contained, any erroneous Company Matching, Supplemental, Incentive or Transitional Contribution which is made by a mistake of fact may be returned to the Participating Employer which made such contribution if the mistake of fact is discovered and the return of such contribution is completed within one year after the payment of such contribution to the Plan. Furthermore, if after the Internal Revenue Service rules that the Plan and Trust are qualified and exempt, as contemplated by subsection (a) above, any deduction for any Company Contribution hereto is denied as not allowable under Section 404(a)(3) of the Code, then such contribution, to the extent of such disallowed deduction, may be returned to the Participating Employer which made such contribution within one year after the disallowance of such deduction. Each and every Company contribution made pursuant to this Plan is contingent upon the allowance of a deduction for such contribution under Section 404 of the Code. 41. Effective October 13, 1996, Article XXV of the Plan is amended by adding to the end of such Article the following new Section 25.16: 25.16 Qualified Military Service. Notwithstanding any provision --------------------------- of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). IN WITNESS WHEREOF, the Company has executed this Amendment by and through its authorized agent this 13th day of December, 1999, effective as stated herein. ANHEUSER-BUSCH COMPANIES, INC. By /s/ William L. Rammes --------------------------------- William L. Rammes Vice President-Human Resources - 15 - 16 FIFTH AMENDMENT TO THE ANUEUSER-BUSCH DEFERRED INCOME STOCK PURCHASE AND SAVINGS PLAN AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996 EXHIBIT A WHOLESALE EMPLOYEES DESIGNATED PURSUANT TO SECTION 6.1(g) Castro, Jose Davis, William R. Dutra, Tony J. Mendoza, David B. Montibeller, John Retzlaff, Laurie Spurgeon, David B. Tirado, Jr., Joseph P. EX-12 16 STATEMENT RECOMPUTATION OF RATIOS 1 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of the Company's earnings to fixed charges, on a consolidated basis, for the periods indicated:
Year Ended December 31 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1999 1998 1997 1996 1995 1994 - - - - - - - - - - - - - - - - - - - - - - - - - 6.9X 6.8X 7.3X 8.1X 6.6X 7.7X For purposes of this ratio, earnings have been calculated by adding to income before income taxes the distributed earnings of investees accounted for under the equity method and the amount of fixed charges. Fixed charges consist of interest on all indebtedness, amortization of debt discounts and that portion of rental expense deemed to represent interest. The ratio for 1996 includes the gain from the sale of the St. Louis Cardinals Major League Baseball Club, which increased income before income taxes by $54.7 million. Excluding this one-time gain, the ratio would have been 7.9X. The ratio for 1995 includes the impact of the Tampa Brewery shutdown and the reduction of beer wholesaler inventories. Excluding these non-recurring items, the ratio would have been 7.6X.
EX-13 17 ANNUAL REPORT 1 ANHEUSER [LOGO] BUSCH COMPANIES [PHOTO] A d d i n g t o l i f e ' s e n j o y m e n t CONTENTS Management's Discussion and Analysis of Operations and Financial Condition 26 Responsibility for Financial Statements 39 Report of Independent Accountants 39 Consolidated Balance Sheet 40 Consolidated Statement of Income 41 Consolidated Statement of Changes in Shareholders Equity 42 Consolidated Statement of Cash Flows 43 Notes To Consolidated Financial Statements 44 Financial Summary--Operations 56 Financial Summary--Balance Sheet and Other Information 58 F I N A N C I A L R E V I E W 1999 1999 Annual Report 25 -- 2 [PHOTO] MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION INTRODUCTION This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity/cash flows of Anheuser-Busch Companies, Inc. for the three-year period ended December 31, 1999. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in this annual report. This discussion contains certain statements regarding the company's expectations concerning its operations, earnings and prospects. These statements are forward-looking statements that involve significant risks and uncertainties, and accordingly, no assurances can be given that such expectations will be correct. These expectations are based upon many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Important factors that could cause actual results to differ from the expectations stated in this discussion include, among others, changes in the pricing environment for the company's products; changes in domestic demand for malt beverage products; changes in consumer preference for the company's malt beverage products; regulatory or legislative changes; changes in raw materials prices; changes in interest rates; changes in foreign currency exchange rates; changes in attendance and consumer spending for the company's theme park operations; changes in demand for aluminum beverage containers; changes in the company's international beer business or in the beer business of the company's international equity partner; and the effect of stock market conditions on the company's share repurchase program. OBJECTIVES Anheuser-Busch remains focused on three major objectives in order to enhance shareholder value: * Increasing per barrel profitability which, when combined with continued market share growth, will provide solid long-term earnings per share growth. * Profitable expansion of international beer operations by building the Budweiser brand worldwide and making selected investments in leading brewers in key international beer growth markets. The company has made significant marketing investments to build Budweiser brand recognition outside the United States and operates overseas breweries in China and the United Kingdom. The company also has a significant equity position in Grupo Modelo, Mexico's largest brewer and producer of the Corona brand. * Continued support of profit growth in packaging and entertainment operations. Packaging operations provide significant efficiencies, cost savings and quality assurance for domestic beer operations, while entertainment operations enhance the company's corporate image by showcasing its heritage, values and commitment to quality and social responsibility to 19 million visitors annually as well as adding their profit contribution. 26 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 3 OPERATIONS In the fourth quarter 1997, the company expensed all previously capitalized and unamortized business re-engineering costs associated with the development and installation of computer software, in accordance with the change in accounting practice mandated by EITF No. 97-13. The total write-off of $10 million after-tax ($.02 per share) is shown as a separate "cumulative effect of accounting change" line item in the income statement, and had no impact on the company's results from operations. Due to the write-off having no impact on the company's results from operations, this discussion excludes the impact of the cumulative effect of accounting change adjustment. COMPARISON OF OPERATING RESULTS Key financial comparisons from operations are summarized in the following tables. COMPARISON OF OPERATING RESULTS ($ in millions, except per share)
1999 1998 1999 VS. 1998 Gross sales $13,723 $13,208 $515 3.9% Excise taxes $2,019 $1,962 $57 2.9% Net sales $11,704 $11,246 $458 4.1% Operating income $2,302 $2,125 $177 8.3% Equity income, net of tax $158 $85 $73 85.2% Net income $1,402 $1,233 $169 13.7% Diluted earnings per share $2.94 $2.53 $.41 16.2% - ---------------------------------------------------------------------------- 1998 1997 1998 VS. 1997 Gross sales $13,208 $12,832 $376 2.9% Excise taxes $1,962 $1,766 $196 11.1% Net sales $11,246 $11,066 $180 1.6% Operating income $2,125 $2,053 $72 3.5% Equity income, net of tax $85 $50 $35 68.7% Net income $1,233 $1,179 $54 4.6% Diluted earnings per share $2.53 $2.36 $.17 7.2% - ---------------------------------------------------------------------------- Net income and diluted earnings per share exclude the impact of the adjustment for the cumulative effect of adopting EITF No. 97-13. - ---------------------------------------------------------------------------- 1997 1996 1997 VS. 1996 Gross sales $12,832 $12,622 $210 1.7% Excise taxes $1,766 $1,738 $28 1.6% Net sales $11,066 $10,884 $182 1.7% Operating income $2,053 $2,029 $24 1.2% Equity income, net of tax $50 -- $50 Net income $1,179 $1,123 $56 5.0% Diluted earnings per share $2.36 $2.21 $.15 6.8% - ---------------------------------------------------------------------------- - Not Meaningful Net income and diluted earnings per share exclude the impact of the adjustment for the cumulative effect of adopting EITF No. 97-13. Normalized results exclude the $54.7 million gain from the sale of the St. Louis Cardinals baseball club.
BEER VOLUME SALES Total worldwide beer sales volume results are summarized in the following table: WORLDWIDE BEER SALES VOLUME (millions of barrels)
1999 1998 CHANGE Domestic 95.7 92.7 3.2% International 7.2 7.1 1.2% ------------------------------------ Worldwide A-B brands 102.9 99.8 3.1% International equity partner brands 15.1 11.2 34.7% ------------------------------------ Total brands 118.0 111.0 6.3% ==================================== - ------------------------------------------------------------------------------- 1998 1997 CHANGE Domestic 92.7 89.6 3.5% International 7.1 7.0 0.6% ------------------------------------ Worldwide A-B brands 99.8 96.6 3.3% International equity partner brands 11.2 6.8 64.9% ------------------------------------ Total brands 111.0 103.4 7.3% ==================================== - ------------------------------------------------------------------------------- 1997 1996 CHANGE Domestic 89.6 88.9 0.7% International 7.0 6.2 13.4% ------------------------------------ Worldwide A-B brands 96.6 95.1 1.6% International equity partner brands 6.8 4.0 70.7% ------------------------------------ Total brands 103.4 99.1 4.3% ==================================== - -------------------------------------------------------------------------------
WORLDWIDE BEER VOLUME Worldwide beer volume is comprised of domestic volume and international volume of Anheuser-Busch brands. Domestic volume represents Anheuser-Busch brands produced and shipped within the United States. International volume represents exports from the company's U.S. breweries to markets around the world, plus Anheuser-Busch brands produced overseas by company-operated breweries in China and the United Kingdom and under various license and contract brewing agreements. Budweiser and other Anheuser-Busch beer brands are sold in more than 80 countries worldwide. Total brands sales volume includes the company's pro rata share of volume in international equity partner Grupo Modelo combined with worldwide Anheuser-Busch brand volume. Total brands for all years shown also includes Anheuser-Busch's equity share of Antarctica beer volume. The company sold its equity investment back to Antarctica in July 1999 in accordance with its investment agreement. See Note 2 for additional discussion. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 27 -- 4 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION SALES -- 1999 VS. 1998 Led by record domestic beer sales volume and successful revenue enhancement strategies, Anheuser-Busch achieved record gross sales of $13.7 billion and record net sales of $11.7 billion in 1999. Gross sales increased over 1998 by $515 million, or 3.9% and net sales increased over 1998 by $458 million, or 4.1%. The sales increases are primarily due to higher domestic beer volume and revenue per barrel. The difference between gross and net sales for 1999 represents beer excise taxes of $2.02 billion. Domestic revenue per barrel grew 3% in 1999 compared to last year, reflecting the company's focus on enhancing domestic beer profitability. In the fourth quarter 1999, the company implemented price increases in 72% of the country on selected brands and packages representing approximately 43% of its volume. Domestic beer shipments to wholesalers grew to an all-time high of 95.7 million barrels in 1999, an increase of 3.0 million barrels or 3.2% over 1998. Each of the company's core brand families contributed to this record achievement. Bud Light continued its outstanding sales performance, with its eighth consecutive year of double-digit growth. Wholesaler sales-to-retailers grew 3.3% for full year 1999. Sales-to-retailers for the fourth quarter 1999 increased 3.1% vs. the fourth quarter 1998. This high level of retail demand exceeded the 2.1% increase in fourth quarter shipments by Anheuser-Busch to its wholesalers, reducing wholesaler inventories to levels below last year, further enhancing product freshness and system economics. The company believes the combination of outstanding domestic beer industry fundamentals, the highest quality and freshest beer in the industry, and exceptional marketing and sales execution provide a positive outlook for achieving Anheuser-Busch's double-digit earnings per share growth objective in 2000. In February 2000, the company implemented selected price increases and additional discount reductions on approximately 20% of its volume. These revenue enhancement actions have again been tailored to specific markets, brands and packages. Worldwide Anheuser-Busch beer brand shipments grew to a record 102.9 million barrels for the full year 1999, up 3.1% compared to last year. This marks the first time in brewing industry history one company has sold over 100 million barrels of its beer in a single year. Total brands sales volume was 118.0 million barrels, up 6.3%, for the full year 1999. The company's domestic market share (excluding exports) for the full year 1999 was 47.5%, an increase of 0.7 percentage points over 1998 market share of 46.8%. Including exports, the company's share of U.S. shipments was 47.3% for the full year vs. 46.6% for 1998. Domestic market share and share of U.S. shipments are determined based on industry sales estimates provided by the Beer Institute. The company's market share is higher than previously reported reflecting the Beer Institute's recent revisions to industry sales estimates. Anheuser-Busch has led the U.S. brewing industry in sales volume and market share since 1957. SALES (GRAPH) International beer volume (excluding Modelo) was up 1.2% for the full year 1999 compared to 1998, to 7.2 million barrels. The increase was due primarily to gains in the Americas, Ireland and Continental Europe, partially offset by continued weakness in Asia, principally in Japan, and lower sales in the United Kingdom. 28 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 5 In August 1999, the company recalled twist-off bottles in several European countries as a quality assurance measure. The recall stemmed from problems with the bottle manufacturing process. There were no quality issues with the beer itself. The company incurred total pretax costs of approximately $6 million for the bottle recall. In July 1999, Anheuser-Busch sold its equity interest in Brazilian brewer Antarctica back to Antarctica. In September 1999, Anheuser-Busch and Antarctica announced a joint decision not to apply to CADE, Brazil's antitrust commission, for continued production of Budweiser by Antarctica. Instead, Anheuser-Busch entered into a distribution agreement with Expand Group in December 1999 for the exporting of Budweiser to Brazil beginning in January 2000. The pretax cost of discontinuing Budweiser production in Brazil was approximately $6 million. Effective January 2000, the company converted its Japan joint venture operation into an exclusive license agreement with its local partner Kirin, for the production and selling of Budweiser in Japan. The new agreement with Kirin is designed to create new opportunities for Budweiser's growth and to improve profitability by giving the brand full access to Kirin's national wholesaler distribution and integrated selling systems. The one-time cost of converting to the license agreement was approximately $9 million and is included in 1999 results. SALES -- 1998 VS. 1997 Anheuser-Busch achieved gross sales of $13.2 billion and net sales of $11.2 billion in 1998. These results represent a gross sales increase over 1997 of $376 million, or 2.9%, and a net sales increase over 1997 of $180 million, or 1.6%. The increases were primarily due to higher domestic beer volume. For 1998, sales and excise taxes include the impact of accounting for Stag Brewery operations in the United Kingdom on a consolidated basis vs. equity accounting in 1997. Beer excise taxes for 1998 totaled $1.96 billion. Worldwide volume for Anheuser-Busch beer brands was up 3.3% for 1998, compared to the prior year. Total volume was up 7.6 million barrels, or 7.3%, for the year. International equity partner brands reflects the company's 37% ownership interest in Grupo Modelo brands for the first nine months of 1998 and 50.2% for the fourth quarter, compared to a combination of 17.7% ownership interest for the first five months of 1997 and 37% thereafter. Anheuser-Busch's strategy to reduce domestic price discounting, initiated at the beginning of 1998, was successful. This strategy was designed to increase revenues, reduce the spread between front-line and discounted prices to consumers, and protect the company's brand equities. In October 1998, the company initiated a revenue enhancement strategy of selective price increases and additional discount reductions. As a result of these and other actions, domestic revenue per barrel was up nearly 3% in the fourth quarter 1998 compared to the same period in 1997, and was level for the full year compared to 1997. Anheuser-Busch domestic beer shipments grew 3.5% during 1998, reflecting strong retail demand. Overall, sales-to-retailers were up 4% for 1998. Combined Bud and Bud Light sales-to-retailers increased 3.4% for 1998 compared to 1997. This growth was led by Bud Light, which had its seventh consecutive double-digit growth year. The company's domestic market share (excluding exports) for 1998 was 46.8%, an increase of 1.0 market share point over 1997 market share of 45.8%. Including exports, the company's share of U.S. shipments was 46.6% vs. 45.5% for 1997. International Anheuser-Busch brand volume (excluding Modelo) was up 0.6% in 1998 compared to 1997. Strong Budweiser sales performances in the United Kingdom, Ireland, Continental Europe and Canada were mostly offset by sales declines in Asia. In Japan, Anheuser-Busch performance was impacted by lower industry sales due to an economic recession and the introduction of a tax-advantaged "happoshu" beer category. Anheuser-Busch introduced its own happoshu beer and significantly restructured its sales force. The restructuring resulted in a pretax charge of about $9 million, or $.01 per share after-tax, in the fourth quarter 1998. In June 1998, the company restructured its alliance with Labatt Brewing Company and granted Labatt perpetual rights to brew and sell the Budweiser and Bud Light brands in Canada. In return, Labatt significantly increased marketing support behind the two brands which provides Anheuser-Busch with a greater share of associated profits. Budweiser is currently the third-largest-selling beer in Canada. