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<SEC-DOCUMENT>0001068800-05-000163.txt : 20050310
<SEC-HEADER>0001068800-05-000163.hdr.sgml : 20050310
<ACCEPTANCE-DATETIME>20050310100427
ACCESSION NUMBER: 0001068800-05-000163
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 23
CONFORMED PERIOD OF REPORT: 20041231
FILED AS OF DATE: 20050310
DATE AS OF CHANGE: 20050310
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: 1934 Act
SEC FILE NUMBER: 001-07823
FILM NUMBER: 05670905
BUSINESS ADDRESS:
STREET 1: ONE BUSCH PL
CITY: ST LOUIS
STATE: MO
ZIP: 63118-1852
BUSINESS PHONE: 3147656565
MAIL ADDRESS:
STREET 1: ONE BUSCH PL
CITY: ST LOUIS
STATE: MO
ZIP: 63118-1852
FORMER COMPANY:
FORMER CONFORMED NAME: ANHEUSER BUSCH COMPANIES INC
DATE OF NAME CHANGE: 19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>ab10k.txt
<TEXT>
<PAGE>
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, 2004
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. [X]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2.) Yes X No
--- ---
As of June 30, 2004, the aggregate market value of the voting stock
held by non-affiliates of the registrant was $42,901,160,382.00.
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 776,959,097 SHARES AS OF MARCH 1, 2005
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C>
Portions of Annual Report to Shareholders for the Year Ended
December 31, 2004....................................... PART I, PART II, and PART IV
Portions of Definitive Proxy Statement for Annual Meeting of
Stockholders on April 27, 2005.......................... PART III
</TABLE>
Available on the Web at www.anheuser-busch.com
<PAGE>
ANHEUSER-BUSCH COMPANIES, INC.
TABLE OF CONTENTS
PAGE
PART I.................................................................. 2
ITEM 1. BUSINESS........................................................ 2
Domestic Beer......................................................... 2
International Beer.................................................... 4
Packaging............................................................. 5
Family Entertainment.................................................. 6
Other................................................................. 6
Sources and Availability of Raw Materials............................. 6
Energy Matters........................................................ 6
Brand Names and Trademarks............................................ 7
Research and Development.............................................. 7
Environmental Protection.............................................. 7
Environmental Packaging Laws and Regulations.......................... 7
Number of Employees................................................... 7
Available Information................................................. 8
ITEM 2. PROPERTIES...................................................... 8
ITEM 3. LEGAL PROCEEDINGS............................................... 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 9
EXECUTIVE OFFICERS OF THE REGISTRANT............................ 9
PART II................................................................. 11
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES............... 11
ITEM 6. SELECTED FINANCIAL DATA......................................... 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS........................................... 11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..... 11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................... 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE............................................ 11
ITEM 9A. CONTROLS AND PROCEDURES........................................ 11
ITEM 9B. OTHER INFORMATION.............................................. 12
PART III................................................................ 12
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............. 12
ITEM 11. EXECUTIVE COMPENSATION......................................... 12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................. 12
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES......................... 12
PART IV................................................................. 13
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES........................ 13
15(a)(1) Financial Statements......................................... 13
15(a)(2) Financial Statement Schedule................................. 13
15(a)(3) Exhibits..................................................... 13
SIGNATURES.............................................................. 16
1
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 nation's leading 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 principal business segments:
domestic beer, international beer, packaging, entertainment, and other. In
2004, domestic beer contributed 76.0% and 90.8%, international beer
contributed 5.4% and 21.7%, packaging contributed 9.4% and 4.5%, and
entertainment contributed 6.6% and 4.8% to consolidated net sales and
consolidated net income, respectively. The individual percentages above do
not add to 100% due to the impact of unallocated corporate sales and
expenses, as detailed in the Company's business segments disclosure.
Approximately 95% of the Company's consolidated net sales and 96% of the
Company's consolidated income before income taxes is generated in the
United States. Financial information with respect to the Company's business
segments appears in Note 16, "Business Segments," on pages 60-61 of the
2004 Annual Report to Shareholders, which Note hereby is incorporated by
reference.
Domestic beer volume was 103.0 million barrels in 2004 as compared with
102.6 million barrels in 2003. Domestic volume represents Anheuser-Busch
brands produced and shipped within the United States including Puerto Rico
and the Caribbean. Worldwide sales of the Company's beer brands aggregated
116.8 million barrels in 2004 as compared with 111.0 million barrels in
2003. Worldwide beer volume is comprised of domestic and international
volume. 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 worldwide Anheuser-Busch brand
volume combined with the Company's ownership percentage share of the volume
of its international equity partners. Total beer volume was 136.1 million
barrels and 129.8 million barrels in 2004 and 2003, respectively.
DOMESTIC BEER
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 ULTRA, Michelob Golden Draft, Michelob Golden
Draft Light, Michelob Amber Bock, Michelob Honey Lager, Michelob Marzen,
Busch, Busch Light, Busch Ice, Natural Light, Natural Ice, King Cobra,
ZiegenBock Amber, ZiegenBock Light, Hurricane Malt Liquor, Hurricane Ice,
Tequiza, Anheuser World Select, Bare Knuckle Stout, Bacardi Silver, Bacardi
Silver O3, and Bacardi Silver Raz. ABI's products also include three
non-alcohol beverages, O'Doul's, Busch NA, and O'Doul's Amber. During 2004,
ABI introduced Bacardi Limon, Bacardi Black Cherry, Bacardi Green Apple,
BE, and Budweiser Select and discontinued "Doc's" Hard Lemon and Kirin
Lager. The Company brews Kirin Light and Kirin-Ichiban through a joint
venture agreement with Kirin Brewing Company, Ltd. of Japan for sale in the
United States. ABI owns a 33.7% equity interest in Seattle-based Redhook
Ale Brewery, Inc. Through this alliance, Redhook products are distributed
exclusively by ABI wholesalers in substantially all U.S. markets. ABI also
owns a 39.5% interest in Portland-based Widmer Brothers Brewing Company.
Widmer products are distributed exclusively by ABI wholesalers.
Budweiser, Bud Light, Bud Ice, Michelob, Michelob Light, Michelob
ULTRA, Michelob Golden Draft, Michelob Golden Draft Light, Michelob Amber
Bock, Busch, Busch Light, Natural Light, Natural Ice, ZiegenBock Amber,
Barcardi Silver O3, Barcardi Silver Raz, Bacardi Limon, Kirin-Ichiban,
O'Doul's, O'Doul's Amber, Anheuser World Select, Budweiser Select and
ZiegenBock Light are sold in both draught and packaged form. Bud Dry, Busch
Ice, King Cobra, Michelob Marzen, Michelob Honey Lager, Hurricane Malt
Liquor, Hurricane Ice, Tequiza, Kirin Light, Busch NA, BE, Bacardi Black
Cherry, Bacardi Green Apple, and Bacardi Limon are sold only in packaged
form. Bare Knuckle Stout is sold only in draught form.
Budweiser, Bud Light, Bud Ice, Michelob, Michelob Light, Michelob
ULTRA, Michelob Amber Bock, Busch, Busch Light, Natural Light, Natural Ice,
O'Doul's, O'Doul's Amber, Bacardi Silver, Bacardi Silver O3,
2
Barcardi Silver Raz, Bacardi Black Cherry, Bacardi Limon, and Bacardi Green
Apple and Budweiser Select are distributed and sold on a nationwide basis.
