SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1993 Number 1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the I.R.S. Employer
I.D.
Laws of New Jersey No. 04-1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8011
Securities registered pursuant to Section 12(b) of the Act:
Name of Each
Exchange
Title of Each Class On Which Registered
Capital Stock ($.33 par value) New York, Pacific,
Boston
$2.875 Non-Voting Cumulative Preferred Stock, Series ANew York
$1.32 Depositary Shares, each representing one-fifth of a share of
Series C Mandatorily Exchangeable Cumulative Preference StockNew York
9-1/8% Subordinated Debentures due February 1, 1998 New York
10-1/4% Subordinated Debentures due August 1, 2005 New York, Pacific
10-1/2% Subordinated Debentures due August 1, 2004 New York, Pacific
11-7/8% Subordinated Debentures due May 1, 2003 New York, Pacific
Securities registered pursuant to Section 12(g) of the Act: None
Other securities for which reports are submitted pursuant to
Section 15(d) of the Act:
9-1/8% Senior Notes due March 1, 2004
9-5/8% Senior Notes due January 15, 2004
11-1/2% Subordinated Notes due June 1, 2001
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, 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 ]
As of March 1, 1994, there were 48,557,653 shares of Common Stock
outstanding. The aggregate market value of Common Stock held by non-affiliates
at March 1, 1994 was approximately $441 million.
Documents Incorporated by Reference
Portions of the Chiquita Brands International, Inc. 1993 Annual Report to
Shareholders are incorporated by reference in Parts I and II. Portions of the
Chiquita Brands International, Inc. Proxy Statement for the 1994 Annual Meeting
of Shareholders are incorporated by reference in Part III.
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
Part I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . .10
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . 10
Item 6. Selected Financial Data. . . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 10
Item 8. Financial Statements and Supplementary Data. . . . . 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . 10
Part III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . .11
Item 11. Executive Compensation . . . . . . . . . . . . . . . 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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PART I
ITEM 1 - BUSINESS
GENERAL
Chiquita Brands International, Inc. ("Chiquita" or the
"Company") is a leading international marketer, processor and
producer of quality fresh and processed food products. In
recent years, the Company has capitalized on its "Chiquita"
and other premium brand names by building on its worldwide
leadership position in the marketing, distribution and
sourcing of bananas; by expanding its quality fresh fruit and
vegetable operations; and by further developing its business
in value-added processed foods.
Chiquita's products include:
- Bananas, citrus, grapes, kiwi, mangos, pears and
pineapples sold under the "Chiquita" brand name;
- Bananas, citrus and other quality fresh fruit including
apples, grapes, papaya, peaches, pears, plums,
strawberries and tomatoes sold under the "Consul,"
"Chico," "Amigo," "Frupac" and other brand names;
- A wide variety of fresh vegetables including asparagus,
beans, broccoli, carrots, celery, lettuce, onions and
potatoes sold under the "Premium" and various other
brand names;
- Fruit and vegetable juices and other processed fruits
and vegetables, including banana puree, marketed under
the "Chiquita," "Friday" and other brands;
- Wet and dry salads sold under the "Club Chef," "Chef
Classic" and "Naked Foods" brands; and
- Margarine, shortening and other consumer packaged foods
sold under the "Numar," "Clover" and various regional
brand names.
No individual customer accounted for more than 10% of the
Company's consolidated net sales during any of the last three
years. See "Management's Analysis of Operations and Financial
Condition," which is incorporated by reference in Item 7
herein from the Company's 1993 Annual Report to Shareholders,
for a discussion of factors affecting results of the Company's
operations for 1993, 1992 and 1991. Factors which may cause
fluctuations in the results of operations are also discussed
in the description of the Company's operations below.
Fresh food products
The Company markets an extensive line of fresh fruits and
vegetables sold under the "Chiquita" and other brand names.
The core of Chiquita's fresh foods operations is the
marketing, distribution and sourcing of bananas. Sales of
bananas, as a percent of consolidated net sales, were 67% in
1991, 62% in 1992 and 58% in 1993.
Chiquita believes that it derives competitive benefits in
the marketing, distribution and sourcing of fresh foods
through its:
- Recognized brand names and reputation for quality;
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- Strong market position in Europe, North America and
Japan, the world's principal markets for fresh fruit;
- Modern, cost-efficient fresh fruit transportation
system; and
- Industry leading position in terms of number and
geographic diversity of its sources of bananas, which
enhances its ability to provide customers with premium
quality products on a consistent basis.
Chiquita has benefitted from its multi-year investment
spending program and the ongoing effects of its restructuring
and cost reduction efforts to adjust its fresh foods volume
and cost infrastructure to significantly reduce production,
distribution and overhead costs. (See "Distribution and
Logistics" and "Sourcing" below and ITEM 2 - PROPERTIES.) The
restructuring program also included measures to reorganize the
Company's European banana operations to adjust to a new quota
which effectively restricts the volume of Latin American
bananas imported into the European Union. (See RISKS OF
INTERNATIONAL OPERATIONS below.)
Marketing. Chiquita markets bananas under trade names
including "Chiquita," "Chiquita Jr.," "Consul," "Amigo,"
"Petite 150," "Chico" and "Bananos." Chiquita's sales of
bananas in 1993 in its principal markets, as a percent of its
total banana net sales, were: Europe, 45%; North America,
34%; and other (principally the Far East and Middle East),
21%.
The Company has been able to obtain a premium price for
its bananas due to its reputation for quality and its
innovative marketing techniques, which include providing
retail marketing support services to its customers. Chiquita
sells bananas through its regional sales organizations and
commissioned agents throughout the world directly to
wholesalers and retail chains, which in turn ripen and resell
or distribute the fruit. The Company also sells bananas
ripened in its own facilities or under contractual ripening
arrangements.
Bananas are highly perishable and must be brought to
market and sold generally within 60 days after harvest.
Therefore, selling prices which importers receive for bananas
depend on the available supplies of bananas and other fruit in
each market, the relative quality, and wholesaler and retailer
acceptance of bananas offered by competing importers. Excess
supplies may result in increased price competition. Profit
margins on sales may also be significantly affected by
fluctuations in currency exchange rates. (See RISKS OF
INTERNATIONAL OPERATIONS below.)
Adverse weather such as major windstorms or floods in
banana growing areas may restrict worldwide supplies and
result in increased prices for bananas. However, competing
importers may be affected differently, depending upon their
ability to obtain adequate supplies from sources in other
geographic areas.
Banana marketing is highly competitive. In order to
compete successfully, Chiquita must be able to source bananas
of uniformly high quality and distribute them in worldwide
markets on a timely basis. A limited number of competitors
account for most of the banana imports throughout the world.
The Company believes that it sells more bananas than any of
its competitors, accounting for approximately one-fourth of
all bananas imported into its principal markets throughout the
world. While smaller companies, including growers'
cooperatives, have also become a competitive factor,
Chiquita's principal competitors continue to be a limited
number of large international companies.
Although production of bananas tends to be relatively
stable throughout the year, competition in the sale of bananas
comes not only from bananas sold by others, but also from
other fresh fruit which may
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be seasonal in nature. The resulting seasonal variations in
demand cause banana pricing to be seasonal, with the first six
months of the calendar year being the stronger period.
Chiquita's interests in food-related businesses include a
network of fresh fruit and vegetable operations in Europe,
North America and the Pacific Rim. Through these
affiliations, Chiquita sells and distributes a variety of
quality fruit and vegetable products under other brand names.
Certain of these affiliations involve both the production and
marketing of fresh fruits and vegetables while others involve
only marketing. These businesses compete against numerous
other regional fresh fruit and vegetable producers and
distributors. No single competitor has a dominant market
share in this industry due to the regionalized nature of these
businesses.
Distribution and Logistics. Transportation expenses
comprise approximately one-fourth of the total costs incurred
by Chiquita in its sale of tropical fruit. Chiquita ships its
tropical fruit in vessels owned or chartered by the Company.
All of Chiquita's tropical fruit shipments into the North
American market are delivered using pallets or containers that
minimize damage to the product by eliminating the need to
handle individual boxes. As a result of a multi-year
investment program, now nearly completed, and the elimination
of a substantial amount of chartered ship capacity under
Chiquita's restructuring program, Chiquita now owns or
controls under long-term lease approximately 60% of its
aggregate shipping capacity. Most of the remaining capacity
is operated under contractual arrangements having terms of
three years or less. (See also ITEM 2 - PROPERTIES below and
Notes 6 and 7 to the Consolidated Financial Statements.)
Chiquita also operates loading and unloading facilities which
it owns or leases in Central and South America and various
ports of destination.
Sourcing. Chiquita has a greater number and geographic
diversity of sources of bananas than any of its competitors.
During 1993, approximately 30% of all bananas sold by Chiquita
were sourced from Panama. Bananas sourced from other
countries, including Colombia, Costa Rica, Guatemala,
Honduras, Mexico and the Philippines, comprised from 6% to 17%
(depending on the country) of bananas sold by Chiquita during 1993.
In 1993 approximately two-thirds of the bananas sourced by
Chiquita were produced by subsidiaries and the remainder were
purchased under purchase fruit arrangements from suppliers.
Under certain of the purchase fruit arrangements, which
require less initial capital investment by the Company than
owned production facilities, Chiquita furnishes financial and
technical assistance to its suppliers to support the
production and preparation of bananas for shipment. Individual
suppliers in Mexico and the Philippines provided approximately
6% and 10%, respectively, of the bananas sold by Chiquita in
1993. The producer in the Philippines has traditionally
supplied substantially all of the bananas marketed by the
Company in Japan. No other single supplier provided 5% or
more of Chiquita's bananas.
Bananas are vulnerable to adverse local weather
conditions, which are quite common but difficult to predict,
and to crop disease, the control of which entails significant
expense. These factors may restrict worldwide supplies and
result in increased prices for bananas. However, competitors
may be affected differently depending upon their ability to
obtain adequate supplies from sources in other geographic
areas. Chiquita's overall risk from these factors, as well as
from political changes in countries where bananas are grown,
is reduced by the low concentration of its banana production
in individual producing locations.
Labor cost, which is a significant portion of the cost of
producing bananas, varies depending on the country of origin.
Since bananas are shipped in cardboard boxes, paper cost is
also significant.
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The geographically diverse sources of other fresh fruits
and vegetables primarily involve formal and informal purchase
arrangements with numerous unrelated producers and importers.
None of these arrangements is individually significant to the
Company's operations.
Processed Food Products
Chiquita's processed food products include fruit and
vegetable juices sold primarily in the United States;
processed fruit and vegetables, including processed bananas,
sold worldwide under the "Chiquita," "Friday" and other
brands; wet and dry salads sold under the "Club Chef," "Chef
Classic" and "Naked Foods" brands; and other consumer packaged
foods sold in Latin America by the Numar Division.
Chiquita branded fruit juices include a full line of
tropical blends sold refrigerated, frozen and in shelf stable
individual servings. The refrigerated and frozen lines
include six varieties: "Caribbean Splash," "Tropical
Squeeze," "Raspberry Passion," "Orange Banana," "Calypso
Breeze" and "Hawaiian Sunrise." Individual servings are sold
in three of these varieties: "Caribbean Splash," "Orange
Banana" and "Calypso Breeze." These all natural tropical
blends are available throughout most of the United States and
are manufactured by others from fruit juice concentrates and
purees to the Company's specifications. The Company also
produces and markets natural fresh fruit and vegetable juices
sold under the "Ferraro's Fine Juices" and "Naked Juice"
brands.
Chiquita's processed banana products include banana puree,
sliced bananas and other specialty products which are produced
by the Company and sold to producers of baby food, fruit
beverages, baked goods and fruit-based products, to
wholesalers of bakery and dairy food products, and to selected
licensees including Beech-Nut and General Mills.
Friday Canning Corporation ("Friday") is one of the
largest private-label vegetable processors in the United
States. Friday markets a full line of over twenty-five types
of processed vegetables to retail and food service customers
throughout the U.S. and other countries. Friday competes
directly with a few major producers of both branded and
private-label canned vegetables, as well as indirectly with
numerous marketers of frozen and fresh vegetable products.
The vegetable processing industry is affected by the
availability of produce, which can vary due to local weather
conditions.
The Numar Division is a vertically integrated marketer,
refiner and producer of shortening, margarine and vegetable
oil products primarily in Costa Rica and Honduras. These
products are derived primarily from oil palm grown on the
Company's plantations located in these countries. Numar is
the leading marketer of such products in Costa Rica and
Honduras and sells its products in these and other Central
American countries under the "Numar," "Clover" and other brand
names. Numar's competitors in Central America consist
principally of a number of small local firms and subsidiaries
of multinational corporations.
RISKS OF INTERNATIONAL OPERATIONS
Information about the Company's operations by geographic
area is included in Note 14 to the Consolidated Financial
Statements included in the Company's 1993 Annual Report to
Shareholders and is incorporated herein by reference.
The Company is subject to a variety of governmental
regulations in certain countries where it sources and markets
its products, including import quotas and tariffs, currency
exchange controls and taxes. On July 1, 1993, the European
Union ("EU") implemented a new quota effectively restricting
the volume of Latin American bananas imported into the EU to
approximately 80% of prior levels. The quota is administered
through a licensing system and grants preferred status to
producers and importers within
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the EU and its former colonies, while imposing new quotas and
tariffs on bananas imported from other sources, including
Latin America, Chiquita's primary source of fruit. Challenges
to the quota and many matters regarding implementation and
administration of the quota remain to be resolved. Prior to
its implementation, the principles underlying the new
regulation were ruled illegal under the General Agreement on
Tariffs and Trade ("GATT") by a GATT dispute settlement panel.
In January 1994, a GATT dispute settlement panel ruled on a
second lawsuit against the current EU regulation in favor of
the Latin American countries. GATT rulings in favor of the
Latin American countries could result in an increase in the
total volume of Latin American bananas, including banana
volume of the Company, which could be imported under the
quota. However, there can be no assurance that the EU will
comply, or of the manner in which it would comply, with such
rulings. (See "Management's Analysis of Operations and
Financial Condition" included in the Company's 1993 Annual
Report to Shareholders for a discussion of the impact of the
EU quota on current operations.)
Certain of the Company's operations are heavily dependent
upon products grown and purchased in Central and South America
and, to a lesser extent, the Philippines. These activities, a
significant factor in the economies of many of the countries
where the Company produces and purchases bananas and other
agricultural and consumer products, are subject to risks that
are inherent in operating in such countries, including
government regulation, currency restrictions and other
restraints, risks of expropriation and burdensome taxes.
There is also a risk that legal or regulatory requirements
will be changed or that administrative policies will change.
Certain of these activities are dependent upon leases and
other agreements with the governments of these countries.
The Company leases all the agricultural lands it uses in
Panama from the Republic of Panama under lease and operating
agreements which automatically renew each year unless canceled
by either party on four years prior notice. In the event of
termination of the agreements, the government of Panama, which
previously purchased such agricultural lands from the Company,
may purchase other Panamanian assets of the Company at
specified values which approximate carrying value but may be
less than market value.
Certain facilities in Honduras previously owned by the
Company were transferred in prior years to the government of
Honduras with provision for their subsequent use by the
Company. Such facilities include a railroad which the Company
operates under a lease with the government of Honduras that
expires January 1, 1995. The Company believes that the lease,
if required in 1995, can be extended or renewed.
As a result of certain governmental price and export
controls in Costa Rica and Honduras, cost increases related to
the Company's oil palm operations may not initially be
recovered through selling prices in the markets in which these
products are sold.
The Company's operations worldwide and the products it
sells are subject to numerous governmental regulations and
inspections by environmental, food safety and health
authorities. These regulations directly affect day-to-day
operations. Although the Company believes it is substantially
in compliance with such regulations, actions by regulators
have in the past required, and in the future may require,
operational modifications or capital improvements at various
locations or the payment of fines and penalties, or both.
The Company's operations are conducted in many areas of
the world and involve transactions in a variety of currencies.