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 29 -- 6 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION SALES -- 1997 VS. 1996 Gross sales were $12.8 billion and net sales were $11.1 billion in 1997, representing increases of $210 million and $182 million, respectively, or 1.7%, compared to 1996. The difference between gross and net sales for 1997 represents $1.77 billion of beer excise taxes. The primary factors responsible for the sales increases were higher domestic and international beer sales volume, partially offset by increased price discounting in the domestic beer market, and increased sales from the company's theme park operations. Theme park operations experienced an attendance increase of approximately 7% in 1997 vs. 1996 and also attained higher in-park per capita revenues. The increase in domestic volume during 1997 was driven by Bud Light, which was up approximately 10%, and improved Budweiser trends. Total Bud Family sales-to-retailers were up almost 2% in 1997 compared to 1996. Anheuser-Busch's domestic market share (excluding exports) for 1997 was 45.8%, compared to 45.7% in 1996. Anheuser-Busch's share of shipments (including exports) for 1997 was 45.5%, level compared with 1996 share. Operating performance for 1997 was significantly impacted by aggressive price discounting initiated by competition, which began in the first quarter and became progressively deeper throughout the year. Anheuser-Busch responded with comparable levels of discounting to keep its brands price-competitive and protect its market share, and the pricing environment stabilized by the end of the year. Volume trends were favorable for the company's core premium brands in 1997 as consumers traded up to premium and higher-priced brands. Bud Light continued its double-digit growth. The company's quality initiatives, including a freshness advertising campaign and renewed focus on Anheuser-Busch's heritage of quality and excellence, enhanced the company's quality perception among consumers. Total international beer volume growth was strong for 1997, led by combined Budweiser sales volume increases in China and the United Kingdom of 44% for the full year. Significant gains in volume produced overseas in 1997 were partially offset by reduced exports from the company's U.S. facilities due in part to discontinuing Kirin Ice shipments to Japan and lower shipments of Michelob Classic Dark to Taiwan. Total international volume, excluding equity partner volume, was up 13.4% for the year. Budweiser volume outside the United States was up 18.3% for 1997 vs. 1996. COST OF PRODUCTS AND SERVICES The company continuously strives to drive operating costs out of its system. Brewery modernizations have yielded long-term savings through reduced beer packaging and shipping costs and reduced maintenance and equipment replacement costs. The company's focused production methods and wholesaler support centers concentrate small-volume brand and package production at three breweries to create production efficiencies, reduce costs and enhance responsiveness to changing consumer brand/package preferences. Also, the company works with its network of wholesalers to reduce distribution costs through better systemwide coordination. Cost of products and services was $7.25 billion in 1999, an increase of $92 million, or 1.3%, vs. 1998. The increase in the cost of products and services in 1999 is primarily due to costs associated with higher domestic beer volume and higher costs at the company's packaging operations. Gross profit as a percentage of net sales for 1999 was 38.0%, an increase of 1.7 percentage points vs. 1998, primarily reflecting increased domestic revenue per barrel due to the company's focus on increasing beer profit margins. Cost of products and services was $7.16 billion in 1998, an increase of $66 million, or 0.9%, compared to 1997. The change in the cost of products and services in 1998 is primarily due to increased beer volume, the change in the method of accounting for the Stag Brewery operation (consolidation in 1998 vs. equity accounting in 1997) and improved brewery operating efficiencies. In 1997, before the Stag Brewing Company Ltd. was 100% owned by Anheuser-Busch, the company accounted for its 50% share of operations under the equity method, with excise taxes paid on beer sold included in the cost of beer purchased from Stag. In 1998, under full consolidation accounting, excise taxes are shown as a deduction from gross sales. Gross profit as a percentage of net sales was 36.3% for 1998, an increase of 0.4 percentage points vs. 1997, primarily reflecting productivity improvements. Cost of products and services in 1997 was $7.10 billion, an increase of 1.9% compared to 1996. The increase in cost of products and services in 1997 is attributable to slightly higher materials costs plus costs associated with increased beer sales volume and theme park attendance. Gross profit as a percentage of net sales was 35.9% for 1997, a decrease of 0.1 percentage points compared to 36.0% for 1996, due to slightly lower revenue per barrel in 1997. 30 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 7 MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES Marketing, distribution and administrative expenses for 1999 were $2.15 billion compared with $1.96 billion for 1998, an increase of $189 million, or 9.7%. The increase is primarily attributable to higher domestic marketing and sales promotion spending in support of the Bud Family, increased spending on consumer awareness and education programs and higher general and administrative costs. Marketing, distribution and administrative expenses for 1998 increased $42 million, or 2.2%, compared to 1997 expenses of $1.92 billion. The increase is primarily due to higher domestic and international marketing expense in support of premium brands, primarily the Bud Family, partially offset by reduced general and administrative costs. Marketing, distribution and administrative expenses for 1997 were up $26 million, or 1.4%, compared with $1.89 billion for 1996. The increase for 1997 is principally due to marketing costs related to the company's international beer activity, costs related to increased theme park attendance and increased administrative expenses, partially offset by lower promotional spending compared to 1996 when the Summer Olympic Games were held in Atlanta. OPERATING INCOME Operating income represents the measure of the company's financial performance before net interest cost, other nonoperating items and equity income. Operating income for 1999 was $2.30 billion, an increase of $177 million, or 8.3%, compared to 1998. The increase in operating income for the year is primarily due to strong domestic beer performance driven by higher domestic beer sales volume and revenue per barrel. Theme park operating results were up slightly from 1998, excluding costs associated with the start-up of the Discovery Cove park in Orlando, which will open in summer 2000. Performance of the company's packaging operations was level with the prior year. Net income for Anheuser-Busch's international beer segment was up 59% in 1999 due to Modelo's strong performance and Anheuser-Busch's increased ownership levels. However, international beer operating results, which exclude Modelo, declined for the year to a loss of $19.9 million, including one-time costs associated with the termination of the Budweiser production joint venture in Brazil, the impact of a bottle recall in Europe and the conversion of the company's Japan joint venture operation into an exclusive license agreement. Operating income for 1998 was $2.13 billion, an increase of $72 million, or 3.5%, over 1997. The increase in operating income for 1998 was primarily due to higher domestic beer sales volume and higher operating results from can manufacturing and entertainment, partially offset by weaker results from international beer operations. OPERATING INCOME (GRAPH) Packaging operating income improved in 1998 vs. the prior year, due to higher soft drink can volume and reduced costs. Despite weakness in Florida tourism, entertainment operations had a slight improvement in operating income compared to 1997, due to higher in-park spending. International beer operating income declined vs. 1997 primarily due to weakness in Japan. Operating income for 1997 was $2.05 billion, an increase of $24 million, or 1.2%, compared to 1996. The increase was primarily due to increased beer sales volume, continued brewery operating efficiencies and improved performance by the company's theme park operations. Domestic revenue per barrel for 1997 was down slightly vs. the 1996 level. Entertainment operations had strong attendance and profitability and contributed $115 million in operating income in 1997. International beer profitability was down in 1997 compared to 1996, primarily due to continued significant marketing expenditures for Budweiser. Packaging operations contributed $121 million in operating profits in 1997, down slightly when compared with 1996 performance. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 31 -- 8 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION NET INTEREST COST Net interest cost (interest expense less interest income) was $303.5 million for 1999, $285.7 million for 1998 and $253.3 million for 1997, representing increases of 6.2%, 12.8% and 13.4%, respectively, compared to prior years. These increases reflect higher average outstanding debt balances during the years. See the Liquidity and Cash Flows section of this discussion for additional information. INTEREST CAPITALIZED Interest capitalized for 1999 decreased $7.8 million, to $18.2 million, compared to 1998. Interest capitalized declined $16.1 million in 1998, to $26.0 million, while interest capitalized increased $6.6 million, to $42.1 million, in 1997 compared to 1996. Capitalized interest amounts fluctuate depending on construction-in-progress balances which change due to capital spending and the timing of project completions. Interest capitalized declined in 1999 and 1998 as the company completed its long-term brewery modernization projects. OTHER INCOME/EXPENSE, NET Other income/expense, net includes numerous items of a nonoperating nature that do not have a material impact on the company's consolidated results of operations, either individually or in total. The company had net other expense of $9.4 million in 1999, $13.0 million in 1998 and $9.3 million in 1997. EQUITY INCOME, NET The company began recognizing its pro rata equity interest in the net earnings of Grupo Modelo under the equity method of accounting in 1997. Equity income, net of tax, increased $72.5 million, to $157.5 million in 1999. The increase in equity income is due to Modelo's strong underlying operating performance, and Anheuser-Busch's 50.2% equity stake in Modelo throughout 1999, compared to 37% ownership for the first nine months and 50.2% for the last quarter 1998. Additionally, equity income for 1998 was adversely impacted by Mexican peso depreciation and hyperinflation accounting. Hyperinflation accounting ceased January 1, 1999. The company recognized equity income, net of tax, of $85.0 million during 1998, compared to $50.3 million in 1997. The increase in equity income in 1998 was due to the company's larger equity stake in Modelo and the strong underlying sales volume and operating results for Modelo, partially offset by hyperinflation accounting. For 1998, equity income percentages compare with 17.7% ownership for the first five months of 1997 and a 37% ownership interest thereafter. NET INCOME NET INCOME/DIVIDENDS (GRAPH) Net income was $1.40 billion in 1999, an increase of $169 million, or 13.7%, vs. 1998. Net income was $1.23 billion for 1998, an increase of $54 million, or 4.6%, compared to 1997 net income (before accounting change) of $1.18 billion, which increased 5.0% vs. net income (excluding the gain on the sale of the St. Louis Cardinals) for 1996. The company's effective tax rate was 38.0% in 1999 and 1998 and 38.4% in 1997. The decline in 1998 was principally due to lower state and foreign taxes and lower nondeductible costs. 32 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 9 DILUTED EARNINGS PER SHARE Diluted earnings per share were $2.94 for 1999, an increase of 16.2% vs. 1998 diluted earnings per share. The 16.2% earnings per share growth in 1999 was the highest growth rate of the 1990s. Diluted earnings per share for 1998 were $2.53, an increase of $.17, or 7.2%, compared to 1997 diluted earnings per share (before accounting change) of $2.36, which had increased 6.8% compared to 1996 (excluding the Cardinals gain). Diluted earnings per share benefit from the company's ongoing share repurchase program. The company repurchased almost 19 million common shares in 1999. See Note 7 for additional information regarding share repurchases. DILUTED EARNINGS PER SHARE (GRAPH) EMPLOYEE-RELATED COSTS Employee-related costs totaled $1.88 billion in 1999, an increase of $40 million, or 2.2%, vs. 1998 costs of $1.84 billion. Employee-related costs during 1998 increased $46 million, or 2.6%, vs. 1997 costs of $1.79 billion. The changes in employee-related costs reflect normal increases in salaries, wages and benefit levels, partially offset by lower combined pension and retiree medical expenses. Salaries and wages comprise the majority of employee-related costs and totaled $1.54 billion in 1999, an increase of $22 million, or 1.4% vs. 1998. Salaries and wages totaled $1.52 billion in 1998, an increase of $40 million, or 2.7%, compared to $1.48 billion paid in 1997. The remainder of employee-related costs consists of pension, life insurance, and health care benefits and payroll taxes. EMPLOYEE-RELATED COSTS (GRAPH) Full-time employees numbered 23,645, 24,344 and 24,326 at December 31, 1999, 1998 and 1997, respectively. TAXES The company is significantly impacted by federal, state and local taxes, including beer excise taxes. Taxes applicable to 1999 operations (not including the many indirect taxes included in materials and services purchased) totaled $3.0 billion, an increase of $114 million, or 3.9%, vs. 1998 total taxes of $2.89 billion, and highlight the burden of taxation on the company and the brewing industry in general. Taxes in 1998 increased 8.1% compared to 1997 total taxes of $2.67 billion, which decreased $8 million, or 0.3%, compared to 1996. The increases in taxes in 1999 and 1998 are primarily due to higher excise taxes on increased beer volume. Taxes for 1998 also reflect the full accounting consolidation of Stag operations compared to 1997. The decrease in 1997 compared to 1996 is primarily attributable to reduced income taxes due to lower pretax income and a lower effective tax rate. LIQUIDITY AND CAPITAL RESOURCES The company's primary sources of liquidity are cash provided from operations and financing activities. Principal uses of cash are capital expenditures, business investments, share repurchases and dividends. Information on the company's consolidated cash flows (categorized by operating activities, financing activities and investing activities) for the years 1999, 1998 and 1997 is presented in the Consolidated Statement of Cash Flows and Note 11. OPERATING CASH FLOW (GRAPH) ANHEUSER-BUSCH COMPANIES 1999 Annual Report 33 -- 10 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION OPERATING CASH FLOW Anheuser-Busch's strong financial profile allows it to pursue its growth strategies while providing substantial direct returns to shareholders. Accordingly, the company has established well-defined priorities for its operating cash flow: * Reinvest in core businesses to achieve profitable growth. To enhance shareholder value, the company will continue to make investments to improve efficiency and capacity in its existing operations, and make selected investments in international brewers. * Make substantial cash payments directly to shareholders through consistent dividend growth and the repurchase of common shares each year. The company has paid cash dividends each of the last 66 years, and has repurchased approximately 3% of outstanding shares annually for the last 10 years. There was a working capital deficit of $(386.6) million at December 31, 1999, compared to a working capital deficit of $(89.9) million at December 31, 1998 and working capital of $83.2 million at December 31, 1997. CAPITAL EXPENDITURES During the next five years, the company will continue capital expenditure programs designed to take advantage of growth and productivity improvement opportunities for its beer, packaging and entertainment operations. The company has a formal and intensive review procedure for the authorization of capital expenditures. The most important measure of acceptability of a capital project is its projected discounted cash flow return on investment. Cash flow from operating activities is projected to exceed the company's funding requirements for anticipated capital expenditures. However, the combination of capital spending, dividend payments and share repurchases, plus possible additional investments in international brewers, may require external financing. The nature, extent and timing of external financing will vary depending upon the company's evaluation of existing market conditions and other economic factors. Total capital expenditures in 1999 amounted to $865.3 million, an increase of $47.8 million, or 5.8%, compared to 1998 capital spending of $817.5 million. Capital expenditures over the past five years totaled $4.9 billion. The company expects capital expenditures in 2000 of approximately $1.0 billion and anticipates capital expenditures during the five-year period 2000 - - 2004 approximating $4 billion. CAPITAL EXPENDITURES/ DEPRECIATION & AMORTIZATION (GRAPH) SHARE REPURCHASE See Note 7 for a discussion of share repurchase activity. DIVIDENDS Cash dividends paid to common shareholders were $544.7 million in 1999 and $521.0 million in 1998. Dividends on common stock are paid in the months of March, June, September and December of each year. In the third quarter 1999, effective with the September dividend, the Board of Directors increased the quarterly dividend rate by 7.1%, from $.28 to $.30 per share of common stock. This increased annual dividends per common share 7.4%, to $1.16 in 1999, compared with $1.08 per common share in 1998. In 1998, dividends were $.26 per share for the first two quarters and $.28 per share for the last two quarters. 34 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 11 FINANCING ACTIVITIES The company utilizes Securities and Exchange Commission "shelf" registration statements to provide flexibility and efficiency when obtaining long-term financing. At December 31, 1999, a total of $690 million of debt was available for issuance under existing registrations. Debt increased a net $404.3 million in 1999, compared to an increase of $353.0 million in 1998. The change in debt during these years is detailed below, by key component. INCREASES IN DEBT -- $994.7 million in 1999 compared to $451.5 million in 1998, as follows:
YEAR DESCRIPTION AMOUNT INTEREST RATE 1999 LONG-TERM NOTES $300.0 5.75%, FIXED COMMERCIAL PAPER $627.1 5.1%, WEIGHTED AVERAGE INDUSTRIAL REVENUE BONDS $36.1 VARIOUS FIXED RATES MISCELLANEOUS $31.5 VARIOUS FIXED RATES 1998 Long-term notes $300.0 $100.0 million each at 5.125%, 5.375% and 5.65%, fixed Debentures $100.0 6.5%, fixed Commercial paper $23.3 5.5%, weighted average Industrial revenue bonds $13.8 Various fixed rates Miscellaneous $14.4 Various fixed rates - -------------------------------------------------------------------------- REDUCTIONS IN DEBT -- $590.4 million in 1999 versus $98.5 million in 1998, as follows: YEAR DESCRIPTION AMOUNT INTEREST RATE 1999 DUAL CURRENCY NOTES $262.4 QUARTERLY FLOATING RATE LONG-TERM NOTES $250.0 8.75%, FIXED DEBENTURES $23.0 8.5%, FIXED MEDIUM-TERM NOTES $15.0 7.7%, WEIGHTED AVERAGE ESOP DEBT GUARANTEE $36.7 8.25%, FIXED MISCELLANEOUS $3.3 VARIOUS FIXED RATES 1998 Debentures $45.0 $22.5 million each at 8.5% and 8.625%, fixed Medium-term notes $15.0 6.3%, weighted average ESOP debt guarantee $34.9 8.25%, fixed Miscellaneous $3.6 Various fixed rates - --------------------------------------------------------------------------
In addition to long-term debt financing, the company has access to funds through the utilization of commercial paper and its $1 billion revolving bank credit agreement that expires August 2001. The credit agreement provides the company with an immediate and continuing source of liquidity. No borrowings have been made under the credit agreement since its inception. See Note 4 for additional discussion of debt. The company's ratio of debt to total capitalization was 56.6% and 52.8% at December 31, 1999 and 1998, respectively. The company's cash flow to total debt ratio was $39.8% in 1999, 40.3% in 1998, and 42.5% in 1997. The company's fixed charge coverage ratio was 6.9x, 6.8x, and 7.3x for the years ended December 31, 1999, 1998 and 1997, respectively. COMMON STOCK At December 31, 1999, common stock shareholders of record numbered 60,100 compared with 62,110 at the end of 1998. See Note 7 for a summary of common stock activity. SHAREHOLDERS EQUITY/DEBT (GRAPH) PRICE RANGE OF COMMON STOCK The company's common stock is listed on the New York Stock Exchange under the symbol "BUD." The following table summarizes 1999 quarterly high and low closing prices for BUD. PRICE RANGE OF ANHEUSER-BUSCH COMMON STOCK (BUD)
1999 1998 QUARTER HIGH LOW HIGH LOW First 78-7/16 65-3/16 47-1/2 43-7/16 Second 78-7/8 68-15/16 49-1/4 45-7/16 Third 81-5/8 69-11/16 57-3/8 46-3/4 Fourth 76-3/8 66-11/16 68-1/4 52-1/2 - ------------------------------------------------------------------
The closing price of the company's common stock at December 31, 1999 and 1998 was $70-7/8 and $65-5/8, respectively. The book value of each common share of stock at December 31, 1999 was $8.50, compared to $8.84 at December 31, 1998. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 35 -- 12 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION SYSTEMS-RELATED YEAR 2000 COSTS The company experienced no operating interruptions or other disturbances due to Year 2000 events. The company resolved its Year 2000 date recognition issues through either the replacement of existing systems with Year 2000-ready systems or by reprogramming existing systems. All costs related to the assessment, reprogramming and testing of systems for the Year 2000 effort were expensed as incurred. The company incurred Year 2000-related reprogramming costs of $11.8 million in 1999, $15.5 million in 1998 and $6.6 million in 1997, and expects to incur costs of approximately $2 million in 2000 to complete its efforts. RISK MANAGEMENT In the ordinary course of business, Anheuser-Busch is exposed to foreign currency exchange, interest rate and commodity price risks. These exposures primarily relate to the sale of product to foreign customers, purchases from foreign suppliers, royalty receipts from license and contract brewers, acquisition of raw materials from both domestic and foreign suppliers, and changes in interest rates. The company utilizes derivative financial instruments, including forward exchange contracts, futures contracts, swaps and options to manage certain of these exposures that it considers practical to do so. Anheuser-Busch has well-established policies and procedures governing the use of derivatives. The company hedges only firm commitments or anticipated transactions in the normal course of business and corporate policy prohibits the use of derivatives for speculation, including the sale of free-standing instruments. The company neither holds nor issues financial instruments for trading purposes. Specific hedging strategies depend on several factors, including the magnitude and volatility of the exposure, offset through contract terms, cost and availability of appropriate hedging instruments, the anticipated time horizon, commodity basis, opportunity cost and the nature of the item being hedged. The company's overall risk management goal is to strike a balance between managing its exposure to market volatility and obtaining the most favorable transaction costs possible within the constraints of its financial objectives. Exposures the company currently is unable to hedge, or has elected to substantially not hedge, primarily relate to its floating rate debt, net investments in foreign-currency-denominated operations and translated earnings of foreign subsidiaries. Derivatives are either exchange-traded instruments which are highly liquid, or over-the-counter instruments transacted with financial institutions. No credit loss is anticipated as the counterparties to over-the-counter instruments generally have long-term ratings from Standard and Poor's or Moody's no lower than A+ or A1, respectively. Additionally, counterparty fair value positions favorable to Anheuser-Busch and in excess of certain thresholds are collateralized with cash, U.S. Treasury securities or letters of credit. Anheuser-Busch has reciprocal collateralization responsibilities for fair value positions unfavorable to the company and in excess of certain thresholds. Collateral amounts at December 31, 1999 were not material. The fair value of derivative financial instruments is the estimated amount the company would receive or have to pay when terminating any contracts. The company also monitors the effectiveness of its hedging structures, based either on cash offset between changes in the value of the underlying exposure and changes in the value of the derivative, or by the correlation between the price of the underlying exposure and the pricing on which the value of the derivative is based. Following is a volatility analysis of the company's derivatives portfolio that indicates potential changes in the fair value of the company's derivative holdings under certain market movements. The company applies sensitivity analysis for commodity price exposures and value-at-risk (VAR) analysis for foreign currency and interest rate exposures. VOLATILITY ANALYSIS ESTIMATED FAIR VALUE VOLATILITY AT DEC. 31, 1999 (in millions) Foreign Currency Risk (VAR): Forwards, Options $(0.8) Interest Rate Risk (VAR): Swaps $(0.3) Commodity Price Risk (Sensitivity): Futures, Swaps, Options $(6.6) - --------------------------------------------------------------------------
VAR forecasts fair value changes using a statistical model (Monte Carlo simulation method) which incorporates historical correlations among various currencies and interest rates. The VAR model assumes the company could liquidate its currency and interest rate positions in a single day (one-day holding period). The volatility figures provided represent the maximum one-day loss each portfolio could experience for 19 out of every 20 trading days (95% confidence level), based on history. 36 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 13 The sensitivity analysis for commodities reflects the impact of a hypothetical 10% adverse change in the market price for the company's principal commodities. The volatility of foreign currencies, interest rates and commodity prices are dependent on many factors that cannot be forecasted with accuracy. Therefore, changes in fair value over time could differ substantially from the illustration. The preceding derivatives volatility analysis ignores changes in the value of the underlying hedged transactions. Because the company does not hold or trade derivatives for speculation or profit, it seeks to establish only highly effective hedging relationships. See Note 3 for additional information. INTRODUCTION OF THE EURO The initial phase of the three-year phase-in of the new common currency of the European Economic and Monetary Union, the "euro," began on January 1, 1999. Prior to introduction, the company made appropriate arrangements with key financial institutions to ensure smooth handling of euro receipts and disbursements. The company's financial systems accommodated the euro introduction. Full systems euro readiness will be achieved through planned systems upgrades and/or replacement prior to the end of the euro transition period in 2001. The company is able to denominate agreements and hedges in euros as necessary. The company cannot readily predict what impact, if any, single currency pricing will have on its European operations. SIGNIFICANT NON-U.S. EQUITY INVESTMENTS GRUPO MODELO In September 1998, the company completed the purchase of an additional 13.25% of Diblo, S.A. de C.V., the operating subsidiary of Grupo Modelo, S.A. de C.V., Mexico's largest brewer and leading exporter of beer. The purchase price was $557 million, bringing Anheuser-Busch's total investment in Modelo to $1.6 billion. The additional investment increased Anheuser-Busch's total direct and indirect holdings in Diblo to 50.2%. The increase in ownership does not give Anheuser-Busch voting or other effective control of either Grupo Modelo or Diblo and, accordingly, the company continues to account for its Modelo investment on the equity basis. The economic benefit of the company's Modelo investment can be measured in two ways--Anheuser-Busch's pro rata share in the earnings of Modelo (equity income) and the excess of the fair value of the investment over its carrying value. The excess of fair value over carrying value, based on Grupo Modelo's closing stock price at December 31, 1999, was $4.0 billion. Although this amount is appropriately not reflected in the company's income statement or balance sheet, it represents economic value to Anheuser-Busch. Due to the structure and composition of Anheuser-Busch's initial investment, the company was not required to adjust the carrying amount of its Modelo investment under FAS 115 while on the cost basis of accounting from 1993 to 1996. Additionally, the initial investment was configured such that the company's return was largely protected against a decline in the value of the Mexican peso. The company adopted the equity method of accounting when ownership was increased to 37% in May 1997, which gave Anheuser-Busch additional minority rights and increased representation on the Grupo Modelo Board of Directors. At that time, the company adjusted the carrying value of its Modelo investment by $189.4 million to reflect the impact of cumulative peso depreciation from 1993 to 1996, the period for which the investment was accounted for under the cost method of accounting. The offset to this translation adjustment was the foreign currency translation component of other comprehensive income in shareholders equity. Throughout 1997 and 1998, Mexico was considered hyperinflationary for accounting purposes. Under hyperinflation accounting, the company effectively recognized in earnings the relative impact of Mexican peso depreciation on its investment during 1997 and 1998, which was unfavorable. The Mexican economy ceased to be hyperinflationary for accounting purposes on January 1, 1999. Translation adjustments are now appropriately reflected in equity rather than earnings. See Note 2 for additional discussion. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 37 -- 14 MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS & FINANCIAL CONDITION ANTARCTICA In April 1996, the company purchased a 5% equity stake in a subsidiary, ANEP, that controlled 75% of the operations of Companhia Antarctica Paulista (Antarctica), one of Brazil's leading brewers. The investment agreement provided the company with options allowing it to increase its investment to approximately 30% of ANEP which expired in April 2002. In July 1999, Anheuser-Busch and Antarctica jointly announced the end of their equity partnership. See Note 2 for additional discussion. CORPORATE MATTERS LABOR NEGOTIATIONS On August 7, 1999, Teamster-represented employees at the company's 12 U.S. breweries approved the national portion of a new contract offer by a margin of 59% to 41%. The proposed agreement had been endorsed by the Teamsters' International leadership and called for a new contract which would expire February 29, 2004. Local agreements, however, remain unresolved in several breweries. Both the company and the Teamsters have previously stated that there can be no final agreement, and the new contract cannot go into effect, until agreement is reached on all national and local issues. As a result, the company continues to operate its breweries under the terms of the offer implemented in September 1998. The company remains committed to operate its breweries in the event of any work stoppages. Proposed terms covering local issues were approved by employees at breweries in Columbus, OH, Williamsburg, VA and Baldwinsville, NY, and certain locals in St. Louis, MO, Newark, NJ and Los Angeles, CA. Local supplements previously had been approved by employees in Houston, TX, Fairfield, CA and Merrimack, NH. Local terms were rejected in Ft. Collins, CO, Cartersville, GA and Jacksonville, FL, and at certain locals in St. Louis, MO, Newark, NJ and Los Angeles, CA. The terms of the proposed agreement include wage and benefit increases, as well as provisions to support productivity improvement, promote workplace flexibility, reduce absenteeism, improve the grievance procedure and institute a more effective drug-testing program. Additionally, Anheuser-Busch would reaffirm its commitment, contingent on the new contract going into effect, to keep all 12 of its U.S. breweries open during the life of the contract, barring an unforeseen event, providing its Teamster-represented employees with unprecedented job security. ENVIRONMENTAL MATTERS The company is subject to federal, state and local environmental protection laws and regulations and is operating within such laws or is taking action aimed at assuring compliance with such laws and regulations. Compliance with these laws and regulations is not expected to materially affect the company's competitive position. None of the Environmental Protection Agency (EPA) designated clean-up sites for which Anheuser-Busch has been identified as a Potentially Responsible Party (PRP) would have a material impact on the company's consolidated financial statements. The company is strongly committed to environmental protection. Its Environmental Management System provides specific guidance for how the environment must be factored into business decisions and mandates special consideration of environmental issues in conjunction with other business issues when any of the company's facilities or business units plans capital projects or changes in processes. Anheuser-Busch also encourages its suppliers to adopt similar environmental management practices and policies. 38 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 15 MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Anheuser-Busch Companies, Inc. is responsible for the financial statements and other information included in this annual report. These statements are prepared in accordance with generally accepted accounting principles. The company maintains accounting and reporting systems, supported by a system of internal accounting control, which management believes are adequate to provide reasonable assurances that assets are safeguarded against loss from unauthorized use or disposition and financial records are reliable for preparing financial statements. During 1999, the company's internal auditors, in conjunction with PricewaterhouseCoopers LLP, the company's independent accountants, performed a comprehensive review of the adequacy of the company's internal accounting control system. Based on that comprehensive review, it is management's opinion that the company has an effective system of internal accounting control. The Audit Committee of the Board of Directors, which consists of six nonmanagement directors, oversees the company's financial reporting and internal control systems, recommends selection of the company's independent accountants and meets with the independent accountants and internal auditors to review the overall scope and specific plans for their respective audits. The Committee held four meetings during 1999. A more complete description of the functions performed by the Audit Committee can be found in the company's proxy statement. REPORT OF INDEPENDENT ACCOUNTANTS 800 Market Street St. Louis, MO 63101 [PRICEWATERHOUSECOOPERS LOGO] February 1, 2000 To the Shareholders and Board of Directors of Anheuser-Busch Companies, Inc. We have audited the accompanying Consolidated Balance Sheet of Anheuser-Busch Companies, Inc. and its subsidiaries as of December 31, 1999 and 1998, and the related Consolidated Statements of Income, Changes in Shareholders Equity and Cash Flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the Consolidated Financial Statements audited by us present fairly, in all material respects, the financial position of Anheuser-Busch Companies, Inc. and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. As discussed in Note 1 and Note 2 to the Consolidated Financial Statements, in 1997 the company respectively changed its method of accounting for business process re-engineering costs incurred in connection with information technology transformation projects, and adopted the equity method of accounting for its investment in Grupo Modelo, S.A. de C.V. and its operating subsidiary, Diblo, S.A. de C.V. /s/ PriceWaterhouseCoopers LLP ANHEUSER-BUSCH COMPANIES 1999 Annual Report 39 -- 16 CONSOLIDATED BALANCE SHEET Anheuser-Busch Companies and Subsidiaries