Anheuser World Select and Tequiza are sold in 49 states, Bud Ice Light in 48
states, King Cobra in 46 states, Busch NA in 45 states, Bud Dry and Michelob
Honey Lager in 44 states, Kirin-Ichiban in 43 states, BE in 42 states, Kirin
Light in 38 states, Hurricane Malt Liquor in 34 states, Bare Knuckle Stout
in 25 states, Busch Ice in 21 states, Michelob Golden Draft Light in 7
states, Michelob Golden Draft in 6 states, Hurricane Ice in 2 states, and
ZeigenBock Amber and ZiegenBock Light in one state.
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 at the
Company's breweries are part of ABI's overall strategic initiatives.
During 2004, approximately 93% of the beer sold by ABI, measured in
barrels, reached retail channels through more than 580 independent
wholesalers. The Company has a formal, written distribution agreement (the
Equity Agreement) with each of its wholesalers. Each Equity Agreement
generally specifies the territory in which the wholesaler is permitted to
sell the Company's products, the brands that the wholesaler is permitted to
sell, performance standards applicable to the wholesaler, procedures to be
followed by the wholesaler in connection with the sale of the distribution
rights, and circumstances upon which the distribution rights may be
terminated. By wholesaler use of controlled environment warehouses and
stringent inventory monitoring policies, the quality and freshness of the
product are protected, thus providing ABI a significant competitive
advantage. ABI utilizes its regional vice-presidents, sales directors, key
account and market managers, as well as certain other sales personnel, to
provide strategic sales planning and merchandising assistance to its
wholesalers. In addition, ABI provides national and local media
advertising, point-of-sale advertising, and sales promotion programs to
promote its brands, and complements national brand strategies with
geographic marketing teams focused on delivering relevant programming
addressing local interests and opportunities. The remainder of ABI's
domestic beer sales in 2004 were made through 14 branches that perform
similar sales, merchandising, and delivery services as the independent
wholesalers in their respective areas; these branches are owned and
operated by the Company or direct or indirect subsidiaries of the Company.
ABI's peak selling periods are the second and third quarters.
Another wholly-owned subsidiary, Wholesaler Equity Development
Corporation, shares equity positions with qualified partners in independent
beer wholesalerships and is currently invested in 1 wholesalership.
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 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.
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, Budweiser Select, Michelob Golden Draft, and Michelob Golden
Draft Light compete primarily with premium priced beers. Busch, Busch
Light, Busch Ice, Natural Light, and Natural Ice compete with the value
priced beers. King Cobra, Hurricane Malt Liquor, and Hurricane Ice compete
against other brands in the malt liquor segment. Michelob, Michelob Light,
Michelob Amber Bock, Kirin Light, Kirin-Ichiban, Michelob Honey Lager,
Tequiza, ZiegenBock Amber, ZiegenBock Light, Michelob Marzen, Bacardi
Silver, Michelob ULTRA, Bacardi Silver O3, Bacardi Silver Raz, Bacardi
Limon, Bacardi Black Cherry, Bacardi Green Apple, BE, Anheuser World
Select, Bare Knuckle Stout, the Redhook products, and Widmer beer products
compete primarily in the above premium priced beer segment of the malt
beverage market. O'Doul's and O'Doul's Amber (premium priced) and Busch NA
(value priced) compete in the non-alcohol malt beverage category. Since
1957, ABI has led the United States brewing industry in total sales volume.
In 2004, its sales exceeded those of its nearest competitor by more than 55
million barrels. ABI's domestic market share (excluding exports) for 2004
was approximately 50%. Major competitors in the United States brewing
industry during 2004 included SABMiller, Adolph Coors Co., Pabst Brewery
Co., Grupo Modelo, S.A. de C.V., and Heineken. In addition to competing
with the other brewers' brands, the Company's beer brands must also compete
in the marketplace with other types of alcohol beverage choices available
to consumers.
3
The Company has an energy drink, "180," in the alternative beverage
segment. "180" is distributed and sold on a nationwide basis and is
available in single eight-ounce slim-line cans. The Company also has an
enhanced water beverage drink, "180 Sport," in the alternative beverage
segment. "180 Sport" is distributed and sold in two flavors in test markets
in four states and is available in 24 packs of 15.5 ounce cans.
The Company's wholly-owned subsidiary, Busch Agricultural Resources,
Inc. ("BARI"), operates rice milling 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, and
Powell, Wyoming; a barley research facility in Ft. Collins, Colorado; and a
rice research facility in California. BARI also owns and operates malt
plants in Manitowoc, Wisconsin, Moorhead, Minnesota, and Idaho Falls,
Idaho. 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 a barley office in Winnipeg,
Canada.
INTERNATIONAL BEER
International beer volume was nearly 13.8 million barrels in 2004,
including 5.2 million barrels due to the Company's partial year of owning
Harbin Brewery Group, compared with 8.4 million barrels in 2003.
Anheuser-Busch International, Inc. ("ABII"), a wholly-owned subsidiary of
the Company, oversees the marketing and sale of Budweiser and other ABI
brands outside the U.S., 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. Following the
acquisition of Harbin Brewery Group in 2004, which is described below,
ABII, working with the existing management of Harbin Brewery Group, also
handles the marketing and sale of Harbin and other brands owned by Harbin
Brewery Group.
Through Anheuser-Busch Europe Limited ("ABEL"), an indirect,
wholly-owned subsidiary of the Company, certain ABI beer brands are
marketed, distributed, and sold in more than thirty countries. In the U.K.,
ABEL sells Budweiser, Bud Ice, Michelob, Michelob ULTRA, and Anheuser World
Select Lager brands to selected on-premise accounts, brewers, wholesalers,
and directly to off-premise accounts. Budweiser, Bud Ice, Michelob, and
Michelob ULTRA are brewed and packaged at the Stag Brewery near London,
England which is managed and operated by ABEL. Anheuser World Select is
imported into the U.K. by ABEL.
In Canada, Budweiser, Bud Light, Busch and Busch Light are brewed and
sold through a license agreement with Labatt Brewing Co. O'Doul's is
imported into Canada. In Japan, Budweiser is brewed and sold through a
license agreement with Kirin Brewery Company, Limited. Budweiser is also
brewed under license and sold by brewers in Korea (Oriental Brewery Co.,
Ltd.), the Republic of Ireland and Northern Ireland (Guinness Ireland
Limited), Italy (Heineken Italia S.A.), and Spain (Sociedad Anonima Damm).
In Mexico, Budweiser, Bud Light and O'Doul's are imported and distributed
by a wholly owned subsidiary of Grupo Modelo (Cervezas Internacionales).
The Company has an agreement with Brasseries Kronenbourg for sale and
distribution of Bud in France.
In 1995, the Company formed an alliance with Compania Cervecerias
Unidas S.A. ("CCU"), the leading Chilean brewer. The Company acquired a 20%
stake in CCU in 2001 and subsequently sold its 20% stake in November 2004
for $303 million. The Company still owns a 10.8% stake in a subsidiary of
CCU in Argentina that brews and distributes Budweiser under license in
Argentina and distributes Budweiser in Chile and Uruguay.
In China, the Company purchased an initial 80% equity interest in a
joint venture in 1995, renamed the Budweiser Wuhan International Brewing
Company, Ltd., that owns and operates a brewery in Wuhan. This ownership
interest has subsequently increased to 97%.
During the second quarter of 2004, the Company initiated a tender offer
for all outstanding shares of Harbin Brewery Group, the fourth largest
brewer in China, and completed the purchase by the end of July 2004. The
Company paid a total of $694 million for 100% of Harbin Brewery Group.
Harbin Brewery Group has thirteen breweries in northeast China. Harbin
Brewery Group owns 100% of the entities operating six of the breweries and
a majority interest in the remaining seven breweries. (See Item 2 of
Part I--Properties.)