Results of its operations may be significantly affected by
fluctuations of currency exchange rates. Such fluctuations
affect the Company's banana operations because many of its
costs are incurred in currencies different from those that are
received from the sale of bananas in non-U.S. markets, and
there is normally a time lag between the incurrence of such
costs and collection of the related sales
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proceeds. The Company's policy is to exchange local
currencies for dollars immediately upon receipt, thus reducing
exchange risk. The Company also engages from time to time in
various hedging activities to further minimize potential
losses on cash flows originating in currencies other than the
U.S. dollar. Fluctuations of currency exchange rates may also
affect the Company's Numar Division. Since Numar's profits
are generated in many of the same Central American countries
where the Company incurs costs to produce bananas, exchange
fluctuations with an adverse effect on Numar's profits would
generally have a favorable impact on the Company's cost of
producing bananas. See Note 1 to the Consolidated Financial
Statements and "Management's Analysis of Operations and
Financial Condition" included in the Company's 1993 Annual
Report to Shareholders for information with respect to
currency exchange.
LABOR RELATIONS
The Company employs a total of approximately 45,000
persons in its continuing operations. Approximately 39,000 of
these associates are employed in Central and South America
including 32,000 workers covered by labor contracts.
The Company has approximately 75 labor contracts with
terms expiring from 1994 to 1997. Contracts expiring in 1994
cover approximately 9,000 employees including approximately
6,500 under a contract expiring in July at one of Chiquita's
Panamanian banana producing divisions. The Company has
commenced negotiations for a new contract with these workers
and does not expect any new terms of the contract to have a
material effect on its operations. Strikes or other labor-
related actions are often encountered upon expiration of labor
contracts and also frequently occur during the term of the
contracts.
DISCONTINUED OPERATIONS
During the fourth quarter of 1992, after evaluation of
reorganization plans announced earlier that year and
completion of other preparatory actions, the Company adopted a
plan of disposal for its Meat Division operations. (See Note
3 to the Company's Consolidated Financial Statements included
in the Company's 1993 Annual Report to Shareholders.)
Pursuant to the plan, the Company immediately completed
the sale of a major fresh pork processing facility in December
1992. During 1993 and early 1994, the Company engaged in
extensive activity with respect to execution of the balance of
its disposal plan. Numerous proposals for the sale of
individual components of the Meat Division were received from
a larger number of buyers than originally expected. Although
progress under the plan has been slower than anticipated,
partially as a result of the Company evaluating all these
proposals in the interest of maximizing shareholder value, the
Company has made significant progress in the implementation of
its disposal plan. This progress includes:
- successful ongoing cost reduction efforts that have
contributed to the improvement in Meat Division
operating results to approximately breakeven levels for
1993.
- progress toward obtaining further substantial cost
reductions for 1994 and beyond relating to retiree
medical costs. In June 1993, the Company received a
favorable court ruling on its previously filed
litigation that confirms its right to unilaterally
reduce medical benefits of retired hourly employees.
This ruling is being appealed by the union and a
hearing on the appeal was held in February 1994. A
decision on the appeal is expected later in 1994.
- receiving subsidies and concessions from the State of
South Dakota and the City of Sioux Falls that will
enhance the operating profitability of the Sioux Falls
plant. These incentives were offered in September 1993
by newly installed state and city administration
officials who took office in April 1993 after their
predecessors, including the Governor of South Dakota,
were
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killed in a plane crash on their return from a meeting
to discuss incentives with Company and Meat Division
representatives.
- obtaining a new stand-alone revolving credit facility
in June 1993 to fund the Meat Division's working
capital needs.
- obtaining financial incentives and concessions in
November 1993 from the City of Sioux City, Iowa and the
local labor union to enhance the salability of the
Sioux City pork processing plant as an operating
facility.
- completing the sale of the Division's specialty meat
operations in February 1994 for approximately $50
million in cash.
The Company also continues to be engaged in marketing
efforts with respect to the remaining Meat Division operations
and expects to complete the divestitures of these operations
by the end of 1994.
Marketing. The Meat Division is engaged in the
processing and marketing primarily of fresh pork and processed
meat products, including sausage, frankfurters, bacon, hams
and luncheon meats. The Meat Division's products are sold
principally in the United States, and for export to Japan,
Mexico, Canada, and other Central American and Pacific Rim
countries. In addition to operating its own meat-packing
plants, the Company engages other meat packers to custom
slaughter and process meat products.
The Meat Division's products are marketed in the United
States nationally under the "John Morrell" brand name and
regionally under brands such as "Dinner Bell," "Kretschmar,"
"Rath Black Hawk" and "Tobin's First Prize," as well as under
various private customer labels.
Profit margins in the fresh meat business are low and
competition among packers in the United States is strong.
Price, quality and brand identification are major competitive
factors. The Meat Division's major competitors in fresh and
processed meats are large U.S. meat-packing corporations, as
well as a large number of U.S. regional and local meat
packers. Competition also comes from other high protein
products, including beef, poultry, seafood and dairy products.
The Meat Division's operations involve supplying a
consistent quality product to a broad market, including large
food chains. The Meat Division maintains an experienced sales
force that sells its products principally in the United States
and Japan. Some fresh and processed meats, including export
sales, are also sold through independent food brokers or
expedited through international trading companies.
The availability of adequate supplies and cost of
livestock are significant to the profitability of the Meat
Division's fresh meat operations. Generally, results of
operations are adversely affected when livestock is in short
supply because competition among meat packers for available
supplies is strong and prices for livestock may increase. The
availability of livestock is determined primarily by decisions
made independently by a large number of growers and feeders
over a period of years and is beyond the control of the Meat
Division and competing meat packers.
Labor relations. The Meat Division employs approximately
4,600 domestic employees, nearly all of whom are covered under
approximately 10 labor contracts with terms expiring from 1994
to 1998.
In January 1984 certain workers who were affected by the
closing and later reopening of one of the Meat Division's
plants sued John Morrell & Co. ("Morrell"), Chiquita and the
United Food and Commercial Workers Union in the U.S. District
Court for the Western District of Tennessee. The workers
claimed that Morrell breached its collective bargaining
agreement with the union and that the
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union breached its duty of fair representation. Morrell,
Chiquita and the union settled with the workers in late 1988.
However, the union also asserted cross-claims against Morrell
and Chiquita. In December 1992, the Court dismissed all of
the cross-claims. The union has appealed this decision and a
hearing is scheduled for April 1994.
In an unrelated action, in October 1988 approximately 650
employees from three Morrell plants filed suit in the U.S.
District Court for the Northern District of Iowa claiming that
Morrell violated wage and hours laws by not paying them for
the time required to put on, take off and clean personal
protective clothing. In February 1994, Morrell settled this
suit with the employees for an immaterial amount.
A strike at Sioux Falls in May 1987 led to three lawsuits
by Morrell against the union. Following judgments in favor of
Morrell in the first two lawsuits which resulted in payments
to Morrell by the union totaling $29.3 million, the union
demanded further arbitration of its claims that its contract
had required Morrell to recall the striking employees. In the
fall of 1991 in the third lawsuit, Morrell sued the union in
the U.S. District Court for the District of South Dakota,
seeking a ruling that the prior litigation disposed of the
union's recall claims. In March 1992, the court ruled in
Morrell's favor. On appeal, the Eighth Circuit Court of
Appeals reversed the lower court's decision, ruling that the
union is entitled to have its remaining arguments heard in a
second round of arbitration, and the United States Supreme
Court refused to grant certiorari. In February 1994, the
union petitioned to re-commence arbitration.
Properties. The Meat Division owns and operates its
principal slaughtering plant and processed meat facility
located in Sioux Falls, South Dakota. The Meat Division also
owns or leases and operates meat-processing facilities in Iowa
and Ohio and operates warehouses and distribution facilities
in several states. Although much of the Sioux Falls plant is
relatively old, the Company believes that it and other more
modern plants and facilities now used are, in general, well
maintained and suitable for its operations. Certain products
are produced for the Meat Division by custom meat packers in
plants located in Ohio and Kansas.
Regulation. The Meat Division's operations are subject
to numerous governmental regulations and regular inspections
by the U.S. Department of Agriculture and other environmental
and health authorities. Actions by regulators directly affect
day-to-day operations and have in the past required, and in
the future may require, plant improvements at various
locations or the payment of fines and penalties, or both.
While it is not possible to predict the cost of such future
improvements with a high degree of certainty, management does
not expect that such expenditures will have a material impact
on the Company's financial results.
In March 1993, Morrell brought to the attention of the
United States Environmental Protection Agency ("USEPA")
certain deficiencies relating to the wastewater treatment
facility at one of its plants. The Company's internal
investigation of this matter and discussions with the USEPA
are continuing. The U.S. Department of Justice (DOJ) has
proposed that Morrell consider entering into a judicial civil
consent order requiring compliance with certain environmental
laws, regulations and permits and other actions. The DOJ
indicated that the amount of civil penalties, if any, to be
imposed would be resolved later. In addition, the U.S.
Attorney for South Dakota and the Environmental Crimes Section
of the Environment and Natural Resources Division of the DOJ
are reviewing the matter. Morrell is presently operating this
wastewater treatment facility under an extension of its
previous five-year permit which will remain in place until a
permanent permit is issued.
ITEM 2 - PROPERTIES
The Company owns approximately 132,000 acres and leases
approximately 46,000 acres of improved land, principally in
Costa Rica, Panama and Honduras. Substantially all of this
land is used for
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the cultivation of bananas and oil palm and support
activities, including the maintenance of floodways. The
Company also owns power plants, packing stations, warehouses,
irrigation systems and loading and unloading facilities used
in connection with its banana and oil palm operations.
The Company owns or controls under long-term bareboat
leases 23 ocean-going refrigerated vessels, including 1
delivered in early 1994, and has 21 additional such vessels
under time charters, primarily for transporting tropical fruit
sold by the Company. From time to time, excess capacity may
be chartered or subchartered to others. In addition, the
Company enters into spot charters as necessary to supplement
its transportation resources. The Company also owns or leases
other related equipment, including refrigerated container
units, used to transport fresh food. The majority of the
ships owned and related container units are pledged as
collateral for related financings.
Properties used by the Company's processed foods
operations include processing facilities in Costa Rica and
Honduras, and vegetable canning facilities in Wisconsin.
Other operating units of the Company own, lease and operate
properties, principally in the United States and Central and
South America. The Company leases the space for its executive
offices in Cincinnati, Ohio.
For further information with respect to the Company's
physical properties, see the descriptions under ITEM 1 -
BUSINESS - GENERAL and DISCONTINUED OPERATIONS, above, and
Notes 6 and 7 to the Consolidated Financial Statements
included in the Company's 1993 Annual Report to Shareholders.
ITEM 3 - LEGAL PROCEEDINGS
A number of legal actions are pending against the Company,
including those described below and in ITEM 1 - BUSINESS -
DISCONTINUED OPERATIONS affecting the Meat Division, which is
reported as a discontinued operation. Based on evaluations of
facts which have been ascertained and opinions of counsel,
management does not believe such litigation will, individually
or in the aggregate, have a material adverse effect on the
consolidated financial condition or results of operations of
the Company.
The Company and other major banana producing companies
have been added as defendants in two purported class actions,
filed in state courts in Galveston and Brazoria counties,
Texas, and in three other Texas state court cases. These
cases were originally filed in early 1993 against the
manufacturers of an agricultural chemical called DBCP by an
aggregate of approximately 20,000 individuals. Most of the
plaintiffs are foreign citizens who claim to have been
employees of banana companies, including in some cases
subsidiaries of the Company. The plaintiffs allege they were
injured as a result of exposure to DBCP, which was used
primarily in the 1970's. The damage claims have not been
quantified. The suits are Franklin Rodriguez Delgado, et al.
v. Shell Oil Company, et al., Cause No. 93-CV-0030 (Galveston
County, Texas); Armando Ramos Bermudez, et al. v. Shell Oil
Company, et al., Cause No. 93-C-2290 (Brazoria County, Texas);
Narcisco Borja, et al. v. Dow Chemical Company, et al., Cause
No. 93-320 (Dallas County, Texas); Juan Ramon Valdez, et al.
v. Shell Oil Company, et al., Cause No. 17814 (Morris County,
Texas); and Ramon Rodriguez Rodriguez, et al. v. Shell Oil
Company, et al., Cause No. 3813 (Jim Hogg County, Texas).
Similar suits have been filed in Costa Rica and Panama by
approximately 800 individuals against subsidiaries of the
Company, including Compania Palma Tica and Compania Bananera
Atlantica Limitada. Similar suits have been filed in other
countries against other defendants as well. The Company has
answered all suits, believes it has substantial and
meritorious defenses and is vigorously defending the actions.
9
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Information concerning the number of shareholders at March
1, 1994, and the market for the Company's capital stock is set
forth on the inside back cover of the Company's 1993 Annual
Report to Shareholders under "Investor Information."
Information concerning the price ranges of the Company's
capital stock and dividends declared thereon is set forth in
Note 15 to the Consolidated Financial Statements included in
the 1993 Annual Report to Shareholders. Information
concerning restrictions on the Company's ability to declare
and pay dividends is set forth in Note 8 to the Consolidated
Financial Statements included in the 1993 Annual Report to
Shareholders. All such information is incorporated herein by
reference.
ITEM 6 - SELECTED FINANCIAL DATA
This information is included in the table entitled
"Selected Financial Data" on page 6 of the Company's 1993
Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This information is included under the caption
"Management's Analysis of Operations and Financial Condition"
included on pages 8 through 10 of the Company's 1993 Annual
Report to Shareholders and is incorporated herein by
reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of Chiquita Brands
International, Inc. and its subsidiaries included on pages 11
through 23 of the Company's 1993 Annual Report to
Shareholders, and "Quarterly Financial Data" which is set
forth in Note 15 to such Consolidated Financial Statements,
are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Except for information relating to the Company's executive
officers set forth in ITEM 10 below, the information required
by the following Items will be included in Chiquita's
definitive Proxy Statement which will be filed with the
Securities and Exchange Commission in connection with the 1994
Annual Meeting of Shareholders and is incorporated herein by
reference.
10
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are:
Carl H. Lindner (age 74) - Mr. Lindner has been Chairman
of the Board of Directors and Chief Executive Officer of the
Company since August 1984 and Chairman of the Board of
Directors and Chief Executive Officer of AFC since AFC was
founded over 30 years ago. AFC is a holding company which,
through subsidiaries, is engaged in several financial
businesses, including property and casualty insurance,
annuities, and portfolio investing. In nonfinancial areas,
AFC has substantial operations in the food products industry,
through its ownership in Chiquita, in television and radio
station operations, through its ownership of Great American
Communications Company ("GACC"), and in industrial
manufacturing.
Keith E. Lindner (age 34) - Mr. Lindner has been President
and Chief Operating Officer of the Company since June 1989 and
President of its Chiquita Brands, Inc. subsidiary since
December 1986. He was Senior Executive Vice President of the
Company from March 1986 to June 1989.
Fred J. Runk (age 51) - Mr. Runk has been a Vice President
of the Company since September 1984. From September 1984 to
March 1994 he served as the Company's Chief Financial Officer.
From February 1985 until June 1988, he was also Treasurer of
the Company. Mr. Runk has served as Vice President and
Treasurer of AFC for more than five years.
Steven G. Warshaw (age 40) - Mr. Warshaw was named Chief
Financial Officer of the Company in March 1994. He has also
served as the Company's Executive Vice President and Chief
Administrative Officer since January 1990. Mr. Warshaw has
been employed by the Company in various executive capacities
since April 1986.
Robert F. Kistinger (age 41) - Mr. Kistinger was named
Senior Executive Vice President of the Company's Chiquita
Banana Group in February 1994. From March 1989 until February
1994, he was Executive Vice President, Operations of the
Company's Chiquita Tropical Products Division. Mr. Kistinger
has been employed by the Company in various capacities since
1980.