YEAR ENDED DECEMBER 31 (in millions) 1999 1998 ASSETS Current Assets: Cash and marketable securities $ 152.1 $ 224.8 Accounts and notes receivable, less allowance for doubtful accounts of $6.4 in 1999 and $5.5 in 1998 629.0 610.1 Inventories: Raw materials and supplies 378.2 362.9 Work in process 84.7 90.7 Finished goods 160.9 169.8 Total inventories 623.8 623.4 Other current assets 195.7 182.1 ------------------------------------ Total current assets 1,600.6 1,640.4 Investments in affiliated companies 2,012.5 1,880.6 Other assets 1,062.7 1,114.3 Plant and equipment, net 7,964.6 7,849.0 ------------------------------------ TOTAL ASSETS $12,640.4 $12,484.3 ==================================== LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities: Accounts payable $ 932.6 $ 905.7 Short-term debt 242.3 -- Accrued salaries, wages and benefits 263.0 256.3 Accrued taxes 164.2 193.6 Other current liabilities 385.1 374.7 ------------------------------------ Total current liabilities 1,987.2 1,730.3 ------------------------------------ Postretirement benefits 506.4 515.8 ------------------------------------ Long-term debt 4,880.6 4,718.6 ------------------------------------ Deferred income taxes 1,344.7 1,303.6 ------------------------------------ Common Stock and Other Shareholders Equity: Common stock, $1.00 par value, authorized 1.6 billion shares 716.1 712.7 Capital in excess of par value 1,241.0 1,117.5 Retained earnings 9,181.2 8,320.7 Accumulated other comprehensive income: Foreign currency translation adjustment (175.0) (205.6) ------------------------------------ 10,963.3 9,945.3 Treasury stock, at cost (6,831.3) (5,482.1) ESOP debt guarantee (210.5) (247.2) ------------------------------------ 3,921.5 4,216.0 ------------------------------------ Commitments and contingencies -- -- ------------------------------------ TOTAL LIABILITIES AND EQUITY $12,640.4 $12,484.3 ==================================== The Notes on pages 44-55 of this report are an integral component of the company's Consolidated Financial Statements.
40 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 17 CONSOLIDATED STATEMENT OF INCOME Anheuser-Busch Companies and Subsidiaries
YEAR ENDED DECEMBER 31 (in millions) 1999 1998 1997 Sales $13,723.3 $13,207.9 $12,832.4 Excise taxes (2,019.6) (1,962.1) (1,766.2) -------------------------------------------------- Net sales 11,703.7 11,245.8 11,066.2 Cost of products and services (7,254.4) (7,162.5) (7,096.9) -------------------------------------------------- Gross profit 4,449.3 4,083.3 3,969.3 Marketing, distribution and administrative expenses (2,147.0) (1,958.0) (1,916.3) -------------------------------------------------- Operating income 2,302.3 2,125.3 2,053.0 Interest expense (307.8) (291.5) (261.2) Interest capitalized 18.2 26.0 42.1 Interest income 4.3 5.8 7.9 Other expense, net (9.4) (13.0) (9.3) -------------------------------------------------- Income before income taxes 2,007.6 1,852.6 1,832.5 Provision for income taxes (762.9) (704.3) (703.6) Equity income, net of tax 157.5 85.0 50.3 -------------------------------------------------- Income before cumulative effect of accounting change 1,402.2 1,233.3 1,179.2 Cumulative effect of accounting change, net of tax benefit of $6.2 -- -- (10.0) -------------------------------------------------- Net income $ 1,402.2 $ 1,233.3 $ 1,169.2 ================================================== Basic earnings per share: Income before cumulative effect of accounting change $ 2.99 $ 2.56 $ 2.39 Cumulative effect of accounting change -- -- (.02) -------------------------------------------------- Net income $ 2.99 $ 2.56 $ 2.37 ================================================== Diluted earnings per share: Income before cumulative effect of accounting change $ 2.94 $ 2.53 $ 2.36 Cumulative effect of accounting change -- -- (.02) -------------------------------------------------- Net income $ 2.94 $ 2.53 $ 2.34 ================================================== The Notes on pages 44-55 of this report are an integral component of the company's Consolidated Financial Statements.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 41 -- 18 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Anheuser-Busch Companies and Subsidiaries
YEAR ENDED DECEMBER 31 (in millions, except per share) 1999 1998 1997 COMMON STOCK Balance, beginning of period $ 712.7 $ 709.3 $ 705.8 Shares issued under stock plans 3.4 3.4 3.5 ------------------------------------------------- Balance, end of period $ 716.1 $ 712.7 $ 709.3 ================================================= CAPITAL IN EXCESS OF PAR VALUE Balance, beginning of period $ 1,117.5 $ 1,017.0 $ 929.2 Shares issued under stock plans 123.5 100.5 87.8 ================================================= Balance, end of period $ 1,241.0 $ 1,117.5 $ 1,017.0 ================================================= RETAINED EARNINGS Balance, beginning of period $ 8,320.7 $ 7,604.9 $ 6,924.5 Net income 1,402.2 1,233.3 1,169.2 Common dividends paid (per share: 1999 - $1.16; 1998 - $1.08; 1997 - $1.00) (544.7) (521.0) (492.6) Shares issued under stock plans 3.0 3.5 3.8 ------------------------------------------------- Balance, end of period $ 9,181.2 $ 8,320.7 $ 7,604.9 ================================================= TREASURY STOCK Balance, beginning of period $(5,482.1) $(4,793.3) $(4,206.2) Treasury stock acquired (1,349.2) (688.8) (587.1) ------------------------------------------------- Balance, end of period $(6,831.3) $(5,482.1) $(4,793.3) ================================================= ESOP DEBT GUARANTEE Balance, beginning of period $ (247.2) $ (282.1) $ (315.4) Annual debt service 36.7 34.9 33.3 ------------------------------------------------- Balance, end of period $ (210.5) $ (247.2) $ (282.1) ================================================= ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of period $ (205.6) $ (214.0) $ (8.8) Foreign currency translation adjustment 30.6 8.4 (205.2) ------------------------------------------------- Balance, end of period $ (175.0) $ (205.6) $ (214.0) ================================================= TOTAL SHAREHOLDERS EQUITY $ 3,921.5 $ 4,216.0 $ 4,041.8 ================================================= COMPREHENSIVE INCOME Net income $ 1,402.2 $ 1,233.3 $ 1,169.2 Foreign currency translation adjustment 30.6 8.4 (205.2) ------------------------------------------------- TOTAL COMPREHENSIVE INCOME $ 1,432.8 $ 1,241.7 $ 964.0 ================================================= The Notes on pages 44-55 of this report are an integral component of the company's Consolidated Financial Statements.
42 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 19 CONSOLIDATED STATEMENT OF CASH FLOWS Anheuser-Busch Companies and Subsidiaries
YEAR ENDED DECEMBER 31 (in millions) 1999 1998 1997 CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 1,402.2 $ 1,233.3 $ 1,169.2 Cumulative effect of accounting change -- -- 10.0 ------------------------------------------- Income before cumulative effect of accounting change 1,402.2 1,233.3 1,179.2 Adjustments to reconcile income before cumulative effect of accounting change to cash provided by operating activities: Depreciation and amortization 777.0 738.4 683.7 Deferred income taxes 40.3 34.5 91.4 Undistributed earnings of affiliated companies (155.5) (53.7) (49.9) Other, net 38.6 (27.1) (93.2) ------------------------------------------- Operating cash flow before changes in working capital 2,102.6 1,925.4 1,811.2 (Increase)/decrease in working capital (18.3) 250.6 5.4 ------------------------------------------- Cash provided by operating activities 2,084.3 2,176.0 1,816.6 ------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (865.3) (817.5) (1,199.3) New business acquisitions (7.0) (566.5) (683.3) Proceeds from sale of business 59.6 -- -- ------------------------------------------- Cash (used for) investing activities (812.7) (1,384.0) (1,882.6) ------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase in debt 973.4 451.5 1,245.9 Decrease in debt (553.7) (63.6) (141.6) Dividends paid to shareholders (544.7) (521.0) (492.6) Acquisition of treasury stock (1,349.2) (688.8) (587.1) Shares issued under stock plans 129.9 107.4 95.1 ------------------------------------------- Cash (used for)/provided by financing activities (1,344.3) (714.5) 119.7 ------------------------------------------- Net (decrease)/increase in cash during the year (72.7) 77.5 53.7 Cash, beginning of year 224.8 147.3 93.6 ------------------------------------------- Cash, end of year $ 152.1 $ 224.8 $ 147.3 =========================================== The Notes on pages 44-55 of this report are an integral component of the company's Consolidated Financial Statements.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 43 -- 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES This summary of the significant accounting principles and policies of Anheuser-Busch Companies, Inc. and its subsidiaries is presented to assist in evaluating the company's Consolidated Financial Statements included in this annual report. These principles and policies conform to U.S. generally accepted accounting principles. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires that management make estimates and assumptions about the future which impact the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and assumptions. REVENUE RECOGNITION The company recognizes revenue only when finished products are shipped or services have been rendered to unaffiliated customers. The company's beer and packaging operations do not engage in consignment sales. Entertainment operations recognize revenue related to advance ticket sales when customers actually visit a park location. PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the company and all its subsidiaries. The company generally consolidates all majority-owned and controlled subsidiaries, accounts for investments below the 20% level under the cost method, and applies the equity method of accounting for investments between 20% and 50%. All significant intercompany transactions have been eliminated. Minority interests in consolidated subsidiaries are not material. FOREIGN CURRENCY TRANSLATION Financial statements of foreign operations where the local currency is the functional currency are translated using period-end exchange rates for assets and liabilities, and weighted average exchange rates during the period for the results of operations. Translation adjustments are reported as a separate component of other comprehensive income within shareholders equity. Translation practice differs for foreign operations in hyperinflationary economies. See Note 2 for additional discussion. Exchange rate adjustments related to foreign currency transactions are recognized in income as incurred. CASH AND MARKETABLE SECURITIES Cash and marketable securities include cash, demand deposits and short-term investments with initial maturities generally of 90 days or less. EXCESS OF COST OVER NET ASSETS OF ACQUIRED BUSINESSES (GOODWILL) The excess of the cost over the net assets of acquired businesses, which is included in other assets on the balance sheet, is amortized on a straight-line basis over a period of 40 years. Accumulated amortization at December 31, 1999 and 1998 was $131.7 million and $116.3 million, respectively. The ongoing recoverability of goodwill is monitored based on applicable operating unit performance and consideration of significant events or changes in the overall business environment. See Note 11 for additional information. INVENTORIES AND PRODUCTION COSTS Inventories are valued at the lower of cost or market. Cost is determined under the last-in, first-out method (LIFO) for approximately 75% and 73%, respectively, of total inventories at December 31, 1999 and 1998. Had the average-cost method (which approximates replacement cost) been used with respect to such inventories at December 31, 1999 and 1998, total inventories would have been $83.3 million and $100.3 million higher, respectively. PLANT AND EQUIPMENT Plant and equipment is carried at cost and includes expenditures for new facilities and expenditures which substantially increase the useful lives of existing facilities. The cost of maintenance, repairs and minor renewals is expensed as incurred. When plant and equipment is retired or otherwise disposed, the cost and related accumulated depreciation are eliminated, and any gain or loss on disposition is recognized in earnings. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, resulting in annual depreciation rates on buildings ranging from 2% to 10% and on machinery and equipment ranging from 4% to 25%. INCOME TAXES The provision for income taxes is based on income and expense amounts as reported in the Consolidated Statement of Income. The company utilizes certain provisions of federal, state and foreign income tax laws and regulations to reduce current taxes payable. Deferred income taxes are recognized for the effect of temporary differences between financial and tax reporting in accordance with the requirements of FAS No. 109, "Accounting for Income Taxes." 44 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 21 DERIVATIVE FINANCIAL INSTRUMENTS All derivative instruments held by the company are designated as hedges, have high correlation with the underlying exposure and are highly effective in offsetting underlying price movements. Accordingly, gains and losses from changes in derivative fair values are deferred. Gains or losses upon settlement of derivative positions when the underlying transaction occurs are recognized in the income statement or recorded as part of the underlying asset or liability, depending on the circumstances. Derivative positions are settled if the underlying transaction is no longer expected to occur, with related gains and losses recognized in earnings in the period settlement occurs. Option premiums paid are recorded as assets and amortized over the life of the option. Derivatives generally have initial terms of less than three years, and all currently hedged transactions are expected to occur within the next three years. See Note 3 for additional information regarding the company's derivatives portfolio. RESEARCH AND DEVELOPMENT COSTS, ADVERTISING AND PROMOTIONAL COSTS, AND INITIAL PLANT COSTS Research and development costs, advertising and promotional costs, and initial plant costs are expensed as incurred. Advertising and promotional expenses were $721.8 million, $642.1 million and $603.6 million in 1999, 1998 and 1997, respectively. START-UP COSTS Effective January 1, 1999, the company adopted SOP 98-5, "Reporting on the Costs of Start-Up Activities," which requires the costs of start-up activities to be expensed as incurred. Adoption of SOP 98-5 required no significant changes to the company's accounting policies and had no impact on the results of operations. SYSTEMS DEVELOPMENT COSTS The company capitalizes certain systems development costs that meet established criteria in accordance with SOP 98-1, "Accounting for the Costs of Computer Systems Developed or Obtained for Internal Use." Amounts capitalized are amortized to expense over a five-year period. In the fourth quarter 1997, in accordance with EITF consensus No. 97-13, "Accounting for Costs Incurred in Connection with a Consulting Project or an Internal Project That Combines Business Process Reengineering and Information Technology Transformation," the company reported a $10 million after-tax charge ($.02 per share) to expense previously capitalized systems reengineering costs. The charge is shown as a separate cumulative effect of accounting change line item in the income statement. The company now expenses all such costs as incurred. STOCK-BASED COMPENSATION The company accounts for employee stock options in accordance with APB 25, "Accounting for Stock Issued to Employees." Under APB 25, the company recognizes no compensation expense related to employee stock options, since options are always granted at a price equal to the market price on the day of grant. See Note 5 for additional information on the company's stock options plus pro forma disclosures required by FAS 123, "Accounting for Stock-Based Compensation." 2. INTERNATIONAL INVESTMENTS GRUPO MODELO In 1993, Anheuser-Busch purchased a 17.7% direct and indirect equity interest in Diblo, S.A. de C.V. (Diblo), the operating subsidiary of Grupo Modelo, S.A. de C.V. (Modelo), Mexico's largest brewer and producer of the Corona brand, for $477 million. In May 1997, the company increased its direct and indirect equity ownership in Diblo to 37% for an additional $605 million. Effective with the increase in equity ownership to 37%, the company received expanded minority rights, increased its representation on Modelo's Board of Directors to 10 of 21 members and adopted the equity method of accounting for the investment. In September 1998, the company completed its purchase of an additional 13.25% equity interest in Diblo for $557 million, and now owns a 50.2% direct and indirect interest in Diblo. Anheuser-Busch does not have voting or other effective control of either Diblo or Modelo and therefore continues to account for its investment using the equity method. The difference between income recognized on the cost basis prior to 1997 and what would have been recognized had the company applied equity accounting in those years is not material. In 1997, the company recorded a $189.4 million adjustment to the carrying value of the investment for cumulative Mexican peso depreciation between 1993 and 1996 prior to the adoption of equity accounting in 1997. The offset for the adjustment was to "foreign currency translation," a component of other comprehensive income in shareholders equity. Included in the carrying amount of the Modelo investment is goodwill of $541.4 million and $553.6 million, respectively, at December 31, 1999 and 1998 which is being amortized over 40 years. Accumulated amortization was $29.2 million and $15 million, respectively, at December 31, 1999 and 1998. Dividends received from Grupo Modelo in 1999 totaled $2.9 million, compared to $50.3 million in 1998 and $16.4 million in 1997. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 45 -- 22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For foreign operations in countries whose economies are considered highly inflationary, foreign currency translation practice under FAS No. 52, "Foreign Currency Translation," requires that property, other long-lived assets, long-term liabilities and related profit and loss accounts be translated at historical rates of exchange. Additionally, net monetary asset and liability related translation adjustments must be included in earnings in the current period. Mexico's economy was considered highly inflationary for accounting purposes for all of calendar 1997 and 1998. Accordingly, all monetary translation gains and losses related to the Modelo investment were recognized in equity income during 1997 and 1998. Summary financial information for Grupo Modelo as of, and for the two years ended December 31, is presented in the following table (in millions). The amounts shown represent consolidated Grupo Modelo operating results and financial position based on U.S. generally accepted accounting principles, and include the impact of Anheuser-Busch's purchase accounting adjustments.