4
The Company has a strategic investment agreement with Tsingtao Brewing
Company, Ltd., the largest brewer in China, and producer of the Tsingtao
brand, whereby the Company has invested $182 million in Tsingtao
convertible bonds that when fully converted over the next several years,
will increase its economic ownership interest to 27% of Tsingtao (with a
voting interest of 20%). In April 2003, the Company invested $116 million
in two convertible bonds of Tsingtao and invested an additional $33 million
in a third convertible bond in October 2003. The Company made its final
investment of $33 million in convertible bonds during the first quarter of
2004. In July 2003, the Company converted the first bond, which increased
its equity interest in Tsingtao from 4.5% to 9.9%.
In 1993, the Company purchased a 17.7% direct and indirect equity
interest in Grupo Modelo's operating subsidiary, Diblo, for $477 million.
As noted in Note 2, "International Equity Investments," on pages 49 and 50
of the 2004 Annual Report to Shareholders, which Note is hereby
incorporated by reference, Diblo is the operating subsidiary of Grupo
Modelo, Mexico's largest brewer. Accordingly, Diblo operates in Mexico and
is a brewer. 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
of either Grupo Modelo or Diblo.
Competition for International Beer operations differs significantly
depending upon the specific country involved. For 2004, no single foreign
country or region accounted for more than 2.6% of consolidated revenues or
2.1% of consolidated income before income taxes. The Company's primary
foreign markets for beer sales are China, the United Kingdom, Canada and
Ireland. In each international market, the Company competes against a mix
of national, regional, local, and imported beer brands. In China,
competition is primarily from numerous national and regional brands. There
is no dominant competitor in China. In the United Kingdom, the top four
competitors--Scottish & Newcastle, Coors Brewers, Interbrew, and
Carlsberg-Tetley--have combined market share of nearly 78%, with Scottish &
Newcastle having a share of approximately 25%. The Company's share is 3%.
In Ireland, the market leader is the Company's license brewing partner,
Guinness Ireland, with a market share of 68% including a share of 15%
related to the Company's products. In Canada, the top two competitors, of
similar size, are Molson and the Company's license brewing partner, Labatt
Brewing. Their combined market share is more than 83%, including a share of
13% related to the Company's products.
Net income for the International Beer Segment also includes the
Company's ownership percentage of the net income of Grupo Modelo, the
largest seller of beer in Mexico. Modelo's principal competitor in Mexico
is FEMSA, with the two companies having respective market shares of 57% and
43%. Although Anheuser-Busch does not significantly compete in the Mexican
beer market, a significant change in Modelo's business could have a
material effect on the Company's reported net income and earnings per
share.
Financial information with respect to the Company's business segments
appears in Note 16, "Business Segments," on pages 60-61 of the 2004 Annual
Report, which Note is hereby incorporated by reference.
PACKAGING
The Company's packaging operations are handled through the following
wholly-owned subsidiaries of the Company: Metal Container Corporation,
which manufactures beverage cans at eight plants and beverage can lids at
three plants for sale to ABI and U.S. soft drink customers (See Item 2 of
Part 1--Properties); Anheuser-Busch Recycling Corporation, which buys and
sells used aluminum beverage containers from its corporate office in Sunset
Hills, Missouri and recycles aluminum containers at its plant in Hayward,
California; Precision Printing and Packaging, Inc., which manufactures
pressure sensitive, metalized and paper labels at its plant in Clarksville,
Tennessee; and Eagle Packaging, Inc., which manufactures crown and closure
liner materials for ABI at its plant in Bridgeton, Missouri.
Through a wholly-owned limited partnership known as Longhorn Glass
Manufacturing, L.P., the Company owns and operates a glass manufacturing
plant in Jacinto City, Texas, which manufactures glass bottles for the
Company's nearby Houston brewery.
5
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 operates Busch Gardens theme parks in Tampa, Florida and
Williamsburg, Virginia, and SeaWorld theme parks in Orlando, Florida, San
Antonio, Texas, and San Diego, California. BEC operates water park
attractions in Tampa, Florida (Adventure Island) and Williamsburg, Virginia
(Water Country, U.S.A.), and Langhorne, Pennsylvania (Sesame Place), as
well as Discovery Cove in Orlando, Florida, a reservations-only attraction
offering interaction with marine animals. 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 13.3% equity
interest in Port Aventura, S.A., which is a theme park near Barcelona,
Spain.
The Company is the third largest theme park operator in the United
States. It faces competition in the family entertainment field from other
theme and amusement parks, public zoos, public parks, and other family
entertainment events and attractions. Major competitors in the theme park
industry during 2004 include Walt Disney Co., Six Flags Parks, and
Universal Studios Theme Parks. No reliable national market share
information is available for the theme park industry.
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 a wholly-owned subsidiary, the Company owns and operates 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 hops, malt (barley), rice, and
corn grits for beer, and rice and barley for the rice milling and malting
operations of Busch Agricultural Resources, Inc. 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 above referenced commodities 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 both in the U.S. and around the world, weather conditions,
export demand, and government regulations and legislation affecting
agriculture and trade.
The Company uses water in brewing its beer. The Company generally
satisfies its requirements for water from municipal water systems and
privately owned wells.
The Company also requires aluminum cansheet for the manufacture of cans
and lids. The cansheet market experiences price volatility due to the
supply and demand balance for both aluminum ingot and sheet fabrication.
The Company manages its aluminum supply and cost using various methods
including long-term purchase contracts and hedging techniques.
ENERGY MATTERS
The Company uses natural gas, fuel oil, and coal as its primary fuel
materials. The Company believes that adequate supplies of fuel and
electricity are available at the present time, but cannot predict future
availability or market prices. Where economically feasible, the Company has
alternate fuel capability and limited electric generation which helps
ensure continued operation of essential processes.
6
The energy commodity markets have experienced and will continue to
experience significant price volatility due to perceived volatility of both
supply and demand. The Company manages its energy costs using various
methods including supply contracts, hedging techniques, and fuel switching.
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. The Company owns rights to its principal brand names and
trademarks in perpetuity.
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.
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 facilitated lower cost
operating systems while reducing the impact to air, water, and land.
ENVIRONMENTAL PACKAGING LAWS AND REGULATIONS
The states of California, Connecticut, Delaware, Hawaii, 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. While
such laws have not had a significant effect on ABI's market share, they
have resulted in significantly higher beer prices over and above the cost
of the deposit in those states that have adopted container deposit laws as
well as had an adverse impact on beer industry growth in those states. The
Company considers deposit laws 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
might require the Company to incur significant capital expenditures to
comply as some proposed container deposit laws would require the use of
returnable, reusable bottles. As a result, the Company would be required to
acquire equipment to receive, sort, inspect and clean bottles.
NUMBER OF EMPLOYEES
As of December 31, 2004, the Company had 31,435 full-time employees.
As of December 31, 2004, approximately 7,783 employees were represented
by the International Brotherhood of Teamsters. Eighteen other unions
represented approximately 1,147 domestic employees. In December 2003,
employees represented by the Brewery and Soft Drink Conference of the
International Brotherhood of Teamsters ("Teamsters") approved a new
five-year labor contract. The new labor agreement between ABI and the
Teamsters, which represents the majority of brewery workers, expires
February 28, 2009.
The Company considers its employee relations to be good.