Thomas E. Mischell (age 46) - Mr. Mischell has served as a
Vice President of the Company since July 1986 and has served
as Vice President of AFC for more than five years.
Charles R. Morgan (age 47) - Mr. Morgan has been Vice
President, General Counsel and Secretary of the Company since
January 1990. Mr. Morgan has also served as Vice President,
General Counsel and Secretary of Chiquita Brands, Inc. since
June 1988 and as Vice President and Secretary of Morrell since
February 1989. From February 1989 to July 1993, he was also
General Counsel of Morrell.
Jos P. Stalenhoef (age 52) - Mr. Stalenhoef was named
President, Chiquita Banana-North American Division in February
1994. From March 1989 until February 1994, he was Senior Vice
President, North America, Chiquita Tropical Products Division.
Prior to that time, Mr. Stalenhoef was Vice President,
Marketing, Chiquita Tropical Products Division.
William A. Tsacalis (age 50) - Mr. Tsacalis has served as
Vice President and Controller of the Company since November
1987.
In December 1993, GACC completed a comprehensive financial
restructuring which included a prepackaged plan of
reorganization filed in November of that year under Chapter 11
of the Bankruptcy Code. Carl H. Lindner and Fred J. Runk were
executive officers of GACC within two years before GACC's
bankruptcy reorganization.
11
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of the
Company and the Report of Independent Auditors are included in
the Company's 1993 Annual Report to Shareholders and are
incorporated by reference in Part II, Item 8:
Page of
Annual Report
Report of Independent Auditors 7
Consolidated Statement of Income
Years ended December 31, 1993, 1992 and 1991 11
Consolidated Balance Sheet
December 31, 1993 and 1992 12
Consolidated Statement of Shareholders' Equity
Years ended December 31, 1993, 1992 and 1991 13
Consolidated Statement of Cash Flow
Years ended December 31, 1993, 1992 and 1991 14
Notes to Consolidated Financial Statements 15
2. Financial Statement Schedules
The following consolidated financial statement schedules of
the Company, which exclude amounts relating to its
discontinued operations, are included in this Annual Report on
Form 10-K:
Page of
Form 10-K
II - Amounts Receivable from Related Parties, and
Underwriters, Promoters, and Employees Other
Than Related Parties
17
V - Property, Plant and Equipment 18
VI - Accumulated Depreciation of Property,
Plant and Equipment
19
VIII - Allowance for Doubtful Accounts Receivable 20
IX - Short-term Borrowings 21
X - Supplementary Income Statement Information 22
All other schedules are not required under the related
instructions or are inapplicable and, therefore, have been
omitted.
12
<PAGE>
3. Exhibits
See Index of Exhibits (page 23) for a listing of all
exhibits filed with this Annual Report on Form 10-K.
(b) There were no reports on Form 8-K filed by the Company
during the quarter ended December 31, 1993.
13
<PAGE>
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 on March 30, 1994.
CHIQUITA BRANDS INTERNATIONAL, INC.
By /s/ Carl H. Lindner
Carl H. Lindner
Chairman of the Board and Chief
Executive Officer
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
indicated below on March 30, 1994:
/s/ Carl H. Lindner Chairman of the Board and
Carl H. Lindner Chief Executive Officer
/s/ Keith E. Lindner Director; President and
Keith E. Lindner Chief Operating Officer
/s/ S. Craig Lindner Director
S. Craig Lindner
Hugh F. Culverhouse* Director
Hugh F. Culverhouse
/s/ Fred J. Runk Director and Vice President
Fred J. Runk
Jean H. Sisco* Director
Jean H. Sisco
/s/ Ronald F. Walker Director
Ronald F. Walker
14
<PAGE>
/s/ Steven G. Warshaw Executive Vice President, Chief
Administrative
Steven G. Warshaw Officer and Chief Financial
Officer
/s/ William A. Tsacalis Vice President and Controller
William A. Tsacalis (Chief Accounting Officer)
* By /s/ William A. Tsacalis
Attorney-in-Fact**
** By authority of powers of attorney filed with this annual
report on Form 10-K.
15
<PAGE>
(This page left blank intentionally.)
16
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES, AND
UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
Balance at
Balance at Deductions December 31, 1993
January 1, Amounts Amounts Not
Name of Debtor 1993 Additions Collected Written off Current Current
<S> <C> <C> <C> <C> <C> <C>
Robert F. Kistinger,
Senior Executive
Vice President,
Chiquita Banana Group(1) $ --$200,000 $ -- $ --$200,000$
- --
(1) Collateralized by a second mortgage on Mr.
Kistinger's principal residence originally due
on March 1, 1995 with interest at 7% compounded
semi-annually. Repaid in full on January 25,
1994.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Sales Other Balance
Balance at Additions and Changes at
Beginning at Retire- Add End of
of Period Cost ments (Deduct) Period
<S> <C> <C> <C> <C> <C>
Year Ended
December 31,
1993
Land $ 101,131 $ 1,969 $ (241) $ 1,128 $ 103,987
Buildings and
Improvements 186,038 11,998 (2,358) 2,756 198,434
Machinery and
Equipment 403,480 29,193 (23,298) 2,318 411,693
Ships and
Containers 692,375 125,171 (27,931) 1,202 790,817
Cultivations 292,843 18,752 (15,068) 9,019 305,546
Other 85,106 9,471 (1,056) (14,188) 79,333
Total $ 1,760,973 $ 196,554 $ (69,952) $ 2,235 $ 1,889,810
Year Ended
December 31,
1992
Land $ 90,407 $ 9,360 $ (300) $ 1,664 $ 101,131
Buildings and
Improvements 137,054 42,697 (2,076) 8,363 186,038
Machinery and
Equipment 333,151 56,398 (11,683) 25,614 403,480
Ships and
Containers 412,243 281,919 (226) (1,561) 692,375
Cultivations 224,149 69,108 (397) (17) 292,843
Other 73,514 12,791 (2,134) 935 85,106
Total $ 1,270,518 $ 472,273 $ (16,816) $ 34,998* $ 1,760,973
Year Ended
December 31,
1991
Land $ 53,279 $ 37,398 $ (1,348) $ 1,078 $ 90,407
Buildings and
Improvements 104,250 37,140 (1,858) (2,478) 137,054
Machinery and
Equipment 272,572 61,975 (11,146) 9,750 333,151
Ships and
Containers 236,833 184,021 (11,832) 3,221 412,243
Cultivations 162,245 62,703 (863) 64 224,149
Other 58,784 12,404 (479) 2,805 73,514
Total $ 887,963 $ 395,641 $ (27,526) $ 14,440* $ 1,270,518
* Principally relates to acquisitions of businesses.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
(In thousands)
Sales Other Balance
Balance at Additions and Changes at
Beginning at Retire- Add End of
of Period Cost ments (Deduct) Period
<S> <C> <C> <C> <C> <C>
Year Ended
December 31,
1993
Buildings and
Improvements $ 49,253 $ 7,828 $ (1,120) $ (987) $ 54,974
Machinery and
Equipment 185,489 35,386 (12,769) 1,946 210,052
Ships and
Containers 52,469 43,492 (5,661) (3) 90,297
Cultivations 70,087 10,166 (5,716) 1,265 75,802
Other 28,762 5,719 (486) (2,501) 31,494
Total $ 386,060 $ 102,591 $ (25,752) $ (280) $ 462,619
Year Ended
December 31,
1992
Buildings and
Improvements $ 37,103 $ 8,277 $ (1,168) $ 5,041 $ 49,253
Machinery and
Equipment 146,710 30,208 (8,202) 16,773 185,489
Ships and
Containers 20,346 32,147 (26) 2 52,469
Cultivations 61,937 8,147 (17) 20 70,087
Other 27,112 1,659 (123) 114 28,762
Total $ 293,208 $ 80,438 $ (9,536) $ 21,950* $ 386,060
Year Ended
December 31,
1991
Buildings and
Improvements $ 33,681 $ 5,711 $ (1,278) $ (1,011) $ 37,103
Machinery and
Equipment 126,569 23,714 (2,766) (807) 146,710
Ships and
Containers 15,825 16,457 (11,935) (1) 20,346
Cultivations 55,995 5,578 (425) 789 61,937
Other 22,074 2,941 (369) 2,466 27,112
Total $ 254,144 $ 54,401 $ (16,773) $ 1,436* $ 293,208
* Principally relates to acquisitions of businesses.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE VIII - ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
(In thousands)
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of period $ 9,698 $ 7,196 $ 6,826
Additions:
Charged to costs and expenses 4,797 6,300
2,261
Deductions:
Write-offs 3,220 4,182 1,751
Other, net 224 (384) 140
3,444 3,798 1,891
Balance at end of period $ 11,051 $ 9,698 $ 7,196
</TABLE>
20
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE IX - SHORT-TERM BORROWINGS
(In thousands)
<TABLE>
<CAPTION>
Maximum
Weighted Aggregate Average Weighted
Average Borrowings Out- Average
Category Interest Out- standing Interest
of Balance Rate at standing Borrowing Rate
Year Borrow- at End End of at any During During
Ended ing of Year Year Month End the Year the Year
<S> <C> <C> <C> <C> <C> <C>
12/31/93 Banks $112,796 10.9% $149,328 $125,090 12.4%
12/31/92 Banks $136,765 12.7% $167,365 $142,448 15.6%
12/31/91 Banks $146,756 18.1% $146,756 $75,460 17.2%
</TABLE>
Short-term borrowings include borrowings in currencies other than the U.S.
dollar carrying interest rates which generally are higher than interest
rates on U.S. dollar debt.
Average outstanding borrowings during each year were determined based on
the amounts outstanding at the end of each month during the year.
The weighted average interest rate during each year was computed by
dividing actual interest expense on short-term borrowings in each year by
average short-term borrowings in such year.
21
<PAGE>
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In thousands)
<TABLE>
<CAPTION>
Charged to Costs and Expenses
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $64,340 $66,429 $54,961
Taxes, other than payroll
and income taxes:
Import 51,446 40,945 36,795
Export 25,765 25,602 33,020
Other 11,059 10,038 6,129
Advertising 44,302 71,699 60,095
</TABLE>
22
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
Index of Exhibits
Exhibit
Number Description
3-a The Company's Certificate of Incorporation
*3-b The Company's By-Laws, filed as Exhibit 3-b to Annual
Report on Form 10-K for the year ended December 31, 1992
4 Registrant has no outstanding debt issues exceeding 10% of
the assets of Registrant and its consolidated subsidiaries.
The Registrant will furnish to the Securities and Exchange
Commission, upon request, copies of all agreements and
instruments defining the rights of security holders for
debt issues not exceeding 10% of the assets of Registrant
and its consolidated subsidiaries.
10-a Lease of Lands and Operating Contract between United Brands
Company, Chiriqui Land Company, Compania Procesadora de
Frutas and the Republic of Panama, dated January 8, 1976,
effective January 1, 1976
10-b Agreement dated April 22, 1976 effective January 1, 1976
between Tela Railroad Company and the Government of
Honduras
Executive Compensation Plans
*10-c 1986 Stock Option and Incentive Plan, filed as Exhibit A to
the definitive Proxy Statement in connection with the
Company's 1992 Annual Meeting of Shareholders
*10-d Individual Stock Option Plan and Agreement, filed as
Exhibit 4 to Registration Statement on Form S-8 No. 33-
25950 dated December 7, 1988
*10-e Deferred Compensation Plan, filed as Exhibit 10-e to Annual
Report on Form 10-K for the year ended December 31, 1992
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends
13 Chiquita Brands International, Inc. 1993 Annual Report to
Shareholders (pages 6 through 23 and inside back cover)
21 Subsidiaries of Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
99 Annual Reports on Form 11-K for the Chiquita Savings and
Investment Plan and the John Morrell & Co. Salaried
Employees Incentive Savings Plan for 1993 will be filed by
amendment on or before June 29, 1994.
* Incorporated by reference.
23
<PAGE>
Exhibit 3-a
CERTIFICATE OF INCORPORATION
(Restated)
OF
UNITED BRANDS COMPANY
UNITED BRANDS COMPANY, a corporation organized and existing
under the laws of the State of New Jersey, restates and
integrates its Certificate of Incorporation to read in full as
herein set forth.
SECTION I
The name of the Corporation is UNITED BRANDS COMPANY.
SECTION II
The location of its registered office in the State of
New Jersey is 15 Exchange Place, Jersey City, county of Hudson
(07302), and the name of the registered agent therein and in
charge thereof upon whom process against the Corporation may be
served is The Corporation Trust Company.
SECTION III
The purposes for which the Corporation is organized are to
engage in any activity within the purposes for which corporations
now or at any time hereafter may be organized under the
New Jersey Business Corporation Act and under all amendments and
supplements thereto, or any act enacted to take the place
thereof, including without limiting the generality of the
foregoing:
To engage in such activities directly or through a
subsidiary or subsidiaries, and to take all acts deemed
appropriate to promote the interest of such subsidiary or
subsidiaries, including without limiting the generality of the
foregoing, to make contracts and incur liabilities for the
benefit of such subsidiary or subsidiaries; to transfer or cause
to be transferred to any such subsidiary or subsidiaries assets
of the Corporation; and to guarantee the bonds, debentures, notes
or other evidences of indebtedness issued by or obligations
incurred by such subsidiary or subsidiaries and secure the same
by mortgage or security interest in the property of the
Corporation; and to contract that said bonds, debentures, notes
or other evidences of indebtedness issued by such subsidiary or
subsidiaries may be convertible into stock of the Corporation
upon such terms and conditions as may be approved by the Board of
Directors; and to exercise as a purpose or purposes each power
granted to corporations by the New Jersey Business Corporation
Act and any amendment or supplement thereto or any corporation
act enacted to take the place thereof, insofar as such powers
authorize or may hereafter authorize corporations to engage in
activities; and to guarantee the obligations of any corporation,
partnership, limited partnership, joint venture, or other
association in which the Corporation, pursuant to powers granted
by any such act, has or hereafter may acquire a substantial
interest.
SECTION IV
The aggregate number of shares which the Corporation is
authorized to issue is 49,046,028 shares divided into
(i) 45,000,000 shares of Capital Stock, par value $1 per share
("Capital Stock"), (ii) 46,028 shares of $3.00 Cumulative
Preferred Stock (Convertible Prior to July 1, 1987), without
nominal or par value ("$3.00 Convertible Preferred Stock"),
having the designations, preferences, rights and restrictions set
forth in Subsection A and (iii) 4,000,000 shares of Cumulative
Preference Stock issuable in series, without nominal or par value
("Series Preference Stock"). The designations, preferences,
rights and restrictions, to the extent that the same have been
determined, and the manner of determining other designations,
preferences, rights and restrictions of each series of Series
Preference Stock are set forth in this Section IV.
SUBSECTION A. PROVISIONS APPLICABLE TO $3.00
CONVERTIBLE PREFERRED STOCK
(a) Dividends. The holders of $3.00 Convertible Preferred
Stock, in preference to the holders of Series Preference Stock
and of Capital Stock of the Corporation, shall be entitled to
receive, as and when declared by the Board of Directors,
dividends at the rate of $3.00 per share per annum and no more,
payable quarterly on the last days of March, June, September and
December in each year, commencing on the last day of the
quarterly dividend period in which dividends on such shares
commence to accrue. Such preferential dividends shall accrue,
with respect to shares of $3.00 Convertible Preferred Stock
issued in exchange for shares of $3.00 Convertible Preferred
Stock of AMK Corporation ("AMK") pursuant to the Plan and
Agreement of Merger between AMK and United Fruit Company
("United"), dated as of May 15, 1970 (the "Agreement of Merger")
from the beginning of the quarterly dividend period which
immediately precedes the day on which the merger provided for in
the Agreement of Merger becomes effective (the "Effective Date"),
and shall be cumulative so that if dividends in respect of any
quarterly dividend period at the rate of $3.00 per share per
annum shall not have been paid upon or declared and set apart for
the $3.00 Convertible Preferred Stock, the deficiency shall be
fully paid or declared and set apart before any dividend shall be
paid upon or declared and set apart for the Series Preference
Stock or for the Capital Stock. Preferential dividends on the
$3.00 Convertible Preferred Stock shall be deemed to accrue from
day to day. A quarterly dividend period shall begin on the day
following each dividend payment date set forth above and end on
the next succeeding dividend payment date.