1999 1998 Current assets $1,156.3 $ 859.8 Noncurrent assets 3,322.3 3,008.4 Current liabilities 262.3 200.6 Noncurrent liabilities 328.0 172.0 Gross sales 2,576.3 1,748.3 Net sales 2,405.4 1,632.0 Gross profit 1,209.8 809.2 Minority interest 48.7 32.8 Net income 333.5 180.3 - -------------------------------------------------------------
OTHER INTERNATIONAL INVESTMENTS In April 1996, the company purchased a 5% equity stake in a subsidiary controlling approximately 75% of the operations of the Brazilian brewer Antarctica for $52.5 million, with options to increase its equity interest to approximately 30%. Because Anheuser-Busch had the ability to exercise significant influence as a result of rights granted in its investment agreement, the company applied the equity method of accounting for the investment in Antarctica in 1997, 1998 and 1999. In originally approving the partnership, the Brazilian antitrust agency, CADE, required Anheuser-Busch's options to be mandatorily exercised at specified dates. The first of the required fixed-dollar investment options was set to expire in September 1999, but was determined to be no longer economically attractive for Anheuser-Busch. Accordingly, the company exercised its right to end its equity partnership with Antarctica in July 1999. There was no impact on earnings associated with the divestiture. CADE also required Anheuser-Busch to discontinue its joint venture with Antarctica for the production, sale and distribution of Budweiser in Brazil. The pretax cost of discontinuing Budweiser production in Brazil was approximately $6 million. In December 1999, the company entered into a distribution agreement with Expand Group and now exports Budweiser to Brazil. In 1996, Anheuser-Busch purchased a 4.4% interest in the Argentine subsidiary of Compania Cervecerias Unidas S.A. (CCU), CCU-Argentina, with options to increase its investment up to 20%. In December 1998, the company exercised a portion of its options and purchased an additional 3.8% in CCU-Argentina for $10 million. The company purchased an additional 2.5% of CCU-Argentina for $7.0 million in December 1999, bringing the company's total ownership to 10.7%. The company's remaining options expire in December 2002. The investment is accounted for on the cost basis. CCU-Argentina brews Budweiser under license and sells the brand in Buenos Aires and other major Argentine markets. In the fourth quarter 1998, the company restructured the sales force and made other organizational changes at its 90%-owned Japanese joint venture subsidiary. Total pretax cost of the restructuring was almost $9 million, primarily for severance benefits for workforce reductions. Effective January 2000, the company converted its joint venture operation into an exclusive license agreement with Kirin Brewing Company, Ltd. for the production and sale of Budweiser in Japan. The one-time pretax cost of converting to the license agreement was approximately $9 million, primarily for severance benefits, and is included in 1999 operating results. The company owns an 86.6% interest in and controls a joint venture which owns the Wuhan brewery located in the People's Republic of China. The joint venture brews and distributes Budweiser primarily in the northern, eastern and central regions of China. The joint venture is consolidated. In 1997, the company purchased the remaining 50% of the Stag Brewing Company Ltd. from its partner, Scottish Courage. Budweiser is brewed and packaged at the Stag Brewery primarily for distribution in the United Kingdom. Scottish Courage owns and leases the brewery site to the company. The Stag Brewery operations are consolidated. 3. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS The company currently uses the following derivative financial instruments: purchased options and forward contracts for foreign currency risk; swaps for interest rate risk; and futures, swaps and purchased options for commodity price risk. Derivatives other than options are off-balance-sheet and therefore have no recorded carrying value. Because the company hedges only with instruments that have high correlation with the underlying transaction pricing, changes in derivatives fair values are expected to be offset by changes in the underlying pricing. 46 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 23 The following table summarizes the notional transaction amounts and fair values for outstanding derivatives, by risk category and instrument type, at December 31, (in millions). Bracketed figures indicate settlement of the derivative contract without concluding the underlying hedged transaction would be unfavorable to Anheuser-Busch. In practice, this rarely occurs.
1999 1998 ---- ---- Notional Fair Notional Fair Amount Value Amount Value --------------------------------------------------------------- Foreign Currency: Forwards $ 150.9 $ 4.0 $ 76.8 $ 1.5 Options 94.1 (.7) 323.1 6.5 --------------------------------------------------------------- 245.0 3.3 399.9 8.0 --------------------------------------------------------------- Interest Rate: Swaps 562.8 6.5 425.2 (53.4) --------------------------------------------------------------- Commodity Price: Swaps 92.4 4.5 14.1 (.3) Futures 40.1 (3.0) 46.1 (3.6) Options 559.6 64.5 94.4 2.0 --------------------------------------------------------------- 692.1 66.0 154.6 (1.9) --------------------------------------------------------------- Total of outstanding derivatives $1,499.9 $75.8 $979.7 $(47.3) =============================================================== - ------------------------------------------------------------------------------------------
The interest rate swap and currency exchange agreements related to the dual-currency notes described in Note 4 are included as interest rate swaps in the preceding table. These agreements are integral parts of dual-currency note structures which provide the company with floating-rate financing at below-market rates. The company has "long" exposure to the British pound sterling, Irish punt, Mexican peso and Canadian dollar. The company's exposures to other currencies are essentially "short," primarily for German mark-denominated purchases of hops. Long exposure indicates the company has foreign currency in excess of its needs, while a short exposure indicates the company requires additional foreign currency to meet its needs. For commodity derivatives, as a net user of raw materials, the company's underlying price exposure is short, indicating additional quantities must be obtained to meet anticipated production requirements. CONCENTRATION OF CREDIT RISK The company does not have a material concentration of credit risk. NONDERIVATIVE FINANCIAL INSTRUMENTS Nonderivative financial instruments included in the balance sheet are cash, accounts receivable, commercial paper and long-term debt. The fair value of long-term debt, based on future cash flows discounted at interest rates currently available to the company for debt with similar maturities and characteristics, was $4.5 billion and $5.0 billion at December 31, 1999 and 1998, respectively. NEW DERIVATIVES AND HEDGING ACCOUNTING STANDARD In June 1998, FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued. FAS 133 requires all derivative financial instruments to be reported on an entity's balance sheet at fair value, with changes in fair value recognized in either earnings or equity, depending on the nature of the underlying exposure being hedged. The Standard is required to be adopted no later than January 1, 2001. Adoption of FAS 133 requires a one-time recognition on the balance sheet of the fair value of the company's derivatives portfolio plus a cumulative effect adjustment to earnings and/or equity. The company does not anticipate a material earnings impact from the initial adoption of FAS 133. The company plans no substantive changes to its risk management strategy as a result of adopting the new Standard, and will revise its derivatives-related documentation and policies as necessary on adoption. The company plans to adopt FAS 133 on January 1, 2001. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 47 -- 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. DEBT Debt at December 31, consisted of the following (in millions):
1999 1998 Long-term debt: Commercial paper (weighted average interest rates of 5.1% in 1999 and 5.5% in 1998) $1,000.0 $ 615.2 Medium-term Notes Due 2000 to 2001 (interest rates from 5.1% to 8.0%) 32.5 47.5 8.5% Sinking Fund Debentures Maturing 1999 to 2017 -- 23.0 8.75% Notes Due 1999 -- 250.0 5.1% Japanese yen/Australian dollar Notes Due 1999 -- 262.4 4.1% Japanese yen/U.S. dollar Notes Due 2001 162.8 162.8 6.9% Notes Due 2002 200.0 200.0 6.75% Notes Due 2003 200.0 200.0 6.75% Notes Due 2005 200.0 200.0 7% Notes Due 2005 100.0 100.0 6.75% Notes Due 2006 250.0 250.0 7.1% Notes Due 2007 250.0 250.0 5.125% Notes Due 2008 100.0 100.0 5.375% Notes Due 2008 100.0 100.0 5.65% Notes Due 2008 100.0 100.0 9% Debentures Due 2009 350.0 350.0 5.75% Notes Due 2010 150.0 -- 5.75% Notes Due 2011 150.0 -- 7.25% Debentures Due 2015 150.0 150.0 7.125% Notes Due 2017 250.0 250.0 7.375% Debentures Due 2023 200.0 200.0 7% Debentures Due 2025 200.0 200.0 6.75% Debentures Due 2027 100.0 100.0 6.5% Debentures Due 2028 100.0 100.0 Industrial Revenue Bonds (interest rates from 5.6% to 7.4%) 248.3 212.2 8.25% ESOP Debt Guarantee 210.5 247.2 Other long-term debt 76.5 48.3 ------------------------------ Total long-term debt 4,880.6 4,718.6 Short-term debt: Commercial paper (year-end interest rate of 6.0%) 242.3 -- ------------------------------ Total debt $5,122.9 $4,718.6 ============================== - --------------------------------------------------------------------------
The company uses Securities and Exchange Commission shelf registrations to maintain debt issuance flexibility and currently has $690 million in registered debt available for issuance. Gains/losses on debt redemptions (either individually or in the aggregate) are not material for any year presented. The company's 4.1% Japanese yen/U.S. dollar notes are hedged by an interest rate swap and currency exchange structure that effectively transfers all currency exchange risk to the counterparty over the life of the debt. In October 1999, the company entered into a dual interest rate swap structure which lowered the effective interest rate on the $200 million 6.9% Notes Due 2002, to 6.44% over the remaining term. The company has in place a single, committed revolving credit agreement totaling $1 billion, expiring in August 2001, which supports the company's commercial paper program. At December 31, 1999 and 1998, the company had no outstanding borrowings under the agreement. Annual fees under the agreement were $600,000 for 1999, 1998 and 1997. Commercial paper borrowings classified as long-term are supported on a long-term basis by the $1 billion revolving credit agreement. The company may also choose to refinance some or all of its commercial paper debt with long-term notes or debentures. Commercial paper borrowings in excess of $1 billion are classified as short-term. The aggregate maturities on long-term debt are $75 million, $180 million, $200 million, $200 million and zero, respectively, for each of the years ending December 31, 2000 through 2004. These maturities do not include future maturities of the ESOP debt guarantee or commercial paper. 5. STOCK OPTION PLANS Under terms of the company's stock option plans, officers, certain other employees and nonemployee directors may be granted options to purchase the company's common stock at no less than 100% of the market price on the date the option is granted. Options generally vest over three years and have a maximum term of 10 years. At December 31, 1999, 1998 and 1997, a total of 40 million, 44 million and 27 million shares, respectively, were reserved for future issuance under the plans. Certain of the plans also provide for the granting of stock appreciation rights (SARs) in tandem with, or in lieu of, stock options. When SARs and options are issued in tandem, the exercise of an SAR cancels the related option and the exercise of an option cancels the related SAR. There were 2,000 SARs outstanding at December 31, 1999 and none outstanding at December 31, 1998. 48 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 25 Presented below is a summary of stock option plans activity for the years shown:
Options Wtd. Avg. Options Wtd. Avg. Outstanding Exercise Price Exercisable Exercise Price - --------------------------------------------------------------------------------------------- BALANCE, DEC. 31, 1996 24,320,664 $28.55 15,230,871 $24.67 Granted 5,558,073 43.37 Exercised (3,971,384) 22.48 Cancelled (185,377) 35.11 ------------- BALANCE, DEC. 31, 1997 25,721,976 $32.64 15,908,186 $27.69 Granted 5,043,905 59.82 Exercised (4,084,369) 24.70 Cancelled (139,691) 40.81 BALANCE, DEC. 31, 1998 26,541,821 $38.98 16,712,205 $31.79 Granted 5,295,646 75.76 Exercised (3,508,208) 27.11 Cancelled (43,984) 53.20 BALANCE, DEC. 31, 1999 28,285,275 $47.32 18,083,477 $37.39 - ---------------------------------------------------------------------------------------------
The following table provides additional information for options outstanding and exercisable at December 31, 1999:
OPTIONS OUTSTANDING - ------------------------------------------------------------------------------ Range of Wtd. Avg. Wtd. Avg. Prices Number Remaining Life Exercise Price ------ ------ -------------- -------------- $20-29 4,749,947 4 YRS $25.72 30-39 4,390,445 6 YRS 32.35 40-49 8,869,516 7 YRS 42.29 50-59 4,981,101 9 YRS 59.85 60-77 5,294,266 10 YRS 75.76 --------- $20-77 28,285,275 7 YRS $47.32 - ------------------------------------------------------------------------------ OPTIONS EXERCISABLE - ------------------------------------------------------------------------------ Range of Wtd. Avg. Prices Number Exercise Price ------ ------ -------------- $20-29 4,749,947 $25.72 30-39 4,390,445 32.35 40-49 7,077,526 42.01 50-59 1,682,824 59.85 60-77 182,735 75.76 ------- $20-77 18,083,477 $37.39 - ------------------------------------------------------------------------------
The company's stock option plans provide for acceleration of exercisability of the options upon the occurrence of certain events relating to a change in control, merger, sale of assets or liquidation of the company (Acceleration Events). Certain of the plans also provide that optionees may be granted Limited Stock Appreciation Rights (LSARs). LSARs become exercisable, in lieu of an option, upon the occurrence, at least six months following the date of grant, of an Acceleration Event. The LSARs entitle the holder to a cash payment per share equivalent to the excess of the share value (as defined under terms of the LSAR) over the grant price. As of December 31, 1999 and 1998, there were zero and .1 million, respectively, of LSARs outstanding. PRO FORMA FAIR VALUE DISCLOSURES Had compensation expense for the company's stock options been recognized based on the fair value on the grant date under the methodology prescribed by FAS 123, the company's income from continuing operations and earnings per share for the three years ended December 31, would have been impacted as shown in the following table (in millions, except per share).