7
AVAILABLE INFORMATION
The Company maintains a website on the World Wide Web at
www.anheuser-busch.com. The Company makes available, free of charge, on its
website its annual reports on Forms 10-K, quarterly reports on Forms 10-Q,
current reports on Forms 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, as soon as reasonably practicable after such reports
are electronically filed with, or furnished to, the SEC. The Company's
reports filed with, or furnished to, the SEC are also available on the
SEC's website at www.sec.gov.
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 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 92.4% of capacity in 2004; during the peak
selling periods (second and third quarters), they operated at maximum
capacity.
The Company also owns a 97% 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. With its acquisition of
Harbin Brewery Group, the Company now has thirteen breweries in northeast
China. There are two breweries located in Harbin and one in each of Hailun,
Yongji County (Jilin Province), Hegang, Changchun, Mudanjiang, Jiamusi,
Daqing, Jinzhou, Tangshan, Shenyang, and Yanji.
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; hop farms in Bonners
Ferry, Idaho and Huell, Germany; can manufacturing plants in Jacksonville,
Florida, Columbus, Ohio, Arnold, Missouri, Windsor, Colorado, Newburgh, New
York, Ft. Atkinson, Wisconsin, Rome, Georgia, and Mira Loma, California;
can lid manufacturing plants in Gainesville, Florida, Oklahoma City,
Oklahoma, and Riverside, California; a label plant in Clarksville,
Tennessee; a crown and closure liner material plant in Bridgeton, Missouri;
and an aluminum can recycling plant in Hayward, California. The Company
operates a glass manufacturing plant in Jacinto City, Texas through a
wholly-owned limited partnership.
BEC operates its principal family entertainment facilities in Tampa,
Florida; Williamsburg, Virginia; San Diego, California; Orlando, Florida;
and San Antonio, Texas. The Tampa facility is 336 acres, the Williamsburg
facility is 323 acres, the San Diego facility is 166 acres, the Orlando
facility is 247 acres, and the San Antonio facility is 316 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, the brewery in Wuhan, China, and certain of
the breweries owned by Harbin Brewery Group, 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 & Newcastle. 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
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.
8
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a lawsuit with the Maris Distributing
Company. Information regarding this lawsuit is contained in Note 12,
"Contingencies," on page 58 of the 2004 Annual Report to Shareholders,
which Note hereby is incorporated by reference.
On February 6, 2004, the Company was served with a complaint brought by
two individuals seeking to bring a class action on behalf of all California
residents who, while they were under 21 years of age, purchased alcohol
beverages manufactured by the Company and another defendant during the last
four years. The suit sought disgorgement of unspecified profits earned by
the Company in the past and other unspecified damages and equitable relief.
The California state court has dismissed all causes of action with
prejudice. The plaintiffs have indicated their intent to appeal.
A putative class action was brought against the Company (and many other
defendants) in Ohio. In that suit, parents of illegal underage drinkers are
suing to recover the sums that their offspring purportedly spent illegally
buying alcohol from persons or entities other than the defendants. The suit
alleges four causes of action against Anheuser-Busch: negligence, unjust
enrichment, violation of the Ohio Consumer Sales Practices Act, and civil
conspiracy. It seeks money damages, punitive damages, and injunctive and
equitable relief, including so-called disgorgement of profits allegedly
attributable to underage drinking. The Company removed the case to federal
court in the Northern District of Ohio in June 2004. The Company has moved
to dismiss this action, and that motion is fully briefed and awaiting
decision.
The Company believes that it has strong legal and factual defenses to
both of these class actions and intends to defend itself vigorously.
The Company is not a party to any other pending or threatened
litigation, the outcome of which would be expected to have a material
adverse effect upon its financial condition or its results of 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, 2004.
EXECUTIVE OFFICERS OF THE REGISTRANT
PATRICK T. STOKES (age 62) is presently President and Chief Executive
Officer and a Director of the Company and has served in such capacities
since 2002, 2002, and 2000, respectively. He previously served as Senior
Executive Vice President (2000-2002), and Vice President and Group
Executive (1981-2000) of the Company. He is also presently Chairman and
Chief Executive Officer of the Company's subsidiary, Anheuser-Busch,
Incorporated, and has served in such capacities since 2002 and 2000,
respectively, and Chairman of the Board of the Company's subsidiary,
Anheuser-Busch International, Inc., and has served in such capacity since
1999. He previously served as President of Anheuser-Busch, Incorporated
(1990-2002).
AUGUST A. BUSCH III (age 67) is presently Chairman of the Board and a
Director of the Company and has served in such capacities since 1977 and
1963, respectively. He previously served as President of the Company
(1974-2002) and Chief Executive Officer (1975-2002). He also serves as
Executive Vice President of the Company's subsidiary, Anheuser-Busch,
Incorporated, and has served in such capacity since 2002, and had
previously served as its Chairman of the Board (1979-2002) and also as its
Chief Executive Officer (1979-2000).
W. RANDOLPH BAKER (age 58) is presently Vice President and Chief
Financial Officer of the Company and has served in such capacity since
1996.
JOHN E. JACOB (age 70) is presently Executive Vice President-Global
Communications and a Director of the Company and has served in such
capacities since 2002 and 1990, respectively. He previously served as the
Company's Executive Vice President and Chief Communications Officer
(1994-2002). He also serves as Executive Vice President of the Company's
subsidiary, Anheuser-Busch, Incorporated, and has served in such capacity
since 2002.
9
THOMAS W. SANTEL (age 46) is presently Vice President-Corporate
Development of the Company and has served in such capacity since 1996.
STEPHEN J. BURROWS (age 53) is presently Vice President-International
Operations of the Company and has served in such capacity since 1999. 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 1999 and as President since 1994.
AUGUST A. BUSCH IV (age 40) is presently Vice President and Group
Executive of the Company and has served in such capacity since 2000. He is
also presently President of the Company's subsidiary, Anheuser-Busch,
Incorporated, and has served in such capacity since 2002 and had previously
served as its Group Vice President-Marketing and Wholesale Operations
(2000-2002) and its Vice President-Marketing (1996-2000).
MARK T. BOBAK (age 45) is presently Group Vice President and Chief
Legal Officer and has served in that capacity since July 2004. He had
previously served as Vice President-Corporate Human Resources (2000-June
2004) and Vice President and Deputy General Counsel of the Company
(1998-2000).
JOSEPH P. SELLINGER (age 58) is presently Vice President and Group
Executive of the Company and has served in such capacity since 2000. He is
also presently Chairman, Chief Executive Officer and President of the
Company's direct subsidiaries, Anheuser-Busch Packaging Group, Inc.,
Anheuser-Busch Recycling Corporation, Metal Container Corporation, Eagle
Packaging, Inc., and Precision Printing and Packaging, Inc., and has served
in all such capacities since 2000. He is also Chairman, Chief Executive
Officer and President of the Company's direct subsidiary, Glass Container
Corporation (doing business as Longhorn Glass Corporation), and has served
in such capacities since 2001. He had previously served as Vice
President-Operations of the Company's subsidiary, Anheuser-Busch,
Incorporated (1992-2000).
DOUGLAS J. MUHLEMAN (age 51) is presently Group Vice President-Brewing
Operations and Technology of the Company's subsidiary, Anheuser-Busch,
Incorporated, and has served in such capacity since 2001 and had previously
served as its Vice President-Brewing (1996-2001).
FRANCINE I. KATZ (age 46) is presently Vice President-Communications
and Consumer Affairs of the Company and has served in such capacity since
May 2004. She previously served as its Vice President-Corporate
Communications (2002-April 2004) and Vice President-Consumer Affairs
(1999-2002).