(b) Liquidation. The $3.00 Convertible Preferred Stock
shall be preferred as to assets over the Series Preference Stock
and over the Capital Stock, so that in the event of the
liquidation, dissolution or winding up of the Corporation, the
holders of $3.00 Convertible Preferred Stock shall be entitled to
have set apart for them, or to be paid, out of the assets of the
Corporation before any distribution is made to or set apart for
the holders of Series Preference Stock or of Capital Stock, an
amount in cash equal to and in no event more than (i) $65.00 per
share plus a sum equal to accrued and unpaid dividends thereon,
whether or not earned or declared, in the event of an involuntary
liquidation, dissolution or winding up, or (ii) $68.00 per share
plus a sum equal to accrued and unpaid dividends thereon, whether
or not earned or declared, in the event of a voluntary
liquidation, dissolution or winding up on or prior to June 30,
1972, or (iii) the then applicable redemption price per share, in
the event of a voluntary liquidation, dissolution or winding up
on or subsequent to July 1, 1972.
(c) Redemption. At the option of the Corporation, by vote
of the Board of Directors, the $3.00 Convertible Preferred Stock
may be redeemed on or after, but not prior to, July 1, 1972, as a
whole, or in part, at any time or from time to time, at a
redemption price hereinafter specified. The redemption price of
shares of $3.00 Convertible Preferred Stock redeemed during the
twelve month period commencing July 1, 1972 shall be $68.00 per
share plus an amount equal to accrued and unpaid dividends
thereon to the date fixed for redemption, whether or not earned
or declared, and for shares of such Stock redeemed thereafter
shall be (i) the greater of (x) $68.00 per share minus the sum of
forty three cents for each July 1 during the period after July 1,
1972 and up to and including the date fixed for redemption or
(y) $65.00 per share, plus (ii) an amount equal to accrued and
unpaid dividends thereon to the date fixed for redemption,
whether or not earned or declared.
If less than all of the outstanding shares of $3.00
Convertible Preferred Stock are to be redeemed, the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its sole
discretion shall prescribe.
At least 30 days prior to the date fixed for the redemption
of shares of the $3.00 Convertible Preferred Stock a written
notice shall be mailed to each holder of record of shares of
$3.00 Convertible Preferred Stock to be redeemed in a postage
prepaid envelope addressed to such holder at his post office
address as shown on the records of the Corporation, notifying
such holder of the election of the Corporation to redeem such
shares, stating the date fixed for redemption thereof
(hereinafter referred to as the redemption date), and calling
upon such holder to surrender to the Corporation on the
redemption date at the place designated in such notice his
certificate or certificates representing the number of shares
specified in such notice of redemption.
On or after the redemption date each holder of shares of
$3.00 Convertible Preferred Stock to be redeemed shall present
and surrender his certificate or certificates for such shares to
the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid to or
on the order of the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered
certificate shall be canceled.
In case less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
From and after the redemption date (unless default shall be
made by the Corporation in payment of the redemption price) all
dividends on the shares of $3.00 Convertible Preferred Stock
designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price
thereof upon the surrender of certificates representing the same,
shall cease and determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on the
books of the Corporation, and such shares shall not be deemed to
be outstanding for any purpose whatsoever.
At its election the Corporation prior to the redemption date
may deposit the redemption price of the shares of $3.00
Convertible Preferred Stock so called for redemption in trust for
the holders thereof with a bank or trust company (having a
capital and surplus of not less than $5,000,000) in the Borough
of Manhattan, City and State of New York, or in any other city in
which the Corporation at the time shall maintain a transfer
agency with respect to such stock, in which case such redemption
notice shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of
the redemption price, and shall call upon such holders to
surrender the certificates representing such shares at such price
on or after the date fixed in such redemption notice (which shall
not be later than the redemption date) against payment of the
redemption price. From and after the making of such deposit, the
shares of $3.00 Convertible Preferred Stock so designated for
redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be
limited to the right to receive the redemption price of such
shares, without interest, upon surrender of the certificates
representing the same to the Corporation at said office of such
bank or trust company, and the right of conversion (on or before
the tenth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for
such redemption because of the exercise of such right of
conversion after the date of such deposit shall be returned to
the Corporation forthwith. Any interest accrued on such funds
shall be paid to the Corporation from time to time.
Any moneys so deposited which shall remain unclaimed by the
holders of such $3.00 Convertible Preferred Stock at the end of
six years after the redemption date, shall be returned by such
bank or trust company to the Corporation after which the holders
of the $3.00 Convertible Preferred Stock shall have no further
interest in such moneys.
(d) Vote. Each holder of $3.00 Convertible Preferred Stock
shall be entitled to one vote for each share held on each matter
submitted to a vote of stockholders of the Corporation and,
except as otherwise herein or by law provided, the $3.00
Convertible Preferred Stock, the Capital Stock of the
Corporation, and any other capital stock of the Corporation at
the time entitled thereto, shall vote together as one class,
except that while the holders of $3.00 Convertible Preferred
Stock, voting as a class, are entitled to elect two directors as
hereinafter provided, they shall not be entitled to participate
with the Capital Stock (or any other capital stock as aforesaid)
in the election of any other directors.
(e) Class Voting. In case at any time the equivalent of
six or more full quarterly dividends (whether consecutive or not)
on the $3.00 Convertible Preferred Stock shall be in arrears,
then during the period (hereinafter in this subparagraph (e)
called the Class Voting Period) commencing with such time and
ending with the time when all arrears in dividends on the $3.00
Convertible Preferred Stock shall have been paid and the full
dividend on the $3.00 Convertible Preferred Stock for the then
current quarterly dividend period shall have been paid or
declared and set apart for payment, at any meeting of the
stockholders of the Corporation held for the election of
directors during the Class Voting Period, the holders of $3.00
Convertible Preferred Stock represented in person or by proxy at
said meeting shall be entitled, as a class, to the exclusion of
the holders of all other classes of stock of the Corporation, to
elect two directors of the Corporation, each share of $3.00
Convertible Preferred Stock entitling the holder thereof to one
vote.
Any director who shall have been elected by holders of $3.00
Convertible Preferred Stock or any director elected by the
remaining director as provided in the next sentence, may be
removed at any time during a Class Voting Period, either for or
without cause, by, and only by, the affirmative votes of the
holders of record of a majority of the outstanding shares of
$3.00 Convertible Preferred Stock given at a special meeting of
such stockholders called for the purpose and any vacancy thereby
created may be filled during such Class Voting Period by the
holders of $3.00 Convertible Preferred Stock, present in person
or represented by proxy at such meeting. In the event that any
director elected by the holders of the $3.00 Convertible
Preferred Stock (or any director elected pursuant to the
provisions of this sentence) dies, resigns or otherwise ceases to
be a director, the remaining director may elect a successor;
provided, however, that the foregoing shall not apply to a
vacancy created by the removal of a director by the holders of
$3.00 Convertible Preferred Stock as provided in the preceding
sentence. At the end of the Class Voting Period the holders of
$3.00 Convertible Preferred Stock shall be automatically divested
of all voting power vested in them under this subparagraph (e)
but subject always to the subsequent vesting hereunder of voting
power in the holders of $3.00 Convertible Preferred Stock in the
event of any similar default or defaults thereafter. The term of
all directors elected pursuant to the provisions of this
subparagraph (e) shall in all events expire at the end of the
Class Voting Period.
(f) Conversion. Each share of the $3.00 Convertible
Preferred Stock may be converted, at the option of the holder
thereof, at any time prior to July 1, 1987 (but in case the same
shall be called for redemption, only until the close of business
on the tenth day prior to the date fixed for the redemption
thereof) into three and six-tenths (3.6) fully paid and
non-assessable shares of Capital Stock of the Corporation, the
respective number of shares of Capital Stock in any case being
subject to adjustment, however, as hereinafter in
subparagraph (g) provided. Upon any such conversion of shares of
$3.00 Convertible Preferred Stock no allowance or adjustment
shall be made with respect to dividends upon either class of
stock.
Such option to convert shares of $3.00 Convertible Preferred
Stock into shares of Capital Stock may be exercised by, and only
by, surrendering for such purpose to the Corporation at the
office of any of its Transfer Agents for its Capital Stock for
the time being, located in the City of New York or in any other
city in which the Corporation at the time shall maintain a
transfer agency with respect to such stock, certificates
representing the shares to be converted, duly endorsed or
accompanied by proper instruments of transfer, together with a
written request for conversion. At the time of such surrender,
the person exercising such option to convert shall be deemed to
be the holder of the shares of Capital Stock issuable upon such
conversion, notwithstanding that the stock transfer books of the
Corporation may then be closed or that certificates representing
such shares of Capital Stock shall not then be actually delivered
to such person.
The term "Capital Stock" as used in this Subdivision A shall
be deemed to include stock of the Corporation of every class,
except stock which shall be preferred as to dividends or assets
over the Capital Stock of the Corporation or which shall not
participate equally, share for share, with such Capital Stock in
earnings or assets remaining after payment in full of the
preferential amounts of dividends or assets to which such stock
shall be entitled; provided, however, that the shares of Capital
Stock into which shares of the $3.00 Convertible Preferred Stock
shall be convertible, shall be shares of Capital Stock of the
character authorized at the date of the initial issuance of the
$3.00 Convertible Preferred Stock or, in case of a
reclassification or exchange of such Capital Stock, shares of the
stock into or for which such Capital Stock shall be reclassified
or exchanged and all provisions of this Subdivision A shall be
applied appropriately thereto and to any stock resulting from any
subsequent reclassification or exchange thereof.
(g) Anti-Dilution. The number of shares of Capital Stock
into which each share of $3.00 Convertible Preferred Stock may be
converted shall be subject to adjustment from time to time in
certain instances as follows:
(1) If at any time or from time to time the
outstanding shares of Capital Stock of the Corporation
shall be subdivided or combined into a greater or
smaller number of shares (by way of reclassification or
splitup of shares or in any other manner), then the
number of shares of Capital Stock into which each share
of $3.00 Convertible Preferred Stock may, after any
such subdivision or combination becomes effective, be
converted shall be increased or reduced in the same
proportion.
(2) If at any time or from time to time there is
declared on the Capital Stock of the Corporation any
dividend payable in Capital Stock of the Corporation,
then the number of shares of Capital Stock into which
each share of $3.00 Convertible Preferred Stock may be
converted on or after the record date fixed for such
dividend shall be increased in the same proportion as
the aggregate number of shares of Capital Stock issued
or to be issued on account of such dividend bears to
the aggregate number of shares of Capital Stock on
which such dividend is or is to be paid.
(3) If the Corporation shall grant the holders of
its Capital Stock, as such, rights to subscribe for
shares of Capital Stock and/or securities convertible
into, exchangeable for, or carrying rights of purchase
of shares of Capital Stock and if (i) the conversion
price (determined by dividing Sixty-Five Dollars
($65.00) by the number of shares of Capital Stock
deliverable upon conversion of each share of $3.00
Convertible Preferred Stock, immediately before the
time herein provided for such adjustment) and (ii) the
"market value per share" of Capital Stock on the first
full business day (excluding any Saturday) after the
last date on which any of such rights to subscribe may
be exercised, shall each exceed the amount payable for
one share of Capital Stock on exercise of such rights
to subscribe, then in each case said conversion price
shall be reduced by "the value of the right to
subscribe", as limited and defined herein, so granted
to the holder of one share of Capital Stock, and the
number of shares of Capital Stock deliverable
thereafter upon conversion of each share of $3.00
Convertible Preferred Stock, shall be the quotient
obtained by dividing Sixty-Five Dollars ($65.00) by the
conversion price so reduced.
The adjustment provided for herein shall be
effective immediately after the close of business on
the day as of which said market value per share of
Capital Stock is taken.
For the purpose of such adjustment, the "value of
the right to subscribe" so granted to the holder of one
share of Capital Stock shall be deemed to be an amount
equal to the quotient obtained by dividing (x) the
excess of said "market value per share" of Capital
Stock or said conversion price immediately before such
reduction, whichever is lower, over the amount payable
for one share of Capital Stock on exercise of such
rights to subscribe by (y) the number of shares of
Capital Stock with respect to which is granted the
right to subscribe for one full share of Capital Stock.
For the purpose of such adjustment, the "market
value per share" of Capital Stock shall be deemed to be
the mean between the high and low sales prices per
share of Capital Stock on the day as of which such
market value is taken (or lacking any sales, the mean
between the closing bid and asked prices on that day)
or, if the New York Stock Exchange is not open on that
day, then on the first full business day (excluding any
Saturday) upon which the New York Stock Exchange is
open immediately following such day. Such sales prices
or such bid and asked prices, as the case may be, shall
be those on the New York Stock Exchange if the Capital
Stock be listed or dealt in thereon at the time, or, if
not listed or dealt in thereon, then those on such
exchange as shall have been selected from time to time
by the Corporation for the purpose or, if not listed or
dealt in on any exchange, then those furnished by the
trading department of any New York Stock Exchange firm
selected from time to time by the Corporation for the
purpose and deemed by it to be reliable.
For the purpose of such adjustment in case of such
granting of rights to subscribe for securities
convertible into, exchangeable for, or carrying rights
of purchase of, shares of Capital Stock, (i) the holder
of one share of Capital Stock shall be deemed to have
been granted a right to subscribe for such number of
shares of Capital Stock as shall be deliverable upon
exercise of the rights of conversion, exchange or
purchase of all of the securities for which such holder
is granted rights to subscribe, (ii) the last date on
which any rights to subscribe for shares of Capital
Stock (so deemed to have been granted) may be exercised
shall be deemed to be the last date on which any of the
aforesaid rights may be exercised to subscribe for such
securities convertible into, exchangeable for, or
carrying rights of purchase of, shares of Capital
Stock, and (iii) the amount payable for one share of
Capital Stock on exercise of a right to subscribe for
shares of Capital Stock (so deemed to have been
granted) shall be deemed to be the sum of (x) the
consideration payable to the Corporation for such
number of such securities as are convertible into or
exchangeable for one full share of Capital Stock,
(y) in the case of securities carrying such rights, the
amount (if any) by which the consideration payable to
the Corporation for such number of such securities as
carry rights to purchase one full share of Capital
Stock shall exceed the distributive amount, if any
(excluding any sums with respect to accrued dividends)
payable on voluntary liquidation of the Corporation
with respect to such securities, if stock, or, if not
stock, the principal amount of such securities, and
(z) any additional amount thereafter payable to the
Corporation for one full share of Capital Stock upon
the exercise of such rights of conversion, exchange or
purchase.
(4) No adjustment in the conversion prices
resulting from the application of the foregoing
provisions of clause (3) of subparagraph (g) is to be
given effect unless, by making such adjustments, the
conversion price in effect immediately prior to such
adjustment would be changed by thirty cents or more,
and such adjustments shall be made only in amounts of
thirty cents or a multiple thereof, but any adjustment
which would change the conversion price by less than
thirty cents or a multiple thereof is to the extent of
the difference between the next multiple thereof and
such lesser multiple to be carried forward and given
effect in making future adjustments.
(h) Certificate as to Adjustment of the Conversion Price;
Reservation of Shares. Whenever the amount of Capital Stock
and/or other securities deliverable upon the conversion of the
shares of $3.00 Convertible Preferred Stock shall be adjusted
pursuant to the provisions hereof, the Corporation shall
forthwith file at its principal office and with the transfer
agent or agents for the $3.00 Convertible Preferred Stock and for
such Capital Stock a statement, signed by the President or one of
the Vice Presidents of the Corporation and by its Treasurer or
one of its Assistant Treasurers, stating the adjusted amount of
its Capital Stock and/or other securities deliverable per share
of $3.00 Convertible Preferred Stock calculated to the nearest
one hundredth (1/100th) and setting forth in reasonable detail
the method of calculation and the facts requiring such adjustment
and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is
required.