1999 1998 1997 Reported income from continuing operations $1,402.2 $1,233.3 $1,179.2 Pro forma income from continuing operations 1,373.3 1,209.3 1,165.0 Reported diluted earnings per share 2.94 2.53 2.36 Pro forma diluted earnings per share 2.88 2.48 2.33 - -------------------------------------------------------------------------------
The fair value of options granted, which is hypothetically amortized to expense over the option vesting period in determining the pro forma impact, has been estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
1999 1998 1997 Expected life of option 5 YRS. 5 yrs. 5 yrs. Risk-free interest rate 6.2% 4.7% 5.7% Expected volatility of Anheuser-Busch stock 18% 16% 15% Expected dividend yield on Anheuser-Busch stock 1.6% 1.7% 2.3% - -------------------------------------------------------------------------------
The weighted average fair value of options granted during 1999, 1998 and 1997 determined using the Black-Scholes model is as follows:
1999 1998 1997 Fair value of each option granted $18.76 $11.72 $8.37 Total number of options granted (in millions) 5.3 5.0 5.6 ------------------------------------------ Total fair value of all options granted (in millions) $ 99.4 $ 58.6 $46.9 ========================================== - -------------------------------------------------------------------------------
For FAS 123 disclosure purposes, the weighted average fair value of stock options granted is required to be based on a theoretical option pricing model. In actuality, because the company's stock options are not traded on any exchange, employees can receive no value nor derive any benefit from holding stock options under these plans without an increase in the market price of Anheuser-Busch stock. Such an increase in stock price would benefit all stockholders commensurately. ANHEUSER-BUSCH COMPANIES 1999 Annual Report 49 -- 26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. EMPLOYEE STOCK OWNERSHIP PLANS In 1989, the company added Employee Stock Ownership Plans (ESOPs) to its existing Deferred Income Stock Purchase and Savings Plans. Most regular employees are eligible for participation in the ESOPs. The ESOPs initially borrowed $500 million for a term of 15 years at an interest rate of 8.25% and used the proceeds to buy approximately 22.7 million shares of common stock from the company at market price. The debt is guaranteed by the company and the shares are being allocated to participants over the 15-year period as contributions are made to the plans. The ESOPs purchased an additional .2 million shares from the company using proceeds from the sale of spin-off-related Earthgrains shares in 1996. Of the 22.9 million total shares purchased, 16.8 million shares have been allocated to plan participants. ESOP cash contributions and expense accrued during the calendar year are determined by several factors, including the market price, number of shares allocated to participants, debt service, dividends on unallocated shares and the company's matching contribution. Over the 15-year life of the ESOPs, total expense recognized will equal total cash contributions made by the company for ESOP debt service. ESOP expense is allocated to operating expense and interest expense based on the ratio of principal and interest payments on the debt. Total ESOP expense for the three years ended December 31, is presented below (in millions):
1999 1998 1997 Operating expense $1.7 $ 7.4 $ 8.6 Interest expense .9 4.5 6.7 ---------------------------------- Total ESOP expense $2.6 $11.9 $15.3 ================================== - -----------------------------------------------------------------------------
ESOP cash contributions are made in March and September to correspond with debt service requirements. A summary of cash contributions and dividends on unallocated ESOP shares for the three years ended December 31, is presented below (in millions):
1999 1998 1997 Cash contributions $2.5 $14.2 $15.2 ================================== Dividends $7.8 $ 8.9 $ 9.9 ================================== - -----------------------------------------------------------------------------
7. PREFERRED AND COMMON STOCK COMMON STOCK ACTIVITY Activity for the company's common stock for the three years ended December 31, is summarized below (in millions of shares):
1999 1998 1997 COMMON STOCK Beginning common stock 712.7 709.3 705.8 Shares issued under stock plans 3.4 3.4 3.5 ------------------------------------ Common stock 716.1 712.7 709.3 ------------------------------------ TREASURY STOCK Beginning treasury stock (236.1) (222.2) (208.4) Treasury stock acquired (18.9) (13.9) (13.8) ------------------------------------ Cumulative treasury stock (255.0) (236.1) (222.2) ------------------------------------ NET COMMON STOCK OUTSTANDING 461.1 476.6 487.1 ==================================== - ----------------------------------------------------------------------------
PREFERRED STOCK At December 31, 1999 and 1998, 40,000,000 shares of $1.00 par value preferred stock were authorized and unissued. STOCK REPURCHASE PROGRAMS The Board of Directors has approved various resolutions authorizing the company to purchase shares of its common stock to return cash to shareholders and to meet the requirements of the company's various stock purchase and incentive plans. At December 31, 1999, approximately 6 million shares were available for repurchase under a 1996 repurchase authorization.The company's current resolution was approved by the Board in February 2000 and authorized the repurchase of 50 million shares. The company acquired 18.9 million, 13.9 million and 13.8 million shares of common stock in 1999, 1998 and 1997 for $1,349.2 million, $688.8 million and $587.1 million, respectively. STOCKHOLDER RIGHTS PLAN The Board of Directors adopted a Stockholder Rights Plan in 1985, which was extended in 1994, that would permit shareholders to purchase common stock at prices substantially below market value under certain change-in-control scenarios. 50 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 27 8. RETIREMENT BENEFITS PENSION PLANS The company has pension plans covering substantially all of its regular employees. Total pension expense for the three years ended December 31, is presented below (in millions):
1999 1998 1997 Single-employer defined benefit plans $21.1 $ 3.3 $12.0 Multi-employer plans 15.7 14.4 13.2 Defined contribution plans 18.3 18.2 15.9 -------------------------------------- Total pension expense $55.1 $35.9 $41.1 ====================================== - -----------------------------------------------------------------------------
Contributions to multi-employer plans in which the company and its subsidiaries participate are determined in accordance with the provisions of negotiated labor contracts and are based on employee hours or weeks worked. Expense recognized for multi-employer and defined contribution plans equals cash contributions for all years shown. Net annual pension expense for single-employer defined benefit plans was comprised of the following for the three years ended December 31, (in millions):
1999 1998 1997 Service cost (benefits earned during the year) $ 63.2 $ 53.4 $ 51.5 Interest cost on projected benefit obligation 116.7 106.4 100.7 Assumed return on plan assets (169.2) (156.8) (141.0) Amortization of prior service cost, actuarial gains/losses and the excess of market value of plan assets over projected benefit obligation at January 1, 1986 10.4 .3 .8 ---------------------------------------- Net annual pension expense $ 21.1 $ 3.3 $ 12.0 ======================================== - ----------------------------------------------------------------------------
The key actuarial assumptions used in determining annual pension expense for single-employer defined benefit plans were as follows for the three years ended December 31:
1999 1998 1997 Discount rate 7.0% 7.5% 7.75% Long-term rate of return on plan assets 10.0% 10.0% 10.0% Weighted average rate of compensation increase 4.75% 4.75% 5.5% - -----------------------------------------------------------------------------
The following table provides a reconciliation of the funded status of single-employer defined benefit plans to prepaid pension cost for the two years ended December 31, (in millions):
1999 1998 Funded status - plan assets in excess of projected benefit obligation (PBO) $320.4 $120.2 Unamortized excess of market value of plan assets over PBO at January 1, 1986, being amortized over 15 years (12.7) (23.0) Unrecognized net actuarial (gain) (258.8) (61.8) Unamortized prior service cost 155.8 167.9 ------------------------------ Prepaid pension cost $204.7 $203.3 ============================== - ----------------------------------------------------------------------------
The assumptions used in determining the funded status of the plans as of December 31, were as follows:
1999 1998 Discount rate 7.5% 7.0% Weighted average rate of compensation increase 4.75% 4.75% - -----------------------------------------------------------------------------
The following tables summarize the changes in the projected benefit obligation and the fair market value of plan assets (consisting primarily of corporate equity securities and publicly traded bonds) for all company single-employer defined benefit pension plans for the two years ended December 31, (in millions).
1999 1998 Projected benefit obligation, beginning of year $1,704.0 $1,428.4 Service cost 63.2 53.4 Interest cost 116.7 106.4 Plan amendments 7.2 111.9 Actuarial (gain)/loss (36.0) 92.0 Benefits paid (109.0) (88.1) --------------------------------- Projected benefit obligation, end of year $1,746.1 $1,704.0 ================================= - ----------------------------------------------------------------------------- 1999 1998 Fair market value of plan assets, beginning of year $1,824.2 $1,821.4 Actual return on plan assets 328.5 68.7 Employer contributions 22.8 22.2 Benefits paid (109.0) (88.1) --------------------------------- Fair market value of plan assets, end of year $2,066.5 $1,824.2 ================================= - -----------------------------------------------------------------------------
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 51 -- 28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS POSTRETIREMENT HEALTH CARE AND INSURANCE BENEFITS The company provides certain health care and life insurance benefits to eligible retired employees. Generally, participants must accrue 10 years of continuous service after reaching age 45 to become eligible for retiree health care benefits. The following table sets forth the accumulated postretirement benefit obligation (APBO) and the total postretirement benefit liability for all company single-employer defined benefit health care and life insurance plans at December 31, (in millions). Postretirement benefit obligations are not prefunded and there are no assets associated with the plans.
1999 1998 Accumulated postretirement benefit obligation (APBO) $369.9 $348.1 Unrecognized prior service benefits 76.3 87.9 Unrecognized net actuarial gains 79.2 98.7 ---------------------------- Total postretirement benefit liability $525.4 $534.7 ============================ - --------------------------------------------------------------------------
As of December 31, 1999 and 1998, $19.0 million and $18.9 million of these obligations were classified as current liabilities and $506.4 million and $515.8 million were classified as long-term liabilities, respectively. Net periodic postretirement benefits expense for company single-employer defined benefit health care and life insurance plans was comprised of the following for the three years ended December 31, (in millions):
1999 1998 1997 Service cost (benefits earned during the year) $ 16.8 $ 13.6 $ 12.0 Interest cost on APBO 24.0 23.3 23.2 Amortization of prior service benefit (11.6) (11.7) (11.7) Amortization of actuarial (gains) (13.0) (8.9) (10.1) ------------------------------------------ Net periodic postretirement benefits expense $ 16.2 $ 16.3 $ 13.4 ========================================== - ------------------------------------------------------------------------------
The following table summarizes the change in the APBO for the two years ended December 31, (in millions):
1999 1998 APBO, beginning of year $348.1 $318.4 Service cost 16.8 13.6 Interest cost 24.0 23.3 Actuarial loss 6.5 11.8 Benefits paid (25.5) (19.0) ------------------------------- APBO, end of year $369.9 $348.1 =============================== - -------------------------------------------------------------
In measuring the APBO, annual trend rates for health care costs of 9.6%, 8.7% and 8.3% were assumed for 1999, 1998 and 1997, respectively. These rates were assumed to decline ratably over the subsequent 9-12 years to 5.4% for 1999, 5.95 % for 1998, and 5.3% for 1997, and remain at that level thereafter. The weighted average discount rate used in determining the APBO was 8.0% and 7.5% at December 31, 1999 and 1998, respectively. If the assumed health care cost trend rate changed by 1%, the APBO as of December 31, 1999 would change by 13%. A 1% change in the health care cost trend rate would result in a corresponding change of 14% in net periodic postretirement benefits expense. 9. EARNINGS PER SHARE OF COMMON STOCK Basic earnings per share are based on the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share are based on the weighted average number of shares of common stock plus common stock equivalents outstanding during the year. A reconciliation of weighted average shares outstanding between basic and diluted earnings per share for the three years ended December 31, follows (in millions of shares). There were no adjustments to income available to common shareholders for any year shown.