KEITH M. KASEN (age 61) is presently Chairman of the Board and
President of the Company's subsidiary, Busch Entertainment Corporation, and
has served in such capacities since 2003. During the past five years, he
also served as Executive Vice President and General Manager of the SeaWorld
theme parks in Orlando, Florida (2000-2003) and in San Antonio, Texas
(1997-2000).
JOSEPH P. CASTELLANO (age 51) is presently Vice President-Corporate
Human Resources of the Company and has served in such capacity since July
2004. He previously served as Vice President-Retail Marketing (2001-June
2004) and Vice President-Wholesale Operations (1994-2001) of the Company's
subsidiary, Anheuser-Busch, Incorporated.
JAMES F. HOFFMEISTER (age 60) is presently Group Vice
President-Procurement, Logistics and Agricultural Resources of the
Company's subsidiary, Anheuser-Busch, Incorporated and has served in such
capacity since July 2004. He previously served as Vice
President-Administration (1990-June 2004) of Anheuser-Busch, Incorporated.
MICHAEL J. OWENS (age 50) is presently Vice President-Sales and
Marketing of the Company's subsidiary, Anheuser-Busch, Incorporated and has
served in such capacity since July 2004. He previously served as Vice
President-Sales (2001-June 2004) and Vice President-Geographic Marketing
(1997-2001) of Anheuser-Busch, Incorporated.
ROBERT C. LACHKY (age 51) is presently Vice President-Brand Management
and Director-Global Brand Creative of the Company's subsidiary,
Anheuser-Busch, Incorporated and has served in such capacity since 2001. He
previously served as Vice President-Brand Management (1997-2001) of
Anheuser-Busch, Incorporated.
10
ANTHONY T. PONTURO (age 52) is presently Vice President-Global Media
and Sports Marketing of the Company's subsidiary, Anheuser-Busch,
Incorporated and has served in such capacity since 1998.
JOHN F. KELLY (age 48) is presently Vice President and Controller of
the Company and has served in such capacity since 1996.
PART II
The information required by Items 5 (except as set forth below), 6, 7,
7A, and 8 of this Part II are hereby incorporated by reference from pages
26 through 65 of the Company's 2004 Annual Report to Shareholders.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
On October 1, 2004, the Company issued out of treasury shares a total
of 79 shares of the Company's common stock ($1 par value) to four members
of the Board of Directors of the Company in lieu of cash to reflect an
increase in the annual retainer fee pursuant to the Company's Non-Employee
Director Elective Stock Acquisition Plan. The transaction was exempt from
registration and prospectus delivery requirements of the Securities Act of
1933 pursuant to Section 4(2) of the Act.
Following are the Company's common stock purchases during the fourth
quarter 2004 (shares in millions):
<TABLE>
<CAPTION>
AVG. PRICE
SHARES PER SHARE
------ ----------
<S> <C> <C>
Shares Remaining Authorized Under Disclosed Repurchase
Programs at September 30, 2004............................ 49,998,392
----------
Less Shares Repurchased:
October..................................................... 2,608,300 $50.48
November.................................................... 969,421 $50.43
December.................................................... 2,151,753 $50.47
----------
Total Shares Repurchased................................ 5,729,474 $50.47
----------
Shares Remaining Authorized Under Disclosed Repurchase
Programs at December 31, 2004............................. 44,268,918
==========
</TABLE>
All shares are repurchased under authorization by the Company's Board
of Directors. The Board authorized the current program to repurchase 100
million shares in March 2003. There is no prescribed termination date for
this program. The figures shown include shares delivered to the Company to
exercise stock options.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES.
It is the responsibility of the chief executive officer and chief
financial officer to ensure the Company maintains disclosure controls and
procedures designed to provide reasonable assurance that material
information, both financial and non-financial, and other information
required under the securities laws to be disclosed is identified and
communicated to senior management on a timely basis. The Company's
disclosure controls and
11
procedures include mandatory communication of material subsidiary events,
automated accounting processing and reporting, management review of monthly
and quarterly results, periodic subsidiary business reviews, an established
system of internal controls and rotating internal control reviews by the
Company's internal auditors.
The chief executive officer and chief financial officer evaluated the
Company's disclosure controls and procedures as of the end of the quarter
ended December 31, 2004 and have concluded that they are effective as of
December 31, 2004 in providing reasonable assurance that such information
is identified and communicated on a timely basis. Additionally, there were
no changes in the Company's internal control over financial reporting
identified in connection with the evaluation that have materially affected,
or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
Management's Report on Internal Control Over Financial Reporting
appears on page 40 of the 2004 Annual Report to Shareholders, which is
incorporated by reference. The Report of Independent Registered Public
Accounting Firm on Internal Control Over Financial Reporting appears on
page 41 of the 2004 Annual Report to Shareholders, which is incorporated by
reference.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A portion of the information required by this Item with respect to
Directors is hereby incorporated by reference from pages 7 through 9, 12
and pages 29 and 30 of the Company's Proxy Statement for the Annual Meeting
of Stockholders on April 27, 2005. The information required by this Item
with respect to Executive Officers is presented on pages 9-11 of this Form
10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated by
reference from pages 11 and 12 and pages 20 through 27 of the Company's
Proxy Statement for the Annual Meeting of Stockholders on April 27, 2005.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A portion of the information required by this Item pursuant to Item 403
of Regulation S-K is hereby incorporated by reference from pages 10 and 11
of the Company's Proxy Statement for the Annual Meeting of Stockholders on
April 27, 2005.
The information required pursuant to Item 201(d) of Regulation S-K is
hereby incorporated by reference from page 27 of the Company's Proxy
Statement for the Annual Meeting of Stockholders on April 27, 2005.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is hereby incorporated by
reference from pages 28 and 29 of the Company's Proxy Statement for the
Annual Meeting of Stockholders on April 27, 2005.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item is hereby incorporated by
reference from page 20 of the Company's Proxy Statement for the Annual
Meeting of Stockholders on April 27, 2005.
12
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
<TABLE>
<S> <C> <C>
1. FINANCIAL STATEMENTS: PAGE
----
Report of Independent Registered Public Accounting Firm 41*
Consolidated Balance Sheet at December 31, 2004 and 2003 42*
Consolidated Statement of Income for the three years ended
December 31, 2004 43*
Consolidated Statement of Changes in Shareholders Equity for the
three years ended December 31, 2004 44*
Consolidated Statement of Cash Flows for the three years ended
December 31, 2004 45*
Notes to Consolidated Financial Statements and Supplementary
Information 46-65*
<FN>
*Incorporated herein by reference from the indicated pages of the 2004
Annual Report to Shareholders.
<S> <C> <C>
2. FINANCIAL STATEMENT SCHEDULE:
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule for the three years ended
December 31, 2004 F-1
Schedule II--Valuation and Qualifying Accounts and Reserves F-2
</TABLE>
3. EXHIBITS:
Exhibit 3.1 --Restated Certificate of Incorporation.
Exhibit 3.2 --By-Laws of the Company (As amended and restated
September 24, 2003) (Incorporated by reference to
Exhibit 3.2 to Form 10-K for the fiscal year ended
December 31, 2003).
Exhibit 4.1 --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).
Exhibit 4.2 --Indenture dated as of July 1, 2001 between the
Company and The Chase Manhattan Bank, as Trustee
(Incorporated by reference to Exhibit 4.4 to the
Form 10-K for the fiscal year ended December 31,
2002). Other indentures are not required to be
filed, but the Company agrees to furnish copies
of such instruments to the Securities and Exchange
Commission upon request.
Exhibit 4.3 --Credit Agreement dated as of August 4, 2003 among
the Company and JP Morgan Chase Bank, as
Administrative Agent (Incorporated by reference
to Exhibit 4.5 to Form 10-K for the fiscal year
ended December 31, 2003).