The Corporation shall at all times reserve and keep
available out of its authorized but unissued Capital Stock, the
full number of shares of Capital Stock deliverable upon the
conversion of all outstanding shares of $3.00 Convertible
Preferred Stock which are convertible into Capital Stock and upon
exercise of any outstanding rights or options to purchase Capital
Stock.
(i) Fractional Shares. In connection with the conversion
of shares of $3.00 Convertible Preferred Stock into Capital
Stock, no fractions of shares of $3.00 Convertible Preferred
Stock nor of Capital Stock shall be issued; and, in lieu thereof,
non-dividend bearing non-voting scrip (exchangeable when combined
for full shares) may be issued, or the Board of Directors may
make such provisions for the stockholders in lieu of the issue of
scrip as it may determine, including payment in cash or sale of
stock to the extent of any fractions of shares and distribution
of the net proceeds or otherwise. The Board of Directors may
determine and fix the form of such scrip, whether bearer or
otherwise, the denomination thereof, the expiration dates
thereof, any provisions permitting sale of the full shares for
which such scrip is exchangeable for the account of the holder of
such scrip (or in lieu of sale of such full shares, provisions
for the determination of the value thereof, based upon quotations
therefor on the New York Stock Exchange on any specified date or
dates or based upon any other method or methods of determination
of value, and for payment of the value so determined to the
holders of such scrip), and any other terms or provisions of such
scrip as it may deem advisable.
(j) No Reissuance. Converted or redeemed shares of $3.00
Convertible Preferred Stock shall become authorized and unissued
shares and subject to the provisions of subsection (k) may be
reissued by the Corporation.
(k) Priority. All shares of $3.00 Convertible Preferred
Stock shall be of senior rank in respect of the preference as to
dividends and to payments upon the liquidation, distribution or
sale of assets, dissolution or winding up of the Corporation to
all shares of Series Preference Stock.
(l) Issuance of Senior Stock. While any of the $3.00
Convertible Preferred Stock is outstanding, the Corporation shall
not, without the affirmative consent (given in writing or at a
meeting duly called for that purpose) of the holders of at least
two-thirds (2/3rds) of the aggregate number of shares of $3.00
Convertible Preferred Stock then outstanding, (1) issue shares of
any class or series of stock (hereinafter in this
subparagraph (1) referred to as "Senior Stock") having any
preference or priority over, or being of equal rank with, the
$3.00 Convertible Preferred Stock as to dividends or upon
liquidation; (2) reclassify any shares of stock of the
Corporation into shares of Senior Stock; (3) issue any security
exchangeable for, convertible into, or evidencing the right to
purchase any shares of Senior Stock; (4) be a party to any merger
or consolidation unless the surviving or resulting corporation
will have after such merger or consolidation no stock either
authorized or outstanding ranking prior or equal, as to dividends
or upon liquidation, to the $3.00 Convertible Preferred Stock or
to the stock of the surviving or resulting corporation issued in
exchange therefor (except such prior or equal ranking stock of
the Corporation as may have been authorized or outstanding
immediately preceding such merger or consolidation or such stock
of the surviving or resulting corporation as may be issued in
exchange therefor); or (5) amend, alter or repeal the Certificate
of Incorporation of the Corporation to alter or change the
preferences, rights or powers of the $3.00 Convertible Preferred
Stock so as to affect such stock adversely.
(m) Merger. At the time any of the $3.00 Convertible
Preferred Stock is outstanding, the Corporation will not, without
the affirmative consent (given in writing or at a meeting duly
called for that purpose) of the holders of at least two-thirds
(2/3rds) of the aggregate number of shares of $3.00 Convertible
Preferred Stock then outstanding, at any time during the
conversion period, consolidate or merge with or into another
corporation (whether or not the Corporation is the surviving
corporation), or at any time when the $3.00 Convertible Preferred
Stock is not redeemable at the option of the Corporation, sell
all or substantially all of its assets to another corporation,
unless in connection therewith lawful and adequate provision is
made whereby the holders of $3.00 Convertible Preferred Stock
shall receive the right to convert during the conversion period
into the kind and amount of shares of stock and other securities
to be received by holders of the number of shares of Capital
Stock of the Corporation into which the $3.00 Convertible
Preferred Stock might have been converted immediately prior to
such consolidation, merger or sale, which right shall be subject
to adjustment, as nearly equivalent as may be practicable to the
adjustments provided for in this Subsection A.
SUBSECTION B. PROVISIONS APPLICABLE TO ALL SERIES
OF SERIES PREFERENCE STOCK
(a) Issuance in Series. Shares of Series Preference Stock
may be issued from time to time in one or more series. The
shares of all series shall be without par value. The terms of
Series A Preference Stock and Series B Preference Stock shall be
as specified herein and in Subsections C and D of this Section.
The preferences and relative, participating, optional and other
special rights of each subsequent series and the qualifications,
limitations or restrictions thereof, if any, may differ from
those of any and all other series already outstanding; the terms
of each subsequent series shall be as specified in this
Subsection B and in an amendment or amendments hereof (including
any amendment made by action of the Board of Directors without
shareholder approval) and the Board of Directors of the
Corporation is hereby expressly granted authority to fix, by
resolution or resolutions adopted prior to the issuance of any
shares of a particular subsequent series of Series Preference
Stock, the number of authorized shares of any such series and the
designations, preferences and relative, participating, optional
and other special rights, or the qualifications, limitations or
restrictions thereof, of such series, including but without
limiting the generality of the foregoing, the following:
(i) The rate and times at which, and the terms
and conditions on which, dividends on the Series
Preference Stock of such series shall be paid;
(ii) The rights, if any, of holders of Series
Preference Stock of such series to convert the same
into, or exchange the same for, other classes of stock
of the Corporation and the terms and conditions of such
conversion or exchange;
(iii) The redemption price or prices and the time
at which, and the terms and conditions on which, Series
Preference Stock of such series may be redeemed;
(iv) The rights of the holders of Series
Preference Stock of such series upon the voluntary or
involuntary liquidation, distribution or sale of
assets, dissolution or winding up of the Corporation;
(v) The voting power, if any, of the Series
Preference Stock of such series; and
(vi) The terms of the sinking fund or redemption
or purchase account, if any, to be provided for the
Series Preference Stock of such series.
(b) Equal Rank. All shares of each series shall be
identical in all respects, and all shares of Series Preference
Stock of all series shall be of equal rank in respect of the
preference as to dividends and to payments upon the liquidation,
distribution or sale of assets, dissolution and winding up of the
Corporation. All shares of Series Preference Stock of all series
shall be of junior rank in respect of the preference as to
dividends and to payments upon the liquidation, distribution or
sale of assets, dissolution or winding up of the Corporation to
all shares of the $3.00 Convertible Preferred Stock. The rights
of the Capital Stock of the Corporation shall be subject to the
preferences and relative, participating, optional and other
special rights of the Series Preference Stock of each series as
fixed herein and from time to time by the Board of Directors as
aforesaid.
(c) Dividends On All Series. If dividends on the Series
Preference Stock of any series are not paid in full or declared
in full and sums set apart for the payment thereof, then no
dividends shall be declared and paid on any such stock unless
declared and paid ratably on all shares of each series of the
Series Preference Stock then outstanding, including dividends
accrued or in arrears, if any, in proportion to the respective
amounts that would be payable per share if all such dividends
were declared and paid in full. The term "dividends accrued or
in arrears" whenever used herein with reference to the Series
Preference Stock shall be deemed to mean an amount which shall be
equal to dividends thereon at the annual dividend rates per share
for the respective series from the date or dates on which such
dividends commence to accrue to the end of the then current
quarterly dividend period for such stock (or, in the case of
redemption, to the date of redemption), less the amount of all
dividends paid upon such stock. If upon any liquidation,
dissolution or winding up of the Corporation the assets
distributable among the holders of any series of Series
Preference Stock shall be insufficient to permit the payment in
full to the holders of all series of the Series Preference Stock,
of all preferential amounts payable to all such holders, then the
entire assets of the Corporation thus distributable shall be
distributed ratably among the holders of all series of the Series
Preference Stock in proportion to the respective amounts that
would be payable per share if such assets were sufficient to
permit payment in full.
(d) Special Vote. While any Series Preference Stock is
outstanding the Corporation shall not, without the affirmative
consent (given in writing or at a meeting duly called for that
purpose) of the holders of at least two-thirds (2/3rds) of the
aggregate number of shares of Series Preference Stock then
outstanding, (1) authorize or issue shares of any class or series
of stock leaving any preference or priority as to dividends or
upon liquidation (hereinafter in this subparagraph (d) referred
to as "Senior Stock") over the Series Preference Stock;
(2) reclassify any shares of stock of the Corporation into shares
of Senior Stock; (3) issue any security exchangeable for,
convertible into, or evidencing the right to purchase any shares
of Senior Stock; (4) be a party to any merger or consolidation
unless the surviving or resulting corporation will have after
such merger or consolidation no stock either authorized or
outstanding ranking prior as to dividends or upon liquidation to
the Series Preference Stock or to the stock of the surviving or
resulting corporation issued in exchange therefor (except such
prior ranking stock of the Corporation as may have been
authorized or outstanding immediately preceding such merger or
consolidation or such stock of the surviving or resulting
corporation as may be issued in exchange therefor); or (5) amend,
alter or repeal the Certificate of Incorporation of the
Corporation to alter or change the preferences, rights or powers
of the Series Preference Stock so as to affect such stock
adversely.
SUBSECTION C. SPECIAL PROVISIONS APPLICABLE TO
SERIES A PREFERENCE STOCK
There is hereby established Series A Preference Stock which
shall be designated "$1.20 Cumulative Convertible Preference
Stock Series A" (herein referred to as "$1.20 Convertible
Preference Stock") and shall consist of 2,568,096 shares, and no
more. The relative, participating, optional and other special
rights and the qualifications, limitations and restrictions,
other than those specified for all series of Series Preference
Stock in Subsection B of this Section IV, of the $1.20
Convertible Preference Stock, shall be as follows:
(a) Dividends. The holders of $1.20 Convertible Preference
Stock in preference to the holders of Capital Stock of the
Corporation, shall be entitled to receive, as and when declared
by the Board of Directors, dividends at the rate of $1.20 per
share per annum and no more, payable quarterly on the first days
of March, June, September and December in each year. Such
preferential dividends shall accrue, (i) with respect to shares
of $1.20 Convertible Preference Stock issued in exchange for
shares of stock of United pursuant to the Agreement of Merger,
from the record date for the payment of the regular quarterly
dividend on the United Common Stock which immediately precedes
the Effective Date and (ii) with respect to shares of $1.20
Convertible Preference Stock issued at a time when other shares
of $1.20 Convertible Preference Stock are outstanding from such
date as shall make the dividend rights per share of the shares
being issued uniform with the dividend rights per share of the
shares then outstanding, excluding rights to dividends declared
and directed to be paid to shareholders of record as of a date
preceding the date of issuance of the shares being issued, and
shall be cumulative so that if dividends in respect of any
quarterly dividend period at the rate of $1.20 per share per
annum shall not have been paid upon or declared and set apart for
the $1.20 Convertible Preference Stock, the deficiency shall be
fully paid or declared and set apart before any dividend shall be
paid upon or declared or set apart for the Capital Stock.
Preferential dividends on the $1.20 Convertible Preference Stock
shall be deemed to accrue from day to day. Except as otherwise
provided in the preceding sentence, a quarterly dividend period
shall begin on the day following each dividend payment date set
forth above and end on the next succeeding dividend payment date.
(b) Liquidation. The $1.20 Convertible Preference Stock
shall be preferred as to assets over the Capital Stock, so that
in the event of the liquidation, dissolution or winding up of the
Corporation, the holders of $1.20 Convertible Preference Stock
shall be entitled to have set apart for them, or to be paid, out
of the assets of the Corporation before any distribution is made
to or set apart for the holders of Capital Stock, an amount in
cash equal to and in no event more than (i) $20.00 per share plus
a sum equal to accrued and unpaid dividends thereon, whether or
not earned or declared, in the event of an involuntary
liquidation, dissolution or winding up, or (ii) $22.00 per share
plus a sum equal to accrued and unpaid dividends thereon, whether
or not earned or declared, in the event of a voluntary
liquidation, dissolution or winding up on or prior to the date
(the "Date") which is five years after the Effective Date, or
(iii) the then applicable redemption price per share, in the
event of a voluntary liquidation, dissolution or winding up on or
subsequent to the Date.
(c) Redemption. At the option of the Corporation, by vote
of the Board of Directors, the $1.20 Convertible Preference Stock
may be redeemed on or after, but not prior to, the Date, as a
whole, or in part, at any time or from time to time, at a
redemption price hereinafter specified. The redemption price of
shares of $1.20 Convertible Preference Stock redeemed during the
twelve month period commencing on the Date shall be $22.00 per
share plus an amount equal to accrued and unpaid dividends
thereon to the date fixed for redemption, whether or not earned
or declared, and for shares of such stock redeemed thereafter
shall be (i) the greater of (x) $22.00 per share minus the sum of
twenty cents for each anniversary of the Date during the period
after the Date and up to and including the date fixed for
redemption or (y) $20.00 per share, plus (ii) an amount equal to
accrued and unpaid dividends thereon to the date fixed for
redemption, whether or not earned or declared.
If less than all of the outstanding shares of $1.20
Convertible Preference Stock are to be redeemed the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its sole
discretion shall prescribe.
Not more than 90 days and not less than 30 days prior to the
date fixed for the redemption of shares of the $1.20 Convertible
Preference Stock a written notice shall be mailed to each holder
of record of shares of $1.20 Convertible Preference Stock to be
redeemed in a postage prepaid envelope addressed to such holder
at his post office address as shown on the records of the
Corporation, notifying such holder of the election of the
Corporation to redeem such shares, stating the date fixed for
redemption thereof (hereinafter referred to as the redemption
date), and calling upon such holder to surrender to the
Corporation on the redemption date at the place designated in
such notice his certificate or certificates representing the
number of shares specified in such notice of redemption.
On or after the redemption date each holder of shares of
$1.20 Convertible Preference Stock to be redeemed shall present
and surrender his certificate or certificates for such shares to
the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid to or
on the order of the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered
certificate shall be canceled.
In case less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
From and after the redemption date (unless default shall be
made by the Corporation in payment of the redemption price) all
dividends on the shares of $1.20 Convertible Preference Stock
designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price
thereof upon the surrender of certificates representing the same,
shall cease and determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on the
books of the Corporation, and such shares shall not be deemed to
be outstanding for any purpose whatsoever.
At its election the Corporation prior to the redemption date
may deposit the redemption price of the shares of $1.20
Convertible Preference Stock so called for redemption in trust
for the holders thereof with a bank or trust company (having a
capital and surplus of not less than $5,000,000) in the Borough
of Manhattan, City and State of New York, or in any other city in
which the Corporation at the time shall maintain a transfer
agency with respect to such Stock, in which case such redemption
notice shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of
the redemption price, and shall call upon such holders to
surrender the certificates representing such shares at such price
on or after the date fixed in such redemption notice (which shall
not be later than the redemption date) against payment of the
redemption price. From and after the making of such deposit, the
shares of $1.20 Convertible Preference Stock so designated for
redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be
limited to the right to receive the redemption price of such
shares, without interest, upon surrender of the certificates
representing the same to the Corporation at said office of such
bank or trust company, and the right of conversion (on or before
the fifth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for
such redemption because of the exercise of such right of
conversion after the date of such deposit shall be returned to
the Corporation forthwith. Any interest accrued on such funds
shall be paid to the Corporation from time to time.
Any moneys so deposited which shall remain unclaimed by the
holders of such $1.20 Convertible Preference Stock at the end of
six years after the redemption date, shall be returned by such
bank or trust company to the Corporation after which the holders
of the $1.20 Convertible Preference Stock shall have no further
interest in such moneys.