1999 1998 1997 Basic weighted average shares outstanding 469.5 482.1 492.6 Stock option shares 7.3 5.4 7.1 ------------------------------------ Diluted weighted average shares outstanding 476.8 487.5 499.7 ==================================== - -----------------------------------------------------------------------------
52 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 29 10. INCOME TAXES The provision for income taxes consists of the following for the three years ended December 31, (in millions):
1999 1998 1997 Current tax provision: Federal $615.9 $564.3 $510.9 State 106.3 93.3 85.8 Foreign .4 12.2 15.5 ------------------------------------- 722.6 669.8 612.2 ------------------------------------- Deferred tax provision: Federal 32.3 31.6 78.2 State 4.7 2.9 13.8 Foreign 3.3 -- (.6) ------------------------------------- 40.3 34.5 91.4 ------------------------------------- Total tax provision $762.9 $704.3 $703.6 ===================================== - -----------------------------------------------------------------------------
The deferred tax provision results from temporary differences in the recognition of income and expense for tax and financial reporting purposes. The primary differences are related to fixed assets (tax effect of $13.8 million in 1999, $51.5 million in 1998 and $67.8 million in 1997). At December 31, 1999 and 1998, the company had deferred tax liabilities of $1,903.5 million and $1,841.3 million, and deferred tax assets of $558.8 million and $537.7 million, respectively. Deferred tax liabilities are primarily related to fixed assets of $1,614.9 million and $1,601.1 million, respectively. Deferred tax assets are related to accrued postretirement benefits ($198.5 million and $202.1 million, respectively) and other accruals and temporary differences ($300.4 million and $335.6 million, respectively) which are not deductible for tax purposes until paid or utilized. A reconciliation between the U.S. federal statutory tax rate and the effective tax rate for the three years ended December 31, is presented below:
1999 1998 1997 Federal statutory tax rate 35.0% 35.0% 35.0% State taxes, net of federal benefit 3.6 3.4 3.5 Impact of foreign operations .2 .1 .1 Other items (.8) (.5) (.2) --------------------------------- Effective tax rate 38.0% 38.0% 38.4% ================================= - --------------------------------------------------------------------------
11. SUPPLEMENTAL INFORMATION Accounts payable include $124.0 million and $135.0 million, respectively, of outstanding checks at December 31, 1999 and 1998. Supplemental cash flow information for the three years ended December 31, is presented below (in millions):
1999 1998 1997 CASH PAID DURING THE YEAR: Interest, net of interest capitalized $ 286.9 $ 263.3 $ 205.1 Income taxes 706.2 644.3 609.5 Excise taxes 2,016.6 1,966.6 1,760.6 CHANGES IN WORKING CAPITAL: (Increase)/decrease in noncash current assets: Accounts receivable $ (18.9) $ 103.3 $ (80.7) Inventories (0.4) (73.2) (19.1) Other current assets (13.6) (9.1) 35.4 Increase/(decrease) in current liabilities: Accounts payable 26.9 113.9 65.0 Accrued salaries, wages and benefits 6.7 32.0 (3.3) Accrued taxes (29.4) 9.7 (49.1) Other current liabilities 10.4 74.0 57.2 ----------------------------------------- Net (increase)/decrease in working capital $ (18.3) $ 250.6 $ 5.4 ========================================= - ------------------------------------------------------------------------------
The components of plant and equipment, net, at December 31, are summarized below (in millions):
1999 1998 Land $ 260.8 $ 250.9 Buildings 3,684.7 3,569.9 Machinery and equipment 9,921.8 9,570.4 Construction in progress 512.3 446.5 -------------------------------------- 14,379.6 13,837.7 Accumulated depreciation (6,415.0) (5,988.7) -------------------------------------- Total plant and equipment, net $ 7,964.6 $ 7,849.0 ====================================== - ------------------------------------------------------------------------------
The components of other assets at December 31, are summarized below (in millions):
1999 1998 Investment properties $ 119.0 $ 116.4 Goodwill 425.0 442.2 Deferred charges 518.7 555.7 ------------------------------------ Total other assets $1,062.7 $1,114.3 ==================================== - --------------------------------------------------------------------------
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 53 -- 30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summarized below is selected legal entity financial information for Anheuser-Busch, Inc., a wholly-owned subsidiary of Anheuser-Busch Companies, as of and for the years ended December 31, (in millions). This information is provided to satisfy certain Securities and Exchange Commission reporting requirements necessitated by Anheuser-Busch, Inc. being co-obligor on substantially all Anheuser-Busch Companies debt.
1999 1998 1997 Income Statement Information: Net sales $8,939.9 $ 8,408.0 $ 8,116.3 Gross profit 3,589.9 3,197.1 3,141.2 Net income 1,078.2 969.7 906.8 Balance Sheet Information: Current assets $ 649.9 $ 581.4 $ 623.9 Noncurrent assets 6,494.1 17,086.7 15,619.0 Current liabilities 836.1 733.9 677.7 Noncurrent liabilities 5,694.1 4,998.6 4,599.4 - ----------------------------------------------------------------------------- All guaranteed debt for which Anheuser-Busch, Inc. is co-obligor is included as an element of noncurrent liabilities, with related interest expense included in the determination of net income. The reduction in noncurrent assets in 1999 is due to an intercompany dividend from Anheuser-Busch, Inc. to Anheuser-Busch Companies.
12. COMMITMENTS AND CONTINGENCIES The company had commitments for capital expenditures of approximately $148 million at December 31, 1999. Obligations under capital and operating leases are not material. The company and certain of its subsidiaries are involved in certain claims and legal proceedings in which monetary damages and other relief are sought. The company is vigorously contesting these claims. However, resolution of these claims is not expected to occur quickly, and their ultimate outcome cannot presently be predicted. It is the opinion of management that the ultimate resolution of all existing claims, legal proceedings and other contingencies, either individually or in the aggregate, will not materially affect the company's financial position, results of operations, or liquidity. 13. QUARTERLY FINANCIAL DATA (UNAUDITED)
Net Gross Net Diluted Earnings Sales Profit Income per Share - ----------------------------------------------------------------------------------- YEAR ENDED DEC. 31, 1999 1st Quarter $ 2,685.2 $ 973.1 $ 319.1 $ .66 2nd Quarter 3,080.7 1,216.2 431.0 .90 3rd Quarter 3,222.3 1,316.8 461.5 .97 4th Quarter 2,715.5 943.2 190.6 .41 ---------------------------------------------------------------- Annual $11,703.7 $4,449.3 $1,402.2 $2.94 ================================================================ - ----------------------------------------------------------------------------------- YEAR ENDED DEC. 31, 1998 1st Quarter $ 2,507.5 $ 868.7 $ 265.2 $ .54 2nd Quarter 3,006.3 1,142.9 391.2 .80 3rd Quarter 3,122.0 1,226.4 408.3 .84 4th Quarter 2,610.0 845.3 168.6 .35 ---------------------------------------------------------------- Annual $11,245.8 $4,083.3 $1,233.3 $2.53 ================================================================ - -----------------------------------------------------------------------------------
14. BUSINESS SEGMENTS The company categorizes its operations into five business segments: Domestic Beer, International Beer, Packaging, Entertainment and Other. The Domestic Beer segment consists of the company's U.S. beer production, marketing, distribution and raw materials acquisition. The International Beer segment consists of the company's export sales and overseas beer production and marketing operations, which include company-owned operations, administration of contract and license brewing arrangements and equity investments. The company sells beer in more than 80 countries, with principal markets in Canada, the United Kingdom, Ireland, China and Japan. The Packaging segment is comprised of the company's aluminum beverage can manufacturing, aluminum can recycling and label printing operations. Cans are produced for both the company's domestic beer operations and U.S. soft drink industry customers. The Entertainment segment consists of the company's SeaWorld, Busch Gardens and other adventure park operations. The Other segment is comprised of the company's real estate development, transportation and communications businesses. Summarized on the following page is the company's business segment information for 1999, 1998 and 1997 (in millions). Intersegment sales are fully eliminated in consolidation. No single customer accounted for more than 10% of sales. Corporate expenses, including net interest expense, are not allocated to operating segments. 54 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 31
- ------------------------------------------------------------------------------------------------------------------------ Domestic Int'l Corp. & 1999 Beer Beer Pkg. Enter. Other Elims Consol. - ------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT INFORMATION: Gross sales $10,966.8 763.3 1,941.9 750.5 120.2 (819.4) $13,723.3 Net sales - external $ 9,088.2 622.3 1,151.2 750.5 91.5 -- $11,703.7 Net sales - intersegment $ -- -- 790.7 -- 28.7 (819.4) $ -- Depreciation & amortization $ 535.5 20.2 94.6 89.7 6.1 30.9 $ 777.0 Income before income taxes $ 2,250.7 (19.9) 149.3 111.3 12.2 (496.0) $ 2,007.6 Equity income, net of tax $ -- 157.5 -- -- -- -- $ 157.5 Net income $ 1,395.4 145.2 92.6 69.0 7.6 (307.6) $ 1,402.2 BALANCE SHEET INFORMATION: Total assets $ 7,183.9 2,439.6 843.6 1,360.4 197.0 615.9 $12,640.4 Equity method investments $ -- 1,787.9 -- -- -- -- $ 1,787.9 Foreign-located fixed assets $ -- 221.4 -- -- -- -- $ 221.4 Capital expenditures $ 563.2 45.3 49.7 162.6 13.5 31.0 $ 865.3 - ------------------------------------------------------------------------------------------------------------------------ Domestic Int'l Corp. & 1998 Beer Beer Pkg. Enter. Other Elims Consol. - ------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT INFORMATION: Gross sales $10,391.6 809.1 1,842.0 760.8 147.0 (742.6) $13,207.9 Net sales - external $ 8,569.9 668.7 1,127.4 760.8 119.0 -- $11,245.8 Net sales - intersegment $ -- -- 714.6 -- 28.0 (742.6) $ -- Depreciation & amortization $ 498.9 14.6 102.6 90.3 6.1 25.9 $ 738.4 Income before income taxes $ 2,018.0 10.1 148.2 116.6 9.9 (450.2) $ 1,852.6 Equity income, net of tax $ -- 85.0 -- -- -- -- $ 85.0 Net income $ 1,251.2 91.3 91.9 72.3 6.1 (279.5) $ 1,233.3 BALANCE SHEET INFORMATION: Total assets $ 7,078.5 2,340.9 874.1 1,283.1 211.0 696.7 $12,484.3 Equity method investments $ -- 1,662.6 -- -- -- -- $ 1,662.6 Foreign-located fixed assets $ -- 202.1 -- -- -- -- $ 202.1 Capital expenditures $ 514.1 82.9 81.4 97.2 9.9 32.0 $ 817.5 - ------------------------------------------------------------------------------------------------------------------------ Domestic Int'l Corp. & 1997 Beer Beer Pkg. Enter. Other Elims Consol. - ------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT INFORMATION: Gross sales $10,023.9 784.8 1,867.2 756.2 151.7 (751.4) $12,832.4 Net sales - external $ 8,257.7 784.8 1,150.8 756.2 116.7 -- $11,066.2 Net sales - intersegment $ -- -- 716.4 -- 35.0 (751.4) $ -- Depreciation & amortization $ 459.8 7.7 100.5 83.5 6.3 25.9 $ 683.7 Income before income taxes $ 1,984.8 18.2 115.0 115.3 8.8 (409.6) $ 1,832.5 Equity income, net of tax $ -- 50.3 -- -- -- -- $ 50.3 Income from continuing operations $ 1,230.6 61.6 71.3 71.5 5.5 (261.3) $ 1,179.2 BALANCE SHEET INFORMATION: Total assets $ 7,121.1 1,636.9 863.9 1,291.7 220.1 593.4 $11,727.1 Equity method investments $ -- 1,045.6 -- -- -- -- $ 1,045.6 Foreign-located fixed assets $ -- 128.7 -- -- -- -- $ 128.7 Capital expenditures $ 888.5 36.8 98.1 140.1 15.0 20.8 $ 1,199.3 - ------------------------------------------------------------------------------------------------------------------------ Corporate assets principally include cash, marketable securities, deferred charges and certain fixed assets. Eliminations impact only gross and intersegment sales.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 55 -- 32 FINANCIAL SUMMARY -- OPERATIONS Anheuser-Busch Companies and Subsidiaries
(In millions, except per share data) 1999 1998 1997 Consolidated Summary of Operations: Barrels of A-B beer brands sold worldwide 102.9 99.8 96.6 ================================================= Gross sales $13,723.3 $13,207.9 $12,832.4 Excise taxes (2,019.6) (1,962.1) (1,766.2) ------------------------------------------------- Net sales 11,703.7 11,245.8 11,066.2 Cost of products and services (7,254.4) (7,162.5) (7,096.9) ------------------------------------------------- Gross profit 4,449.3 4,083.3 3,969.3 Marketing, distribution and administrative expenses (2,147.0) (1,958.0) (1,916.3) Gain on sale of St. Louis Cardinals -- -- -- Shutdown of Tampa brewery -- -- -- Restructuring charge -- -- -- ------------------------------------------------- Operating income 2,302.3 2,125.3 2,053.0 Interest expense (307.8) (291.5) (261.2) Interest capitalized 18.2 26.0 42.1 Interest income 4.3 5.8 7.9 Other income/(expense), net (9.4) (13.0) (9.3) ------------------------------------------------- Income before income taxes 2,007.6 1,852.6 1,832.5 Provision for income taxes (current and deferred) (762.9) (704.3) (703.6) Revaluation of deferred tax liability under FAS 109 -- -- -- Equity income, net of tax 157.5 85.0 50.3 ------------------------------------------------- Income from continuing operations 1,402.2 1,233.3 1,179.2 Income/(loss) from discontinued operations -- -- -- ------------------------------------------------- Income before accounting changes 1,402.2 1,233.3 1,179.2 Cumulative effect of accounting changes -- -- (10.0) ------------------------------------------------- Net income $ 1,402.2 $ 1,233.3 $ 1,169.2 ================================================= Basic Earnings Per Share: Income from continuing operations $ 2.99 $ 2.56 $ 2.39 Income/(loss) from discontinued operations -- -- -- ------------------------------------------------- Income before accounting changes 2.99 2.56 2.39 Cumulative effect of accounting changes -- -- (.02) ------------------------------------------------- Net income $ 2.99 $ 2.56 $ 2.37 ================================================= Diluted Earnings Per Share: Income from continuing operations $ 2.94 $ 2.53 $ 2.36 Income/(loss) from discontinued operations -- -- -- ------------------------------------------------- Income before accounting changes 2.94 2.53 2.36 Cumulative effect of accounting changes -- -- (.02) ------------------------------------------------- Net income $ 2.94 $ 2.53 $ 2.34 ================================================= Cash dividends paid on common stock $ 544.7 $ 521.0 $ 492.6 Per share 1.16 1.08 1.00 Weighted average number of common shares: Basic 469.5 482.1 492.6 Diluted 476.8 487.5 499.7 - ----------------------------------------------------------------------------------------------------------------------- All per share information and weighted average number of common shares data reflect the September 12, 1996 two-for-one stock split and the 1997 adoption of FAS 128, "Earnings per Share," as applicable. All financial information has been restated to recognize the 1995 divestiture of the Food Products segment. All amounts include the acquisition of SeaWorld as of December 1, 1989. 1997 change in accounting for deferred systems re-engineering costs, net of tax benefit of $6.2 million. 1992 change in accounting for income taxes and other postretirement benefits, net of tax benefit of $186.4 million.