Exhibit 10.1 --Anheuser-Busch Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors
amended and restated as of March 1, 2000.*
13
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 as amended and restated
(Incorporated by reference to Appendix B to the
Definitive Proxy Statement for Annual Meeting of
Stockholders on April 23, 2003).*
Exhibit 10.4 --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 10.4 to Form 10-K for
the fiscal year ended December 31, 2002).*
Exhibit 10.5 --Anheuser-Busch Companies, Inc. 1998 Incentive
Stock Plan (Incorporated by reference to
Appendix C to the Definitive Proxy Statement
for Annual Meeting of Stockholders on April 27,
2005).*
Exhibit 10.6 --Anheuser-Busch Companies, Inc. Excess Benefit
Plan amended and restated as of March 1, 2000.*
Exhibit 10.7 --Anheuser-Busch Global Employee Stock Purchase Plan
(Incorporated by reference to Exhibit 10.7 to
Form 10-K for the fiscal year ended December
31, 2002).*
Exhibit 10.8 --First Amendment to the Anheuser-Busch Global
Employee Stock Purchase Plan.
Exhibit 10.9 --Anheuser-Busch Companies, Inc. Supplemental
Executive Retirement Plan amended and restated
as of March 1, 2003 (Incorporated by reference
to Exhibit 10.8 to Form 10-K for the fiscal
year ended December 31, 2002).*
Exhibit 10.10--Anheuser-Busch Executive Deferred Compensation
Plan amended and restated as of January 1,
2002. (Incorporated by reference to Exhibit
10.9 to Form 10-K for the fiscal year ended
December 31, 2002).*
Exhibit 10.11--Anheuser-Busch 401(k) Restoration Plan amended
and restated as of March 1, 2000.*
Exhibit 10.12--Form of Indemnification Agreement with Directors
and Executive Officers.*
Exhibit 10.13--Anheuser-Busch Officer Bonus Plan as amended on
April 26, 2000 and proposed to be amended on
April 27, 2005 (Incorporated by reference to
Appendix B to the Definitive Proxy Statement
for Annual Meeting of Stockholders on April 27,
2005).*
Exhibit 10.14--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 10.15--Letter agreement between Anheuser-Busch Companies,
Inc. and the Controlling Shareholders regarding
Section 5.5 of the Investment Agreement filed
as Exhibit 10.14 of this report.
Exhibit 10.16--Form of Indemnification Agreement between
Anheuser-Busch, Incorporated and certain
Executive Officers of the Company (Incorporated
by reference to Exhibit 10.16 to Form 10-K for
the fiscal year ended December 31, 2002).*
Exhibit 10.17--Consulting Agreement between Anheuser-Busch
Companies, Inc. and a former executive officer
of the Company.*
Exhibit 10.18--2005 Officer Bonus Program*
14
Exhibit 10.19--Summary of Compensation arrangements with
Executive Officers of the Company.*
Exhibit 10.20--Summary of Compensation arrangements with
Non-Employee Directors of the Company.*
Exhibit 12 --Ratio of Earnings to Fixed Charges.
Exhibit 13 --Pages 26 through 65 of the Anheuser-Busch
Companies, Inc. 2004 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 14 --Code of Business Ethics and Conduct (Incorporated
by reference to Exhibit 14 to Form 10-K for
the fiscal year ended December 31, 2003).
Exhibit 21 --Subsidiaries of the Company
Exhibit 23 --Consent of Independent Registered Public
Accounting Firm
Exhibit 24 --Power of Attorney
Exhibit 31.1 --Certification of Chief Executive Officer
required by Rule 13a-14(e) and 15d-15(e) under
the Exchange Act
Exhibit 31.2 --Certification of Chief Financial Officer
required by Rule 13a-14(e) and 15d-15(e) under
the Exchange Act
Exhibit 32.1 --Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
Exhibit 32.2 --Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
<FN>
- --------
*A management contract or compensatory plan or arrangement required to be
filed by Item 15(c) of this report.
15
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/ W. RANDOLPH BAKER
----------------------------------------
W. Randolph Baker
Vice President and Chief Financial Officer
Date: March 10, 2005
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.
Principal Executive Officer:
Patrick T. Stokes*
President and Chief Executive Officer
Principal Financial Officer:
W. Randolph Baker
Vice President and Chief Financial Officer
Principal Accounting Officer:
John F. Kelly*
Vice President and Controller
/s/ W. RANDOLPH BAKER
-------------------------------------------
(W. Randolph Baker, as attorney-in-fact and
on his own behalf as Principal Financial
Officer)
Date: March 10, 2005
Directors:
- ---------------------------------------------------------------------------
Patrick T. Stokes* Vilma S. Martinez*
August A. Busch III* William Porter Payne*
Carlos Fernandez G.* Joyce M. Roche*
James J. Forese* Henry Hugh Shelton*
John E. Jacob* Andrew C. Taylor*
James R. Jones* Douglas A. Warner III*
Charles F. Knight* Edward E. Whitacre, Jr.
Vernon R. Loucks, Jr.*
- ---------------------------------------------------------------------------
<FN>
* by power of attorney
16
ANHEUSER-BUSCH COMPANIES, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULE
PAGE
----
Report of Independent Registered Public Accounting Firm on F-1
Financial Statement Schedule..............................
Financial Statement Schedule for the Years 2004, 2003 and
2002:
Valuation and Qualifying Accounts and Reserves
(Schedule II)......................................... F-2
All other Financial Statement 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 Company's proportionate share
of investees' profit before income taxes is less than 20% of Anheuser-
Busch's consolidated pretax income, and Anheuser-Busch's investments in
such companies are less than 20% of consolidated total assets.
17
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St. Louis MO 63101-2695
Telephone (314) 206 8500
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Anheuser-Busch Companies, Inc.
Our audits of the consolidated financial statements, of management's
assessment of the effectiveness of internal control over financial
reporting and of the effectiveness of internal control over financial
reporting referred to in our report dated February 23, 2005 appearing in
the 2004 Annual Report to Shareholders of Anheuser-Busch Companies, Inc.
(which reports and consolidated financial statements and assessment are
incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item 15(a)(2) of
this Form 10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
St. Louis, MO
February 23, 2005
F-1
<TABLE>
ANHEUSER-BUSCH COMPANIES, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN MILLIONS)
<CAPTION>
2004 2003 2002
---- ---- ----
<S> <C> <C> <C>
Reserve for doubtful accounts:
Balance at beginning of period....................... $ 6.6 $ 5.6 $ 7.7
Additions charged to costs and expenses.............. 0.5 1.6 (1.3)
Additions (recoveries of uncollectible accounts
previously written off)............................ 0.2 0.2 0.2
Addition related to Harbin acquisition............... 6.1 -- --
Reductions (uncollectible accounts written off)...... (0.9) (0.8) (1.0)
------ ------ -----
Balance at end of period............................. $ 12.5 $ 6.6 $ 5.6
====== ====== =====
Deferred income tax asset valuation allowance:
Balance at beginning of period....................... $ 19.9 $ 10.9 $12.0
Additions charged to costs and expenses.............. 12.0 14.6 7.7
Addition related to Harbin acquisition............... 15.4 -- --
Reductions from utilizations and expirations......... (15.1) (5.6) (8.8)
------ ------ -----
Balance at end of period............................. $ 32.2 $ 19.9 $10.9
====== ====== =====
</TABLE>
F-2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>ex3p1.txt
<TEXT>
<PAGE>
Exhibit 3.1
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:
(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
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
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
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
(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
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
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
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
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
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
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
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
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
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
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
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
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
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.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>ex10p1.txt
<TEXT>
<PAGE>
Exhibit 10.1
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.