(d) Vote. Each holder of $1.20 Convertible Preference
Stock shall be entitled to seven-tenths (0.7) of a share vote for
each share held on each matter submitted to a vote of
stockholders of the Corporation and, except as otherwise herein
or by law provided, the $1.20 Convertible Preference Stock, the
Capital Stock of the Corporation, and any other capital stock of
the Corporation at the time entitled thereto, shall vote together
as one class, except that while the holders of $1.20 Convertible
Preference Stock, voting as a class, are entitled to elect two
directors as hereinafter provided, they shall not be entitled to
participate with the Capital Stock (or any other capital stock as
aforesaid) in the election of any other directors.
(e) Class Voting. In case at any time the equivalent of
six or more full quarterly dividends (whether consecutive or not)
on the $1.20 Convertible Preference Stock shall be in arrears,
then during the period (hereinafter in this subparagraph (e)
called the Class Voting Period) commencing with such time and
ending with the time when all arrears in dividends on the $1.20
Convertible Preference Stock shall have been paid and the full
dividend on the $1.20 Convertible Preference Stock for the then
current quarterly dividend period shall have been paid or
declared and set apart for payment, at any meeting of the
stockholders of the Corporation held for the election of
directors during the Class Voting Period, the holders of $1.20
Convertible Preference Stock represented in person or by proxy at
said meeting shall be entitled, as a class, to the exclusion of
the holders of all other classes of stock of the Corporation, to
elect two directors of the Corporation, each share of $1.20
Convertible Preference Stock entitling the holder thereof to one
vote.
Any director who shall have been elected by holders of $1.20
Convertible Preference Stock or any director elected by the
remaining director as provided in the next sentence, may be
removed at any time during a Class Voting Period, either for or
without cause, by, and only by, the affirmative votes of the
holders of record of a majority of the outstanding shares of
$1.20 Convertible Preference Stock given at a special meeting of
such stockholders called for the purpose and any vacancy thereby
created may be filled during such Class Voting Period by the
holders of $1.20 Convertible Preference Stock, present in person
or represented by proxy at such meeting. In the event that any
director elected by the holders of the $1.20 Convertible
Preference Stock (or any director elected pursuant to the
provisions of this sentence) dies, resigns or otherwise ceases to
be a director, the remaining director may elect a successor;
provided, however, that the foregoing shall not apply to a
vacancy created by the removal of a director by the holders of
$1.20 Convertible Preference Stock as provided in the preceding
sentence. At the end of the Class Voting Period the holders of
$1.20 Convertible Preference Stock shall be automatically
divested of all voting power vested in them under this
subparagraph (e) but subject always to the subsequent vesting
hereunder of voting power in the holders of $1.20 Convertible
Preference Stock in the event of any similar default or defaults
thereafter. The term of all directors elected pursuant to the
provisions of this subparagraph (e) shall in all events expire at
the end of the Class Voting Period.
(f) Conversion. Each share of the $1.20 Convertible
Preference Stock may be converted, at the option of the holder
thereof, at any time (but in case the same shall be called for
redemption, only until the close of business on the fifth
business day prior to the date fixed for the redemption thereof)
into seven-tenths (0.7) of a fully paid and non-assessable share
of Capital Stock of the Corporation, the number of shares of
Capital Stock in any case being subject to adjustment, however,
as hereinafter in subparagraph (g) provided. Upon any such
conversion of shares of $1.20 Convertible Preference Stock no
allowance or adjustment shall be made with respect to dividends
upon either class of stock.
Such option to convert shares of $1.20 Convertible
Preference Stock into shares of Capital Stock may be exercised
by, and only by, surrendering for such purpose to the Corporation
at the office of any of its Transfer Agents for its Capital Stock
for the time being, located in the City of New York or in any
other city in which the Corporation at the time shall maintain a
transfer agency with respect to such Stock, certificates
representing the shares to be converted, duly endorsed or
accompanied by proper instruments of transfer, together with a
written request for conversion. At the time of such surrender,
the person exercising such option to convert shall be deemed to
be the holder of the shares of Capital Stock issuable upon such
conversion, notwithstanding that the stock transfer books of the
Corporation may then be closed or that certificates representing
such shares of Capital Stock shall not then be actually delivered
to such person.
The term "Capital Stock" as used in this Subsection C shall
be deemed to include stock of the Corporation of every class,
except stock which shall be preferred as to dividends or assets
over the Capital Stock of the Corporation or which shall not
participate equally, share for share, with such Capital Stock in
earnings or assets remaining after payment in full of the
preferential amounts of dividends or assets to which such stock
shall be entitled; provided, however, that the shares of Capital
Stock into which shares of the $1.20 Convertible Preference Stock
shall be convertible, shall be shares of Capital Stock of the
character authorized at the date of the initial issuance of the
$1.20 Convertible Preference Stock or, in case of a
reclassification or exchange of such Capital Stock, shares of
tile stock into or for which such Capital Stock shall be
reclassified or exchanged and all provisions of this Subsection C
shall be applied appropriately thereto and to any stock resulting
from any subsequent reclassification or exchange thereof.
(g) Anti-Dilution. The number of shares of Capital Stock
into which each share of $1.20 Convertible Preference Stock may
be converted shall be subject to adjustment from time to time in
certain instances as follows:
(1) If at any time or from time to time the
outstanding shares of Capital Stock of the Corporation
shall be subdivided or combined into a greater or
smaller number of shares (by way of reclassification or
splitup of shares or in any other manner), then the
number of shares of Capital Stock into which each share
of $1.20 Convertible Preference Stock may, after any
such subdivision or combination becomes effective, be
converted shall be increased or reduced in the same
proportion.
(2) If at any time or from time to time there is
declared on the Capital Stock of the Corporation any
dividend payable in Capital Stock of the Corporation,
then the number of shares of Capital Stock into which
each share of $1.20 Convertible Preference Stock may be
converted on or after the record date fixed for such
dividend shall be increased in the same proportion as
the aggregate number of shares of Capital Stock issued
or to be issued on account of such dividend bears to
the aggregate number of shares of Capital Stock on
which such dividend is or is to be paid.
(3) If the Corporation shall grant the holders of
its Capital Stock, as such, rights to subscribe for
shares of Capital Stock and/or securities convertible
into, exchangeable for, or carrying rights of purchase
of shares of Capital Stock and if the "market value per
share" of Capital Stock on the first full business day
(excluding any Saturday) after the last date on which
any of such rights to subscribe may be exercised, shall
exceed the amount payable for one share of Capital
Stock on exercise of such rights to subscribe, then in
each case the conversion price in effect immediately
prior to such issuance shall be reduced by "the value
of the right to subscribe", as limited and defined
herein, so granted to the holder of one share of
Capital Stock, and the number of shares of Capital
Stock deliverable thereafter upon conversion of each
share of $1.20 Convertible Preference Stock, shall be
the quotient obtained by dividing Twenty Dollars
($20.00) by the conversion price so reduced.
The adjustment provided for herein shall be
effective immediately after the close of business on
the day as of which said market value per share of
Capital Stock is taken.
For the purpose of such adjustment, the "value of
the right to subscribe" so granted to the holder of one
share of Capital Stock shall be deemed to be an amount
equal to the quotient obtained by dividing (x) the
excess of said "market value per share" of Capital
Stock over the amount payable for one share of Capital
Stock on exercise of such rights to subscribe by (y)
the number of shares of Capital Stock with respect to
which is granted the right to subscribe for one full
share of Capital Stock.
For the purpose of such adjustment and any adjustment
pursuant to clause (4) of this subparagraph (g), the "market
value per share" of Capital Stock shall be deemed to be the mean
between the high and low sales prices per share of Capital Stock
on the day as of which such market value is taken (or lacking any
sales, the mean between the closing bid and asked prices on that
day) or, if the New York Stock Exchange is not open on that day,
then on the first full business day (excluding any Saturday) upon
which the New York Stock Exchange is open immediately following
such day. Such sales prices or such bid and asked prices, as the
case may be, shall be those on the New York Stock Exchange if the
Capital Stock be listed or dealt in thereon at the time, or, if
not listed or dealt in thereon, then those on such exchange as
shall have been selected from time to time by the Corporation for
the purpose or, if not listed or dealt in on any exchange, then
those furnished by the trading department of any New York Stock
Exchange firm selected from time to time by the Corporation for
the purpose and deemed by it to be reliable.
For the purpose of such adjustment in case of such granting
of rights to subscribe for securities convertible into,
exchangeable for, or carrying rights of purchase of, shares of
Capital Stock, (i) the holder of one share of Capital Stock shall
be deemed to have been granted a right to subscribe for such
number of shares of Capital Stock as shall be deliverable upon
exercise of the rights of conversion, exchange or purchase of all
of the securities for which such holder is granted rights to
subscribe, (ii) the last date on which any rights to subscribe
for shares of Capital Stock (so deemed to have been granted) may
be exercised shall be deemed to be the last date on which any of
the aforesaid rights may be exercised to subscribe for such
securities convertible into, exchangeable for, or carrying rights
of purchase of, shares of Capital Stock, and (iii) the amount
payable for one share of Capital Stock on exercise of a right to
subscribe for shares of Capital Stock (so deemed to have been
granted) shall be deemed to be the sum of (x) the consideration
payable to the Corporation for such number of such securities as
are convertible into or exchangeable for one full share of
Capital Stock, and (y) in the case of securities carrying such
rights, the amount (if any) by which the consideration payable to
the Corporation for such number of such securities as carry
rights to purchase one full share of Capital Stock shall exceed
the distributive amount, if any (excluding any sums with respect
to accrued dividends) payable on voluntary liquidation of the
Corporation with respect to such securities, if stock, or, if not
stock, the principal amount of such securities, and (z) any
additional amount thereafter payable to the Corporation for one
full share of Capital Stock upon the exercise of such rights of
conversion, exchange or purchase.
(4) If the Corporation shall distribute to all holders of
its Capital Stock evidences of its indebtedness or assets
(excluding dividends or distributions referred to in subparagraph
(a) or clause 2 of this subparagraph (g)) or rights to subscribe
(other than those referred to in clause (3) of this subparagraph
(g)), then in each such case the amount of Capital Stock into
which each share of $1.20 Convertible Preference Stock shall
thereafter be converted shall be determined by multiplying the
amount of Capital Stock into which such $1.20 Convertible
Preference Stock was theretofore convertible by a fraction, of
which the numerator shall be the "market value per share" of
Capital Stock (determined as provided in clause (3) of this
subparagraph (g)) on the date of such distribution and of which
the denominator shall be such market value per share of Capital
Stock, less the then fair market value (as determined by the
Board of Directors, whose determination shall be conclusive, and
described in a statement filed with the transfer agent or agents
for the $1.20 Convertible Preference Stock and the Capital Stock)
of the portion of the assets or evidences of indebtedness so
distributed and such subscription rights applicable to one share
of Capital Stock. Such adjustment shall be made whenever such
distribution is made, and shall become effective retroactively
immediately after the record date for the determination of
shareholders entitled to receive such distribution; provided,
however, that if the Corporation shall, before the distribution
to shareholders, legally abandon its plan to make such
distribution, no adjustment of the amount of Capital Stock
issuable upon conversion of the $1.20 Convertible Preference
Stock shall be required by reason of the taking of such record.
(5) No adjustment in the conversion prices resulting from
the application of the foregoing provisions of clauses (3) and
(4) of subparagraph (g) is to be given effect unless, by making
such adjustments, the conversion price in effect immediately
prior to such adjustment would be changed by twelve cents or
more, and such adjustments shall be made only in amounts of
twelve cents or a multiple thereof, but any adjustment which
would change the conversion price by less than twelve cents or a
multiple thereof is to the extent of the difference between the
next multiple thereof and such lesser multiple to be carried
forward and given effect in making future adjustments.
(h) Certificate as to Adjustment of the Conversion Price;
Reservation of Shares. Whenever the amount of Capital Stock
and/or other securities deliverable upon the conversion of the
shares of $1.20 Convertible Preference Stock shall be adjusted
pursuant to the provisions hereof, the Corporation shall
forthwith file at its principal office and with the transfer
agent or agents for the $1.20 Convertible Preference Stock and
for such Capital Stock a statement, signed by the President or
one of the Vice Presidents of the Corporation and by its
Treasurer or one of its Assistant Treasurers, stating the
adjusted amount of its Capital Stock and/or other securities
deliverable per share of $1.20 Convertible Preference Stock
calculated to the nearest one hundredth (1/100th) and setting
forth in reasonable detail the method of calculation and the
facts requiring such adjustment and upon which such calculation
is based. Each adjustment shall remain in effect until a
subsequent adjustment hereunder is required.
The Corporation shall at all times reserve and keep
available out of its authorized but unissued Capital Stock, the
full number of shares of Capital Stock deliverable upon the
conversion of all outstanding shares of $1.20 Convertible
Preference Stock which are convertible into Capital Stock and
upon exercise of any outstanding rights or options to purchase
Capital Stock.
(i) Fractional Shares. In connection with the conversion
of shares of $1.20 Convertible Preference Stock into Capital
Stock, no fractions of shares of $1.20 Convertible Preference
Stock nor of Capital Stock shall be issued; and, in lieu thereof,
non-dividend bearing non-voting scrip (exchangeable when combined
for full shares) may be issued, or the Board of Directors may
make such provisions for the stockholders in lieu of the issue of
scrip as it may determine, including payment in cash or sale of
stock to the extent of any fractions of shares and distribution
of the net proceeds or otherwise. The Board of Directors may
determine and fix the form of such scrip, whether bearer or
otherwise, the denomination thereof, the expiration dates
thereof, any provisions permitting sale of the full shares for
which such scrip is exchangeable for the account of the holder of
such scrip (or in lieu of sale of such full shares, provisions
for the determination of the value thereof, based upon quotations
therefor on the New York Stock Exchange on any specified date or
dates or based upon any other method or methods of determination
of value, and for payment of the value so determined to the
holders of such scrip), and any other terms or provisions of such
scrip as it may deem advisable.
(j) No Reissuance. Converted or redeemed shares of $1.20
Convertible Preference Stock shall become authorized and unissued
shares and subject to the provisions of subsection (k) may be
reissued by the Corporation.
(k) Issuance of Additional $1.20 Convertible Stock. The
Corporation shall not, without the affirmative consent (given in
writing or at a meeting duly called for that purpose) of the
holders of at least two-thirds (2/3rds) of the aggregate number
of shares of $1.20 Convertible Preference Stock then outstanding,
(i) issue additional shares of $1.20 Convertible Preference
Stock, or (ii) amend, alter or repeal this subparagraph (k).
(l) Merger. At the time any of the $1.20 Convertible
Preference Stock is outstanding, the Corporation will not,
without the affirmative consent (given in writing or at a meeting
duly called for that purpose) of the holders of at least two-
thirds (2/3rds) of the aggregate number of shares of $1.20
Convertible Preference Stock then outstanding, at any time during
the conversion period, consolidate or merge with or into another
corporation (whether or not the Corporation is the surviving
corporation), or at any time when the $1.20 Convertible
Preference Stock is not redeemable at the option of the
Corporation, sell all or substantially all of its assets to
another corporation, unless in connection therewith lawful and
adequate provision is made whereby the holders of $1.20
Convertible Preference Stock shall receive the right to convert
during the conversion period into the kind and amount of shares
of stock and other securities to be received by holders of the
number of shares of Capital Stock of the Corporation into which
the $1.20 Convertible Preference Stock might have been converted
immediately prior to such consolidation, merger or sale, which
right shall be subject to adjustment, as nearly equivalent as may
be practicable to the adjustments provided for in this
Subsection C.