56 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 33
1996 1995 1994 1993 1992 1991 1990 1989 95.1 90.9 91.3 89.7 88.9 87.9 88.1 82.2 ======================================================================================================================== $12,621.5 $12,004.5 $11,705.0 $11,147.3 $11,008.6 $10,631.9 $9,716.1 $8,553.7 (1,737.8) (1,664.0) (1,679.7) (1,679.8) (1,668.6) (1,637.9) (868.1) (802.3) - ------------------------------------------------------------------------------------------------------------------------ 10,883.7 10,340.5 10,025.3 9,467.5 9,340.0 8,994.0 8,848.0 7,751.4 (6,964.6) (6,791.0) (6,492.1) (6,167.6) (6,051.8) (5,953.5) (5,963.4) (5,226.5) - ------------------------------------------------------------------------------------------------------------------------ 3,919.1 3,549.5 3,533.2 3,299.9 3,288.2 3,040.5 2,884.6 2,524.9 (1,890.0) (1,756.6) (1,679.9) (1,612.1) (1,583.7) (1,409.5) (1,364.9) (1,244.3) 54.7 -- -- -- -- -- -- -- -- (160.0) -- -- -- -- -- -- -- -- -- (401.3) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------ 2,083.8 1,632.9 1,853.3 1,286.5 1,704.5 1,631.0 1,519.7 1,280.6 (232.8) (225.9) (219.3) (205.1) (194.6) (234.0) (277.2) (172.9) 35.5 24.3 21.8 35.2 46.9 45.6 52.5 49.8 9.4 9.9 2.6 3.4 4.4 6.6 4.3 7.9 (3.0) 20.5 17.6 21.0 (2.5) 1.3 (16.5) 17.7 - ------------------------------------------------------------------------------------------------------------------------ 1,892.9 1,461.7 1,676.0 1,141.0 1,558.7 1,450.5 1,282.8 1,183.1 (736.8) (575.1) (661.5) (452.6) (594.6) (549.6) (481.4) (438.2) -- -- -- (31.2) -- -- -- -- -- -- -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------ 1,156.1 886.6 1,014.5 657.2 964.1 900.9 801.4 744.9 33.8 (244.3) 17.6 (62.7) 30.1 38.9 41.0 22.3 - ------------------------------------------------------------------------------------------------------------------------ 1,189.9 642.3 1,032.1 594.5 994.2 939.8 842.4 767.2 -- -- -- -- (76.7) -- -- -- - ------------------------------------------------------------------------------------------------------------------------ $ 1,189.9 $ 642.3 $ 1,032.1 $ 594.5 $ 917.5 $ 939.8 $ 842.4 $ 767.2 ======================================================================================================================== $ 2.31 $ 1.73 $ 1.93 $ 1.20 $ 1.71 $ 1.59 $ 1.42 $ 1.32 .07 (.47) .04 (.11) .05 .06 .07 .04 - ------------------------------------------------------------------------------------------------------------------------ 2.38 1.26 1.97 1.09 1.76 1.65 1.49 1.36 -- -- -- -- (.13) -- -- -- - ------------------------------------------------------------------------------------------------------------------------ $ 2.38 $ 1.26 $ 1.97 $ 1.09 $ 1.63 $ 1.65 $ 1.49 $ 1.36 ======================================================================================================================== $ 2.27 $ 1.71 $ 1.90 $ 1.20 $ 1.68 $ 1.56 $ 1.40 $ 1.30 .07 (.47) .04 (.11) .05 .06 .07 .04 - ------------------------------------------------------------------------------------------------------------------------ 2.34 1.24 1.94 1.09 1.73 1.62 1.47 1.34 -- -- -- -- (.13) -- -- -- - ------------------------------------------------------------------------------------------------------------------------ $ 2.34 $ 1.24 $ 1.94 $ 1.09 $ 1.60 $ 1.62 $ 1.47 $ 1.34 ======================================================================================================================== $ 458.9 $ 429.5 $ 398.8 $ 370.0 $ 338.3 $ 301.1 $ 265.0 $ 226.2 .92 .84 .76 .68 .60 .53 .47 .40 499.1 510.9 524.6 544.3 563.7 568.0 563.7 565.5 510.6 524.4 538.0 558.6 581.6 585.8 579.4 572.4 - ------------------------------------------------------------------------------------------------------------------------ 1996 results include the impact of the gain on the sale of the St. Louis Cardinals. Excluding the Cardinal gain, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $2,029.1 million, $1,838.2 million, $1,122.7 million and $2.21, respectively. 1995 results include the impact of the one-time pretax charge of $160 million for the closure of the Tampa brewery, and the $74.5 million pretax impact of the beer wholesaler inventory reduction. Excluding these nonrecurring special items, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $1,867.4 million, $1,696.2 million, $1,032.3 million and $1.99, respectively. 1993 results include the impact of two nonrecurring special charges. These charges are (1) a restructuring charge ($401.3 million, pretax) and (2) a revaluation of the deferred tax liability due to the 1% increase in federal tax rates ($31.2 million, after-tax). Excluding these nonrecurring special charges, operating income, pretax income, income from continuing operations and diluted earnings per share would have been $1,687.8 million, $1,542.3 million, $935.2 million and $1.69, respectively.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 57 -- 34 FINANCIAL SUMMARY -- BALANCE SHEET AND OTHER INFORMATION Anheuser-Busch Companies and Subsidiaries
(In millions, except per share and statistical data) 1999 1998 1997 Balance Sheet Information: Working capital (deficit) $ (386.6) $ (89.9) $ 83.2 Current ratio 0.8 0.9 1.1 Debt 5,122.9 4,718.6 4,365.6 Shareholders equity 3,921.5 4,216.0 4,041.8 Return on shareholders equity 34.5% 29.9% 29.2% Debt to total capitalization ratio 56.6% 52.8% 51.9% Book value per share 8.50 8.84 8.30 Total assets $12,640.4 12,484.3 11,727.1 Other Information: Capital expenditures $ 865.3 $ 817.5 $ 1,199.3 Price/earnings ratio 24.1 25.9 18.6 Market price range of common stock (high and low closing) 81-5/8-65-3/16 68-1/4-43-7/16 47-7/8-39-1/2 - --------------------------------------------------------------------------------------------------------------------------------- All share and per share information reflects the September 12, 1996 two-for-one stock split. All financial information has been restated to recognize the 1995 divestiture of the Food Products segment. All amounts include the acquisition of SeaWorld as of December 1, 1989. These ratios have been calculated based on income from continuing operations before the cumulative effect of accounting changes.
58 1999 Annual Report ANHEUSER-BUSCH COMPANIES - -- 35
1996 1995 1994 1993 1992 1991 1990 1989 $ 34.9 $ 268.6 $ 57.0 $ (41.3) $ 247.8 $ 107.9 $ (62.8) $ (82.8) 1.0 1.2 1.0 1.0 1.2 1.1 0.9 0.9 3,270.9 3,270.1 3,066.4 3,019.7 2,630.3 2,627.9 3,115.8 3,268.9 4,029.1 4,433.9 4,415.5 4,255.5 4,620.4 4,438.1 3,679.1 3,099.9 30.0% 25.0% 29.9% 18.8% 27.6% 30.2% 34.0% 34.6% 44.8% 47.1% 47.3% 47.3% 42.0% 43.9% 54.5% 60.7% 8.10 7.22 6.64 6.31 6.51 5.90 4.60 3.74 10,463.6 10,590.9 10,547.4 10,267.7 9,954.9 9,642.5 9,274.2 8,690.1 $ 1,084.6 $ 952.5 $ 662.8 $ 656.3 $ 628.8 $ 625.5 $ 805.3 $ 979.0 17.6 19.6 13.1 22.6 16.9 18.9 14.6 14.4 42-7/8-32-1/2 34-25-3/8 27-5/8-23-1/2 30-22 30-1/4-26 30-3/4-19-3/4 22-1/2-17-1/8 22-7/8-15-1/4 - ----------------------------------------------------------------------------------------------------------------------------------- These ratios have been calculated based on reported income from continuing operations, which includes the $54.7 million pretax gain on the sale of the St. Louis Cardinals. Excluding the Cardinal gain, return on shareholders equity would have been 29.2% and the price/earnings ratio would have been 18.1. These ratios have been calculated based on reported income from continuing operations. Excluding the two nonrecurring 1995 items ($160 million pretax charge for closure of the Tampa brewery and $74.5 million impact of the beer wholesaler inventory reduction), return on shareholders equity would have been 29.1% and the price/ earnings ratio would have been 16.8. These ratios have been calculated based on reported income from continuing operations. Excluding the two nonrecurring 1993 charges ($401.3 million pretax restructuring charge and $31.2 million after-tax FAS 109 charge), return on shareholders equity would have been 26.7% and the price/earnings ratio would have been 13.8.
ANHEUSER-BUSCH COMPANIES 1999 Annual Report 59 -- EX-21 18 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. 1 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ----------------------------------------------
STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- -------------- Anheuser-Busch, Incorporated Missouri Anheuser-Busch, Incorporated Anheuser-Busch Asia, Inc. Delaware Anheuser-Busch Asia, Inc. Anheuser-Busch Australia Limited Delaware Anheuser-Busch Australia Limited Anheuser-Busch Distributors of Delaware Anheuser-Busch Distributors of New York, Inc. New York, Inc. Anheuser-Busch Entertainment Delaware Anheuser-Busch Entertainment Limited Limited Anheuser-Busch Europe, Inc. Delaware Anheuser-Busch Europe, Inc. Anheuser-Busch European Trade United Kingdom Anheuser-Busch European Trade Limited Limited Anheuser-Busch Import Investments, Delaware Anheuser-Busch Import Investments, Inc. Inc. Anheuser-Busch International, Inc. Delaware Anheuser-Busch International, Inc. Anheuser-Busch International Delaware Anheuser-Busch International Holdings, Inc. Holdings, Inc. Anheuser-Busch Investments, S.L. Barcelona, Spain Anheuser-Busch Investments, S.L. Anheuser-Busch Latin American Delaware Anheuser-Busch Latin American Development Corporation Development Corporation Anheuser-Busch Mexico, Inc. Delaware Anheuser-Busch Mexico, Inc. Anheuser-Busch Recycling Ohio Anheuser-Busch Recycling Corporation Corporation Anheuser-Busch Sales of Hawaii, Inc. Delaware Anheuser-Busch Sales of Hawaii, Inc. Anheuser-Busch Sales of South Bay, Delaware Anheuser-Busch Sales of South Bay, Inc. Inc. 2 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- -------------- Anheuser-Busch Spanish Holdings, Delaware Anheuser-Busch Spanish Holdings, Inc. Inc. Anheuser-Busch Wholesaler Delaware Anheuser-Busch Wholesaler Development Corp. Development Corp. Anheuser-Busch World Trade Ltd. Delaware Anheuser-Busch World Trade Ltd. August A. Busch & Co. of Massachusetts August A. Busch & Co. of Massachusetts, Inc. Massachusetts, Inc. BARI-Canada, Inc. Delaware BARI-Canada, Inc. Boardwalk and Baseball, Inc. Delaware Boardwalk and Baseball, Inc. Budweiser Japan Company, Ltd. Japan Budweiser Japan Company, Ltd. Budweiser Philippines, Inc. Delaware Budweiser Philippines, Inc. Budweiser Wuhan International China Budweiser Wuhan International Brewing Company Limited Brewing Company Limited Busch Agricultural Resources, Inc. Delaware Busch Agricultural Resources, Inc. Busch Agricultural Resources Delaware Busch Agricultural Resources International, Inc. International, Inc. Busch Biotech, Inc. Delaware Busch Biotech, Inc. Busch Creative Services Corporation Delaware Busch Creative Services Corporation Busch Entertainment Corporation Delaware Busch Entertainment Corporation Busch Foreign Sales Corporation Barbados Busch Foreign Sales Corporation Busch International Sales Delaware Busch International Sales Corporation Corporation Busch Investment Corporation Delaware Busch Investment Corporation Busch Mechanical Services, Inc. Delaware Busch Mechanical Services, Inc. Busch Media Group, Inc. Delaware Busch Media Group, Inc. Busch Properties, Inc. Delaware Busch Properties, Inc. Busch Properties of Florida, Inc. Florida Busch Properties of Florida, Inc. 3 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- -------------- Civic Center Corporation Missouri Civic Center Corporation Coleridge Corporation Delaware Coleridge Corporation Consolidated Farms, Inc. Delaware Consolidated Farms, Inc. Eagle Packaging, Inc. Delaware Eagle Packaging, Inc. Fairfield Transport, Inc. Delaware Fairfield Transport, Inc. HSH of Orlando, Inc. Florida HSH of Orlando, Inc. Kingsmill Realty, Inc. Virginia Kingsmill Realty, Inc. Litchfield Development Corporation Delaware Litchfield Development Corporation Manufacturers Cartage Company Missouri Manufacturers Cartage Company Manufacturers Railway Company Missouri Manufacturers Railway Company Metal Container Corporation Delaware Metal Container Corporation Metal Container Corporation of California Metal Container Corporation of California California Metal Label Corporation Tennessee Metal Label Corporation M.R.S. Redevelopment Corporation Missouri M.R.S. Redevelopment Corporation MRS Transport Company Texas MRS Transport Company Nutri-Turf, Inc. Delaware Nutri-Turf, Inc. Pacific International Rice Mills, Delaware Pacific International Rice Mills, Inc. Inc. Packaging Business Services, Inc. Delaware Packaging Business Services, Inc. Pestalozzi Street Insurance Bermuda Pestalozzi Street Insurance Company, Ltd. Company, Ltd. Precision Printing and Packaging, Delaware Precision Printing and Packaging, Inc. Inc. Sea World, Inc. Delaware Sea World, Inc. 4 SUBSIDIARIES OF ANHEUSER-BUSCH COMPANIES, INC. ---------------------------------------------- STATE OF DOING BUSINESS NAME OF COMPANY INCORPORATION UNDER NAME OF - --------------- ------------- -------------- Sea World of Florida, Inc. Florida Sea World of Florida, Inc. Sea World of Texas, Inc. Delaware Sea World of Texas, Inc. Stag Brewing Company Limited England Stag Brewing Company Limited St. Louis Refrigerator Car Company Delaware St. Louis Refrigerator Car Company Wholesaler Equity Development Delaware Wholesaler Equity Development Corporation Corporation Williamsburg Transport, Inc. Virginia Williamsburg Transport, Inc.
EX-27 19 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 152,100 0 629,000 0 623,800 1,600,600 14,379,600 6,415,000 12,640,400 1,987,200 5,122,900 716,100 0 0 3,205,400 12,640,400 11,703,700 11,703,700 7,254,400 9,401,400 0 0 307,800 2,007,600 762,900 1,402,200 0 0 0 1,402,200 2.99 2.94
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