(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
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
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
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
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
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
(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
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
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
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
(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
(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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>ex10p2.txt
<TEXT>
Exhibit 10.2
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.
(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
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
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
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
(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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>5
<FILENAME>ex10p6.txt
<TEXT>
<PAGE>
Exhibit 10.6
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
(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
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
(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
(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
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
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
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
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
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
ANHEUSER-BUSCH COMPANIES, INC. EXCESS BENEFIT PLAN
AMENDED AND RESTATED AS OF MARCH 1, 2000
11
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C>
1. Definitions Applicable to this Excess Benefit Plan 1
2. Eligibility to Participate 2
3. Benefits Under this Plan 2
4. Special Rule for Non-Deductible Amounts 2
5. Pre-Retirement Death Benefits 2
6. Payment Method 2
7. Obligation to Pay Benefits Hereunder 3
8. Concerning Payment 3
9. Facility of Payment 4
10. Payees Presumed Competent 5
11. Notice of Address; Lost Payees 5
12. No Liability for Participant's Debts 5
13. Administration 5
14. Negation of Employment Contract 6
15. Forfeiture for Activity Contrary to a Participating Employer's
Best Interests 6
16. Amendment 7
17. Termination 8
18. Participating Employer 8
19. Successor Participating Employer 8
20. Change in Control 8
21. Set Off and Withholding 9
22. Miscellaneous 9
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>6
<FILENAME>ex10p8.txt
<TEXT>
<PAGE>
Exhibit 10.8
FIRST AMENDMENT TO
ANHEUSER-BUSCH GLOBAL EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, Anheuser-Busch Companies, Inc. (the "Company") is the sponsor of
a certain employee stock purchase plan, known as the
Anheuser-Busch Global Employee Stock Purchase Plan (the "Plan"),
designed to permit employees of Anheuser-Busch Companies, Inc.
and its subsidiaries who are not resident in the United States
and are not eligible to participate in the Company's
tax-qualified 401(k) plans to purchase Company stock; and
WHEREAS, the Company reserved to itself the right to amend the Plan by
action of its Vice President, Employee Benefits in Section 18 of
the Plan; and
WHEREAS, the following amendment to the Plan was approved by the Company's
Vice President, Employee Benefits, on April 1, 2003, effective
immediately.
NOW, THEREFORE, the Plan is hereby amended by deleting paragraph (a) from
Section 3 and substituting the following therefor:
3. Participation.
-------------
a) From the Effective Date of the Plan through March 31, 2003,
an Eligible Employee shall become eligible to become a
Participant as of March 1 following his or her first day of
employment; provided that all Eligible Employees on the
regular payroll for a particular location on the fifteenth
(15th) day of the calendar month preceding inception of the
Plan in that location shall be eligible to become
Participants at inception of the Plan in that location. From
and after April 1, 2003, an Eligible Employee shall become
eligible to become a Participant as of March 1 coincident
with or following his or her first day of employment.
The remaining provisions of the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this instrument on behalf
of the Company this 20th day of February, 2004, effective as of April 1,
2003.
ANHEUSER-BUSCH COMPANIES, INC.
By: /s/ John T. Farrell
---------------------------------
John T. Farrell
Vice President, Employee Benefits
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>7
<FILENAME>ex10p11.txt
<TEXT>
<PAGE>
Exhibit 10.11
ANHEUSER-BUSCH
401(k) RESTORATION PLAN
Amended and Restated as of March 1, 2000
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
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
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
Regular 401(k) Plan.
(d) Any Participant suspended pursuant to this Section 3.4
may resume deferrals under this Plan only if the Participant satisfies the
requirements of Section 3.2 at the time of resumption and makes an election
described in Section 4.1 not later than the Election Date for the Plan Year
in which deferrals are resumed, whether the Participant's suspension period
expires as of January 1 or on a later date during the Plan Year.
ARTICLE IV
PARTICIPANT DEFERRAL OF COMPENSATION
------------------------------------
4.1. Election. An Eligible Employee who wishes to begin or resume
--------
Personal Salary Deferral Contributions under the Plan must execute and
deliver the appropriate Company form properly completed. Execution and
delivery of such form to the Company shall be an irrevocable direction by the
Participant to his or her Participating Employer to defer payment of an
amount which is equal to (a) the difference between the Participant's
Compensation and the applicable annual compensation limit under Section
401(a)(17) of the Code, times (b) the maximum percentage of Base Pay which
may constitute Regular 401(k) Plan Matched Contributions until the earlier of
the date the Participant's employment with all Participating Employers ends,
the date of suspension of the Participant's contributions pursuant to Section
3.4 or the date of cessation of the Participant's Personal Salary Deferral
Contributions pursuant to Section 4.4.
4.2. Time For Making Election. In general, the election described in
------------------------
Section 4.1 must be made not later than the Election Date which immediately
precedes the Plan Year in which the Participant wishes to begin or resume
making Personal Salary Deferral Contributions. In the case of an Employee
who becomes an Eligible Employee after the Effective Date, the election to
begin making Personal Salary Deferral Contributions described in Section 4.1
must be made not later than the Election Date which coincides with such
Employee's initial eligibility, and will apply to defer amounts attributable
to services performed after such Election Date.
4.3. Special Rule for Reporting Persons. Notwithstanding anything,
----------------------------------
an election described in Section 4.1 by a Reporting Person shall not be
effective as to Compensation payable prior to the first day of the month
following the calendar month in which the election is executed and delivered.
4
4.4. 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
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
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
9.3. 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
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
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
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
(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
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
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
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
(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
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
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
13.12. Reporting Persons. It is intended that the interests of
-----------------
Reporting Persons in the Plan qualify for exclusion from the definition of
"derivative securities" contained in Rule 16a-1(c) of the Securities and
Exchange Commission; the Plan shall be interpreted in a manner consistent
with that intent. Moreover, the Chief Financial Officer of the Company may
amend the Plan, retroactively if deemed prudent, as such Officer deems
appropriate to ensure the continuation of such qualification.
13.13. Counterparts. This Plan may be executed in two or more
------------
counterparts, any one of which shall constitute an original without reference
to the others.
IN WITNESS WHEREOF, the Company has executed this Plan this 9th
day of March, 2000, effective as of the 1st day of March, 2000.
ANHEUSER-BUSCH COMPANIES, INC.