SUBSECTION D. SPECIAL PROVISIONS APPLICABLE
TO SERIES B PREFERENCE STOCK
There is hereby established Series B Preference Stock which
shall be designated "$3.20 Cumulative Convertible Preference
Stock, Series B" ("$3.20 Convertible Preference Stock") and shall
consist of 75,813 shares, and no more. The relative,
participating, optional and other special rights and the
qualifications, limitations and restrictions, other than those
specified for all series of Series Preference Stock in
Subsection B of this Section IV, of the $3.20 Convertible
Preference Stock, shall be as follows:
(a) Dividends. The holders of $3.20 Convertible Preference
Stock in preference to the holders of Capital Stock of the
Corporation, shall be entitled to receive, as and when declared
by the Board of Directors, dividends at the rate of $3.20 per
share per annum and no more, payable quarterly on the last days
of March, June, September and December in each year, commencing
on the last day of the quarterly dividend period in which
dividends on such shares commence to accrue. Such preferential
dividends shall accrue, with respect to shares of $3.20
Convertible Preference Stock issued in exchange for shares of
$3.20 Cumulative Convertible Preference Stock of AMK pursuant to
the Agreement of Merger, from the beginning of the quarterly
dividend period which immediately precedes the Effective Date,
and shall be cumulative so that if dividends in respect of any
quarterly dividend period at the rate of $3.20 per share per
annum shall not have been paid upon or declared and set apart for
the $3.20 Convertible Preference Stock, the deficiency shall be
fully paid or declared and set apart before any dividend shall be
paid upon or declared or set apart for the Capital Stock.
Preferential dividends on the $3.20 Convertible Preference Stock
shall be deemed to accrue from day to day. A quarterly dividend
period shall begin on the day following each dividend payment
date set forth above and end on the next succeeding dividend
payment date.
(b) Liquidation. The $3.20 Convertible Preference Stock
shall be preferred as to assets over the Capital Stock, so that
in the event of the liquidation, dissolution or winding up of the
Corporation, the holders of $3.20 Convertible Preference Stock
shall be entitled to have set apart for them, or to be paid, out
of the assets of the Corporation before any distribution is made
to or set apart for the holders of Capital Stock, an amount in
cash equal to and in no event more than (i) $100.00 per share
plus a sum equal to accrued and unpaid dividends thereon, whether
or not earned or declared, in the event of an involuntary
liquidation, dissolution or winding up, or (ii) $103.20 per share
plus a sum equal to accrued and unpaid dividends thereon, whether
or not earned or declared, in the event of a voluntary
liquidation, dissolution or winding up on or prior to
December 29, 1972 (the "Date"), or (iii) the then applicable
redemption price per share, in the event of a voluntary
liquidation, dissolution or winding up on or subsequent to the
Date.
(c) Redemption. At the option of the Corporation, by vote
of the Board of Directors, the $3.20 Convertible Preference Stock
may be redeemed on or after, but not prior to, the Date, as a
whole, or in part, at any time or from time to time, at a
redemption price hereinafter specified. The redemption price of
shares of $3.20 Convertible Preference Stock redeemed during the
twelve month period commencing on the Date shall be $103.20 per
share plus an amount equal to accrued and unpaid dividends
thereon to the date fixed for redemption, whether or not earned
or declared, and for shares of such Stock redeemed thereafter
shall be (i) the greater of (x) $103.20 per share minus the sum
of forty cents for each anniversary of the Date during the period
after the Date and up to and including the date fixed for
redemption or (y) $100.00 per share, plus (ii) an amount equal to
accrued and unpaid dividends thereon to the date fixed for
redemption, whether or not earned or declared.
If less than all of the outstanding shares of $3.20
Convertible Preference Stock are to be redeemed, the shares to be
redeemed shall be determined by lot in such usual manner and
subject to such regulations as the Board of Directors in its sole
discretion shall prescribe.
At least 30 days prior to the date fixed for the redemption
of shares of the $3.20 Convertible Preference Stock a written
notice shall be mailed to each holder of record of shares of
$3.20 Convertible Preference Stock to be redeemed in a postage
prepaid envelope addressed to such holder at his post office
address as shown on the records of the Corporation, notifying
such holder of the election of the Corporation to redeem such
shares, stating the date fixed for redemption thereof
(hereinafter referred to as the redemption date), and calling
upon such holder to surrender to the Corporation on the
redemption date at the place designated in such notice his
certificate or certificates representing the number of shares
specified in such notice of redemption.
On or after the redemption date each holder of shares of
$3.20 Convertible Preference Stock to be redeemed shall present
and surrender his certificate or certificates for such shares to
the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid to or
on the order of the person whose name appears on such certificate
or certificates as the owner thereof and each surrendered
certificate shall be canceled.
In case less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
From and after the redemption date (unless default shall be
made by the Corporation in payment of the redemption price) all
dividends on the shares of $3.20 Convertible Preference Stock
designated for redemption in such notice shall cease to accrue,
and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price
thereof upon the surrender of certificates representing the same,
shall cease and determine and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on the
books of the Corporation, and such shares shall not be deemed to
be outstanding for any purpose whatsoever.
At its election the Corporation prior to the redemption date
may deposit the redemption price of the shares of $3.20
Convertible Preference Stock so called for redemption in trust
for the holders thereof with a bank or trust company (having a
capital and surplus of not less than $5,000,000) in the Borough
of Manhattan, City and State of New York, or in any other city in
which the Corporation at the time shall maintain a transfer
agency with respect to such stock, in which case such redemption
notice shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of
the redemption price, and shall call upon such holders to
surrender the certificates representing such shares at such price
on or after the date fixed in such redemption notice (which shall
not be later than the redemption date) against payment of the
redemption price. From and after the making of such deposit, the
shares of $3.20 Convertible Preference Stock so designated for
redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be
limited to the right to receive the redemption price of such
shares, without interest, upon surrender of the certificates
representing the same to the Corporation at said office of such
bank or trust company, and the right of conversion (on or before
the tenth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for
such redemption because of the exercise of such right of
conversion after the date of such deposit shall be returned to
the Corporation forthwith. Any interest accrued on such funds
shall be paid to the Corporation from time to time.
Any moneys so deposited which shall remain unclaimed by the
holders of such $3.20 Convertible Preference Stock at the end of
six years after the redemption date, shall be returned by such
bank or trust company to the Corporation after which the holders
of the $3.20 Convertible Preference Stock shall have no further
interest in such moneys.
(d) Vote. Each holder of $3.20 Convertible Preference
Stock shall be entitled to one vote for each share held on each
matter submitted to a vote of stockholders of the Corporation
and, except as otherwise herein or by law provided, the $3.20
Convertible Preference Stock, the Capital Stock of the
Corporation, and any other capital stock of the Corporation at
the time entitled thereto, shall vote together as one class,
except that while the holders of $3.20 Convertible Preference
Stock, voting as a class, are entitled to elect two directors as
hereinafter provided, they shall not be entitled to participate
with the Capital Stock (or any other capital stock as aforesaid)
in the election of any other directors.
(e) Class Voting. In case at any time the equivalent of
six or more full quarterly dividends (whether consecutive or not)
on the $3.20 Convertible Preference Stock shall be in arrears,
then during the period (hereinafter in this subparagraph (e)
called the Class Voting Period) commencing with such time and
ending with the time when all arrears in dividends on the $3.20
Convertible Preference Stock shall have been paid and the full
dividend on the $3.20 Convertible Preference Stock for the then
current quarterly dividend period shall have been paid or
declared and set apart for payment, at any meeting of the
stockholders of the Corporation held for the election of
directors during the Class Voting Period, the holders of $3.20
Convertible Preference Stock represented in person or by proxy at
said meeting shall be entitled, as a class, to the exclusion of
the holders of all other classes of stock of the Corporation, to
elect two directors of the Corporation, each share of $3.20
Convertible Preference Stock entitling the holder thereof to one
vote.
Any director who shall have been elected by holders of $3.20
Convertible Preference Stock or any director elected by the
remaining director as provided in the next sentence, may be
removed at any time during a Class Voting Period, either for or
without cause, by, and only by, the affirmative votes of the
holders of record of a majority of the outstanding shares of
$3.20 Convertible Preference Stock given at a special meeting of
such stockholders called for the purpose and any vacancy thereby
created may be filled during such Class Voting Period by the
holders of $3.20 Convertible Preference Stock, present in person
or represented by proxy at such meeting. In the event that any
director elected by the holders of the $3.20 Convertible
Preference Stock (or any director elected pursuant to the
provisions of this sentence) dies, resigns or otherwise ceases to
be a director, the remaining director may elect a successor;
provided, however, that the foregoing shall not apply to a
vacancy created by the removal of a director by the holders of
$3.20 Convertible Preference Stock as provided in the preceding
sentence. At the end of the Class Voting Period the holders of
$3.20 Convertible Preference Stock shall be automatically
divested of all voting power vested in them under this
subparagraph (e) but subject always to the subsequent vesting
hereunder of voting power in the holders of $3.20 Convertible
Preference Stock in the event of any similar default or defaults
thereafter. The term of all directors elected pursuant to the
provisions of this subparagraph (e) shall in all events expire at
the end of the Class Voting Period.
(f) Conversion. Each share of the $3.20 Convertible
Preference Stock may be converted, at the option of the holder
thereof, at any time (but in case the same shall be called for
redemption, only until the close of business on the tenth day
prior to the date fixed for the redemption thereof) into three
and six tenths (3.6) fully paid and non-assessable shares of
Capital Stock of the Corporation, the respective number of shares
of Capital Stock in any case being subject to adjustment,
however, as hereinafter in subparagraph (g) provided. Upon any
such conversion of shares of $3.20 Convertible Preference Stock
no allowance or adjustment shall be made with respect to
dividends upon either class of stock.
Such option to convert shares of $3.20 Convertible
Preference Stock into shares of Capital Stock may be exercised
by, and only by, surrendering for such purpose to the Corporation
at the office of any of its Transfer Agents for its Capital Stock
for the time being, located in the City of New York or in any
other city in which the Corporation at the time shall maintain a
transfer agency with respect to such stock, certificates
representing the shares to be converted, duly endorsed or
accompanied by proper instruments of transfer, together with a
written request for conversion. At the time of such surrender,
the person exercising such option to convert shall be deemed to
be the holder of the shares of Capital Stock issuable upon such
conversion, notwithstanding that the stock transfer books of the
Corporation may then be closed or that certificates representing
such shares of Capital Stock shall not then be actually delivered
to such person.
The term "Capital Stock" as used in this Subsection D shall
be deemed to include stock of the Corporation of every class,
except stock which shall be preferred as to dividends or assets
over the Capital Stock of the Corporation or which shall not
participate equally, share for share, with such Capital Stock in
earnings or assets remaining after payment in full of the
preferential amounts of dividends or assets to which such stock
shall be entitled; provided, however, that the shares of Capital
Stock into which shares of the $3.20 Convertible Preference Stock
shall be convertible, shall be shares of Capital Stock of the
character authorized at the date of the initial issuance of the
$3.20 Convertible Preference Stock or, in case of a
reclassification or exchange of such Capital Stock, shares of the
stock into or for which such Capital Stock shall be reclassified
or exchanged and all provisions of this Subsection D shall be
applied appropriately thereto and to any stock resulting from any
subsequent reclassification or exchange thereof.
(g) Anti-Dilution. The number of shares of Capital Stock
into which each share of $3.20 Convertible Preference Stock may
be converted shall be subject to adjustment from time to time in
certain instances as follows:
(1) If at any time or from time to time the
outstanding shares of Capital Stock of the Corporation
shall be subdivided or combined into a greater or
smaller number of shares (by way of reclassification or
splitup of shares or in any other manner), then the
number of shares of Capital Stock into which each share
of $3.20 Convertible Preference Stock may, after any
such subdivision or combination becomes effective, be
converted shall be increased or reduced in the same
proportion.
(2) If at any time or from time to time there is
declared on the Capital Stock of the Corporation any
dividend payable in Capital Stock of the Corporation,
then the number of shares of Capital Stock into which
each share of $3.20 Convertible Preference Stock may be
converted on or after the record date fixed for such
dividend shall be increased in the same proportion as
the aggregate number of shares of Capital Stock issued
or to be issued on account of such dividend bears to
the aggregate number of shares of Capital Stock on
which such dividend is or is to be paid.
(3) If the Corporation shall grant the holders of
its Capital Stock, as such, rights to subscribe for
shares of Capital Stock and/or securities convertible
into, exchangeable for, or carrying rights of purchase
of shares of Capital Stock and if (i) the conversion
price (determined by dividing One Hundred Dollars
($100.00) by the number of shares of Capital Stock
deliverable upon conversion of each share of $3.20
Convertible Preference Stock, immediately before the
time herein provided for such adjustment) and (ii) the
"market value per share" of Capital Stock on the first
full business day (excluding any Saturday) after the
last date on which any of such rights to subscribe may
be exercised, shall each exceed the amount payable for
one share of Capital Stock on exercise of such rights
to subscribe, then in each case said conversion price
shall be reduced by "the value of the right to
subscribe", as limited and defined herein, so granted
to the holder of one share of Capital Stock, and the
number of shares of Capital Stock deliverable
thereafter upon conversion of each share of $3.20
Convertible Preference Stock, shall be the quotient
obtained by dividing One Hundred Dollars ($100.00) by
the conversion price so reduced.
The adjustment provided for herein shall be
effective immediately after the close of business on
the day as of which said market value per share of
Capital Stock is taken.
For the purpose of such adjustment, the "value of
the right to subscribe" so granted to the holder of one
share of Capital Stock shall be deemed to be an amount
equal to the quotient obtained by dividing (x) the
excess of said "market value per share" of Capital
Stock or said conversion price immediately before such
reduction, whichever is lower, over the amount payable
for one share of Capital Stock on exercise of such
rights to subscribe by (y) the number of shares of
Capital Stock with respect to which is granted the
right to subscribe for one full share of Capital Stock.
For the purpose of such adjustment, the "market
value per share" of Capital Stock shall be deemed to be
the mean between the high and low sales prices per
share of Capital Stock on the day as of which such
market value is taken (or lacking any sales, the mean
between the closing bid and asked prices on that day)
or, if the New York Stock Exchange is not open on that
day, then on the first full business day (excluding any
Saturday) upon which the New York Stock Exchange is
open immediately following such day. Such sales prices
or such bid and asked prices, as the case may be, shall
be those on the New York Stock Exchange if the Capital
Stock be listed or dealt in thereon at the time, or, if
not listed or dealt in thereon, then those on such
exchange as shall have been selected from time to time
by the Corporation for the purpose or, if not listed or
dealt in on any exchange, then those furnished by the
trading department of any New York Stock Exchange firm
selected from time to time by the Corporation for the
purpose and deemed by it to be reliable.
For the purpose of such adjustment in case of such
granting of rights to subscribe for securities
convertible into, exchangeable for, or carrying rights
of purchase of, shares of Capital Stock, (i) the holder
of one share of Capital Stock shall be deemed to have
been granted a right to subscribe for such number of
shares of Capital Stock as shall be deliverable upon
exercise of the rights of conversion, exchange or
purchase of all of the securities for which such holder
is granted rights to subscribe, (ii) the last date on
which any rights to subscribe for shares of Capital
Stock (so deemed to have been granted) may be exercised
shall be deemed to be the last date on which any of the
aforesaid rights may be exercised to subscribe for such
securities convertible into, exchangeable for, or
carrying rights of purchase of, shares of Capital
Stock, and (iii) the amount payable for one share of
Capital Stock on exercise of a right to subscribe for
shares of Capital Stock (so deemed to have been
granted) shall be deemed to be the sum of (x) the
consideration payable to the Corporation for such
number of such securities as are convertible into or
exchangeable for one full share of Capital Stock, (y)
in the case of securities carrying such rights, the
amount (if any) by which the consideration payable to
the Corporation for such number of such securities as
carry rights to purchase one full share of Capital
Stock shall exceed the distributive amount, if any
(excluding any sums with respect to accrued dividends)
payable on voluntary liquidation of the Corporation
with respect to such securities, if stock, or, if not
stock, the principal amount of such securities, and
(z) any additional amount thereafter payable to the
Corporation for one full share of Capital Stock upon
the exercise of such rights of conversion, exchange or
purchase.