BY: /s/ W. Randolph Baker
-------------------------------------
W. Randolph Baker
Chief Financial Officer
19
<PAGE>
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
ARTICLE I
RESTATEMENT OF PLAN 1
1.1. Action By Company 1
1.2. Purpose of the Plan 1
ARTICLE II
DEFINITIONS 1
2.1. Account 1
2.2. Beneficiary 1
2.3. Company Contributions 1
2.4. Compensation 1
2.5. Effective Date 1
2.6. Election Date 2
2.7. Eligible Employee 2
2.8. Employee 2
2.9. Investment Fund 2
2.10. Match Rate 2
2.11. Participant 2
2.12. Participating Employer 2
2.13. Personal Salary Deferral Contributions 2
2.14. Plan Year 2
2.15. Regular 401(k) Plan 2
2.16. Regular 401(k) Plan Matched Contributions 2
2.17. Reporting Person 2
2.18. Reporting Person's HCSF Sub-Account 2
ARTICLE III
ELIGIBILITY 3
3.1. Eligibility on Election Dates 3
3.2. Eligibility Requirements 3
3.3. Participation 3
3.4. Suspension 3
ARTICLE IV
PARTICIPANT DEFERRAL OF COMPENSATION 4
4.1. Election 4
4.2. Time For Making Election 4
4.3. Special Rule for Reporting Persons 4
4.4. Cessation of Personal Salary Deferral Contributions 5
i
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
ARTICLE XI
ADMINISTRATION AND CLAIMS PROCEDURES 13
11.1. Administrative Duties of the Company 13
11.2. Claims Procedures 14
11.3. Books and Records 15
11.4. Notices 15
ARTICLE XII
AMENDMENT AND TERMINATION 16
ARTICLE XIII
MISCELLANEOUS 17
13.1. Company's Obligations Unsecured 17
13.2. No Alienation 17
13.3. No Waiver of Rights 17
13.4. Severability 17
13.5. Legal Expenses 17
13.6. Presumption of Competence 17
13.7. Facility of Payment 18
13.8. No Guarantee of Employment or Compensation 18
13.9. Plan Provisions Binding 18
13.10. Rules of Interpretation 18
13.11. Missouri Law Controls 18
13.12. Reporting Persons 19
13.13. Counterparts 19
</TABLE>
iii
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>8
<FILENAME>ex10p12.txt
<TEXT>
<PAGE>
Exhibit 10.12
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;
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
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
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
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
(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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>9
<FILENAME>ex10p14.txt
<TEXT>
<PAGE>
Exhibit 10.14
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
<TABLE>
TABLE OF CONTENTS
-----------------
<S> <C>
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 2
II. TERMS OF THE SUBSCRIPTION OF SERIES P-C SHARES AND
THE PURCHASE AND SALE OF INITIAL DIBLO COMMON SHARES
2.1 Subscription of Series P-C Shares
and Purchase and Sale of the Initial
Diblo Common Shares. . . . . . . . . . . . . 7
2.2 The Closing. . . . . . . . . . . . . . . . . 8
2.3 Purchase Price . . . . . . . . . . . . . . . 8
2.4 Deliveries at the Closing. . . . . . . . . . 8
III. REPRESENTATIONS AND WARRANTIES OF THE G-MODELO
SIGNATORIES
3.1 Capital Stock of G-Modelo. . . . . . . . . . 11
3.2 Capital Stock of Diblo and the G-Modelo
Corporations . . . . . . . . . . . . . . . . 13
3.3 USA Export . . . . . . . . . . . . . . . . . 15
3.4 Power and Authority; Effect of Agreement . . 16
3.5 Investments. . . . . . . . . . . . . . . . . 17
3.6 Organization; Assets . . . . . . . . . . . . 17
3.7 Financial Information. . . . . . . . . . . . 18
3.8 Undisclosed Liabilities; Absence of
Certain Changes. . . . . . . . . . . . . . . 19
3.9 Title and Related Matters. . . . . . . . . . 20
3.10 Patents, Trademarks, Etc.. . . . . . . . . . 20
3.11 Litigation . . . . . . . . . . . . . . . . . 22
3.12 Compliance with Laws . . . . . . . . . . . . 22
3.13 Tax Matters. . . . . . . . . . . . . . . . . 23
3.14 Shareholder Agreements . . . . . . . . . . . 24
3.15 Consents . . . . . . . . . . . . . . . . . . 25
3.16 Environmental Matters. . . . . . . . . . . . 25
3.17 Absence of Certain Changes or Events . . . . 26
3.18 Material Contracts . . . . . . . . . . . . . 26
3.19 Employee Benefits; Employment Contracts. . . 27
3.20 Real Property. . . . . . . . . . . . . . . . 28
3.21 Tied House Prohibitions. . . . . . . . . . . 29
3.22 Insurance. . . . . . . . . . . . . . . . . . 29
i
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
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
13.3 Successors and Assigns . . . . . . . . . . . 78
13.4 Counterparts . . . . . . . . . . . . . . . . 79
13.5 Interpretation . . . . . . . . . . . . . . . 79
13.6 Amendment and Modification . . . . . . . . . 79
13.7 Waiver of Compliance; Consents . . . . . . . 79
13.8 Broker's Fees. . . . . . . . . . . . . . . . 80
13.9 Expenses . . . . . . . . . . . . . . . . . . 80
13.10 Notices. . . . . . . . . . . . . . . . . . . 80
13.11 Governing Law. . . . . . . . . . . . . . . . 82
13.12 Public Announcements . . . . . . . . . . . . 82
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 83
EXHIBIT A -- Capital Stock of G-Modelo as of
Closing
EXHIBIT B -- Calculation of G-Modelo Free Cash
Flow
EXHIBIT C -- Procermex Pricing Policies
EXHIBIT D -- Opinion of Santamarina Y Steta, S.C.
EXHIBIT E -- Opinion of Stephen J. Volland, Esq.,
Senior Associate General Counsel of
Anheuser-Busch Companies, Inc.
EXHIBIT F -- Opinion of Skadden, Arps, Slate,
Meagher & Flom
EXHIBIT G -- Opinion of Creel, Garcia-Cuellar y
Muggenburg
SCHEDULES
- ---------
Schedule 3.2(a)
Schedule 3.2(c)
Schedule 3.10
Schedule 3.11
Schedule 3.17
Schedule 3.18
Schedule 3.19
</TABLE>
iv
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-
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
(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
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
with or without the giving of notice or the lapse of
time, or both, (a) violate any law, rule or regulation to
which any of them or any of their respective assets is
subject, (b) violate any order, writ, injunction, judg-
ment or decree applicable to any of them or any of their
respective assets or properties, or (c) conflict with, or
result in a breach of or default under, or give rise to
any right of termination, cancellation or acceleration
under (i) any term or condition of the Certificate of
Incorporation or By-Laws of any of them, or (ii) any of
the terms, conditions or provisions of any note, bond,
mortgage, indenture or material lease, license, agreement
or other material instrument to which any of them or any
of their respective subsidiaries is a party or by which
any of their respective assets may be bound; except, with
respect to clauses (a), (b) and (c)(ii) above, for viola-
tions, conflicts, breaches or defaults which in the
aggregate would not materially hinder or impair their
ability to consummate the transactions contemplated
hereby.
4.2. Consents. No consent, approval or autho-
--------
rization of, or exemption by, or filing with, any govern-
mental or regulatory authority (other than as may be
required under the HSR Act or the LEC) is required in
connection with the execution, delivery and performance
by A-B, A-BI or the Investor of the transactions contem-
plated by this Agreement.
4.3. Availability of Funds. The Investor has
---------------------
available or will have available on the Closing Date
sufficient funds to enable it to consummate the transac-
tions contemplated by Article II of this Agreement.
4.4. Management of G-Modelo and the G-Modelo
---------------------------------------
Corporations. Each of A-B, A-BI and the Investor ac-
------------
knowledge that it is its intention and desire, as well as
the intention and desire of the Controlling Shareholders,
that G-Modelo and the G-Modelo Corporations shall contin-
ue to be managed by the Controlling Shareholders, with
the participation of A-B, A-BI and the Investor as minor-
ity shareholders, as provided for in this Agreement and
in the Amended G-Modelo By-laws and the Amended Diblo By-
laws; and that this has been an essential and basic
condition for the Controlling Shareholders to enter into
this Agreement and to create and enter into the asso-
ciation or joint venture herein set forth.
31
<PAGE>
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
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
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
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
(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
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
(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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
(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
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
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
(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
(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
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
(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
(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
(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
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
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
(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
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
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
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
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
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
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
(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
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
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
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
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
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
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
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
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