(4) No adjustment in the conversion prices
resulting from the application of the foregoing
provisions of clause (3) of subparagraph (g) is to be
given effect unless, by making such adjustments, the
conversion price in effect immediately prior to such
adjustment would be changed by thirty cents or more,
and such adjustments shall be made only in amounts of
thirty cents or a multiple thereof, but any adjustment
which would change the conversion price by less than
thirty cents or a multiple thereof is to the extent of
the difference between the next multiple thereof and
such lesser multiple to be carried forward and given
effect in making future adjustments.
(h) Certificate as to Adjustment of the Conversion Rate;
Reservation of Shares. Whenever the amount of Capital Stock
and/or other securities deliverable upon the conversion of the
shares of $3.20 Convertible Preference Stock shall be adjusted
pursuant to the provisions hereof, the Corporation shall
forthwith file at its principal office and with the transfer
agent or agents for the $3.20 Convertible Preference Stock and
for such Capital Stock a statement, signed by the President or
one of the Vice Presidents of the Corporation and by its
Treasurer or one of its Assistant Treasurers, stating the
adjusted amount of its Capital Stock and/or other securities
deliverable per share of $3.20 Convertible Preference Stock
calculated to the nearest one hundredth (1/100th) and setting
forth in reasonable detail the method of calculation and the
facts requiring such adjustment and upon which such calculation
is based. Each adjustment shall remain in effect until a
subsequent adjustment hereunder is required.
The Corporation shall at all times reserve and keep
available out of its authorized but unissued Capital Stock, the
full number of shares of Capital Stock deliverable upon the
conversion of all outstanding shares of $3.20 Convertible
Preference Stock which are convertible into Capital Stock and
upon exercise of any outstanding rights or options to purchase
Capital Stock.
(i) Fractional Shares. In connection with the conversion
of shares of $3.20 Convertible Preference Stock into Capital
Stock, no fractions of shares of $3.20 Convertible Preference
Stock nor of Capital Stock shall be issued; and, in lieu thereof,
non-dividend bearing non-voting scrip (exchangeable when combined
for full shares) may be issued, or the Board of Directors may
make such provisions for the stockholders in lieu of the issue of
scrip as it may determine, including payment in cash or sale of
stock to the extent of any fractions of shares and distribution
of the net proceeds or otherwise. The Board of Directors may
determine and fix the form of such scrip, whether bearer or
otherwise, the denomination thereof, the expiration dates
thereof, any provisions permitting sale of the full shares for
which such scrip is exchangeable for the account of the holder of
such scrip (or in lieu of sale of such full shares, provisions
for the determination of the value thereof, based upon quotations
therefor on the New York Stock Exchange on any specified date or
dates or based upon any other method or methods of determination
of value, and for payment of the value so determined to the
holders of such scrip), and any other terms or provisions of such
scrip as it may deem advisable.
(j) No Reissuance. Converted and redeemed shares of $3.20
Convertible Preference Stock shall become authorized and unissued
shares and subject to the provisions of subsection (k) may be
reissued by the Corporation.
(k) Merger. At the time any of the $3.20 Convertible
Preference Stock is outstanding, the Corporation will not,
without the affirmative consent (given in writing or at a meeting
duly called for that purpose) of the holders of at least
two-thirds (2/3rds) of the aggregate number of shares of $3.20
Convertible Preference Stock then outstanding, at any time during
the conversion period, consolidate or merge with or into another
corporation (whether or not the Corporation is the surviving
corporation), or at any time when the $3.20 Convertible
Preference Stock is not redeemable at the option of the
Corporation, sell all or substantially all of its assets to
another corporation, unless in connection therewith lawful and
adequate provision is made whereby the holders of $3.20
Convertible Preference Stock shall receive the right to convert
during the conversion period into the kind and amount of shares
of stock and other securities to be received by holders of the
number of shares of Capital Stock of the Corporation into which
the $3.20 Convertible Preference Stock might have been converted
immediately prior to such consolidation, merger or sale, which
right shall be subject to adjustment, as nearly equivalent as may
be practicable to the adjustments provided for in this
Subsection D.
SUBSECTION E. NO PRE-EMPTIVE RIGHTS
No shareholder of the Corporation, by reason of his holding
shares of any class of the capital stock of the Corporation,
shall have any pre-emptive or preferential right to subscribe for
or purchase any shares of (1) any class whatsoever which the
Corporation may hereafter issue or sell, or (2) any obligations
or securities which the Corporation may hereafter issue or sell,
convertible into or exchangeable for or exchanged for, any shares
of the Corporation of any class, or (3) any warrants or options
which the corporation may hereafter issue or sell which shall
confer upon the holder or owner thereof the right to subscribe
for or purchase from the Corporation any of its shares of any
class.
SECTION V
The number of directors constituting Corporation's current
Board of Directors is fifteen (15). The names and business
office addresses of the persons currently serving as said
directors are set forth below:
<TABLE>
<CAPTION>
Name Address
<C> <C>
E.M. Black 245 Park Avenue, New York, New York
Morton H. Broffman 208 South LaSalle Street, Chicago, Illinois
John M. Fox Prudential Center, Boston, Mass.
M. Robert Gallop 330 Madison Avenue, New York, New York
George P. Gardner, Jr. 24 Federal Street, Boston, Mass.
Richard D. Hill 67 Milk Street, Boston, Mass.
Maurice C. Kaplan 245 Park Avenue, New York, New York
Samuel D. Lunt 120 Broadway, New York, New York
Joseph M. McDaniel, Jr. 44 East 63rd Street, New York, New York
William B. Mason Prudential Center, Boston, Mass.
Richard M. Nichols 28 State Street, Boston, Mass.
Norman I. Schafler Boston Post Road, Old Greenwich, Conn.
David W. Wallace Greenwich Plaza, Greenwich, Conn.
Thomas K. Warner 245 Park Avenue, New York, New York
Jay Wells 200 Park Avenue, New York, New York
</TABLE>
SECTION VI
Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative
or investigative (whether or not by or in the right of the
Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
trustee, employee or agent of another corporation, partnership or
joint venture, trust or other enterprise, shall be entitled to be
indemnified by the Corporation to the full extent now or here-
after permitted by law against reasonable costs, disbursements
and counsel fees and amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties incurred by him in
connection with such action, suit or proceeding. Any such person
who was a director of AMK Corporation prior to its merger with
the Corporation shall be entitled to be indemnified by the
Corporation on the same basis and subject to the same terms and
conditions with respect to any such action, suit or proceeding by
reason of the fact that he was a director, officer, employee or
agent of AMK Corporation or was serving at the request of AMK
Corporation as a director, officer, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise. Such right of indemnification shall continue as to a
person who has ceased to be a director, officer, employee,
trustee or agent and shall inure to the benefit of the heirs,
executor or administrator of such a person. The indemnification
provided by this Section VI shall not exclude any other rights to
which any such person may otherwise be entitled by agreement,
vote of stockholders or otherwise.
SECTION VII
(1) The number of directors at any time may be increased or
decreased by vote of the Board of Directors and in case of any
such increase the Board of Directors shall have power to elect
such additional directors to hold office until the next meeting
of shareholders or until their successors shall be elected.
(2) The Board of Directors from time to time shall
determine whether and to what extent and at what time and places
and under what conditions and regulations the accounts and books
of the Corporation or any of them shall be open to the inspection
of the shareholders and no shareholder shall have any right of
inspecting any account or book or document of the Corporation
except as conferred by statute or authorized by the Board of
Directors or by a resolution of the shareholders.
(3) Subject to provisions that may be included in the
By-Laws of the Corporation, any action required or permitted by
law, by this Certificate of Incorporation or the By-Laws of the
Corporation to be taken at a meting of shareholders may, to the
extent permitted by law, be taken without a meeting upon the
written consent of shareholders who would be entitled to cast at
least the minimum number of votes which would be required to take
such action at a meeting at which all shareholders entitled to
vote thereon are present.
(4) The Board of Directors, by the affirmative vote of a
majority of the directors in office, may remove a director or
directors for cause where, in the judgment of such majority, the
continuation of the director or directors in office would be
harmful to the Corporation and may suspend the director or
directors for a reasonable period pending final determination
that cause exists for such removal.
(5) The Board of Directors shall have power to loan money
to, or guarantee an obligation of, or otherwise assist any
officer or other employee of the Corporation or of any
subsidiary, including an officer or employee who is also a
director of the Corporation, whenever, in the judgment of the
Board of Directors, such loan, guarantee or assistance may
reasonably be expected to benefit the Corporation.
(6) Except as otherwise provided by statute, by this
Certificate of Incorporation or by the By-Laws of the
Corporation, all corporate powers may be exercised by the Board
of Directors. Without limiting the foregoing, the Board of
Directors shall have power, without shareholder action:
(a) To authorize the Corporation to purchase,
acquire, hold, lease, mortgage, pledge, sell and convey
such property, real, personal and mixed, without as
well as within the State of New Jersey, as the Board of
Directors may from time to time determine, and in
payment for any property to issue, or cause to be
issued, shares of the Corporation, or bonds,
debentures, notes or other obligations or evidences of
indebtedness thereof secured by pledge, security
interest or mortgage, or unsecured.
(b) To authorize the borrowing of money; the
issuance of bonds, debentures, notes and other
obligations or evidences of indebtedness of the
Corporation, secured or unsecured, and the inclusion of
provisions as to redeemability and convertibility into
shares of the Corporation or otherwise; and, as
security for money borrowed or bonds, debentures, notes
and other obligations or evidences of indebtedness
issued by the Corporation, the mortgaging or pledging
of any property, real, personal, or mixed, then owned,
or thereafter acquired by the Corporation.
IN WITNESS WHEREOF, UNITED BRANDS COMPANY has made this
Certificate under the signature of its ________ President this
30th day of June, 1970.
UNITED BRANDS COMPANY
By /s/ John M. Fox
--------------------------------
Name: John M. Fox
----------------------------
Capacity: President
------------------------<PAGE>
STATE OF NEW JERSEY
DEPARTMENT OF STATE
I, the Secretary of State of the State of New Jersey, DO
HEREBY CERTIFY that the foregoing is a true copy of Certificate
of Incorporation (Restated) of UNITED BRANDS COMPANY, as the same
is taken from and compared with the original filed in my office
on the 30th day of June A.D. 1970, and now remaining on file and
of record therein.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
affixed my Official Seal at Trenton, this _____ day of
_____________ A.D. 19__.
______________________________
Secretary of State
<PAGE>
UNITED BRANDS COMPANY
CERTIFICATE OF RESTATEMENT
OF
CERTIFICATE OF INCORPORATION
UNITED BRANDS COMPANY hereby certifies that:
1. The name of the corporation is UNITED BRANDS
COMPANY.
2. Attached hereto is the restated Certificate of
Incorporation of United Brands Company which restates and
integrates in a single certificate the provisions of the
Company's certificate of incorporation as amended at or prior to
11:59 P.M. Eastern Daylight Savings Time on June 30, 1970,
without further amending the same.
3. Said restated Certificate of Incorporation was
duly adopted by the Board of Directors at a meeting of said Board
held on June 19, 1970, at which a quorum was present and acting
throughout.
4. Said restated Certificate of Incorporation shall
become effective at 12:01 A.M. Eastern Daylight Savings Time on
July 1, 1970.
IN WITNESS WHEREOF, United Brands Company has made this
certificate under its seal and the signature of its President
this 30th day of June, 1970.
UNITED BRANDS COMPANY
By /s/ John M. Fox
---------------------------
Name: John M. Fox
------------------------
Capacity: President
--------------------<PAGE>
CERTIFICATE OF MERGER
OF
c-N-k CORPORATION
CAPE FARMS, INC.
CHIPPER CORPORATION
FARM PRODUCTION CORPORATION
LANTANA FLOWER FARMS, INC.
INTO
UNITED BRANDS COMPANY
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of Title 14A of the Revised
Statutes of New Jersey, the undersigned corporation hereby
executes the following Certificate of Merger.
1. United Brands Company, a corporation organized and
existing under the laws of the State of New Jersey, and owing all
of the outstanding shares of each class and series of Lantana
Flower Farms, Inc., Farm Production Corporation, c-N-k
Corporation, Chipper Corporation and Cape Farms, Inc., its
subsidiary corporations organized and existing under the laws of
the State of Florida, the provisions of which permit the merger
the merger of a corporation of another state and a corporation
organized and existing under the laws of said state, hereby
agrees to the merger of those subsidiary corporations into United
Brands Company which is hereinafter designated as the surviving
corporation.
The total authorized capital stock of the surviving
corporation shall be those shares, itemized by classes, par value
of shares, shares without par value, and series, if any, within a
class as follows:
$3 Convertible Preferred Stock 46,028 shares without par value
1.20 Series A Cumulative
Convertible Preference Stock 4,000,000 shares without par value
3.20 Series B Cumulative
Convertible Preference Stock 75,813 shares without par value
Capital Stock 45,000,000 shares, $1.00 par value
The address of the surviving corporation's registered
office is 15 Exchange Place, Jersey City, New Jersey 07302, and
the name of its registered agent at such address is Corporation
Trust Company.
2. The plan of merger, attached hereto, was approved
by the board of directors of the undersigned corporation.
3. The number of outstanding shares of each class and
series of the subsidiary corporations, parties to the merger and
the number of such shares of each class and series owned by the
parent corporation is as follows:
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Name of Subsidiary Class Outstanding Owned by Parent
- -----------------------------------------------------------------
<S> <C> <C> <C>
c-N-k Corporation Common 787 787
Cape Farms, Inc. Common 5,000 5,000
Chipper Corporation Common 50 50
Farm Production
Corporation Common 5,000 5,000
Lantana Flower
Farms, Inc. Common 787 787
</TABLE>
4. United Brands Company, the surviving corporation
to this merger, agrees that:
1. It may be served with process in the State of New
Jersey in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of
the State of New Jersey or any foreign corporation,
previously amenable to suit in New Jersey, which is a party
to the merger and in any proceeding for the enforcement of
the rights of a dissenting shareholder of any such
corporation organized under the laws of the State of New
Jersey against the surviving corporation; and,
2. The Secretary of State of the State of New Jersey
shall be and hereby is irrevocably appointed as the agent of
the surviving corporation to accept service of process in
any such proceedings; the post office address to which the
service of process in any such proceeding shall be mailed is
Prudential Center, Boston, Massachusetts 02199.
5. The effective date of this Certificate shall be
November 30, 1970.
IN WITNESS WHEREOF the undersigned corporation has
caused this Certificate of Merger to be executed in its name by
its Vice President as of the 23rd day of October 1970.
UNITED BRANDS COMPANY
By /s/ W. B. Mason
--------------------------------
William B. Mason, Vice President
Subscribed and sworn to before me
this 23 day of October, 1970
/s/ Richard E. Enright, Jr.
- -------------------------------------
Richard E. Enright, Jr. Notary Public
My commission expires May 21, 1976
<PAGE>
AGREEMENT OF MERGER
AGREEMENT OF MERGER made and entered into, this 1st day of
November, 1970, by and between United Brands Company, a
corporation organized and existing under the laws of the State of
New Jersey, and a majority of the directors thereof, parties of
the first part, c-N-k Corporation, a corporation organized and
existing under the laws of the State of Florida and a majority of
the directors thereof, parties of the second part, Cape Farms,
Inc., a corporation organized and existing under the laws of the
State of Florida and a majority of the directors thereof, parties
of the third part, Chipper Corporation, a corporation organized
and existing under the laws of the State of Florida and a
majority of the directors thereof, parties of the fourth part,
Farm Production Corporation, a corporation organized and existing
under the laws of the State of Florida and a majority of the
directors thereof, parties of the fifth part, and Lantana Flower
Farms, Inc., a corporation organized and existing under the laws
of the State of Florida and a majority of the directors thereof,
parties of the sixth part.
WHEREAS, said United Brands Company, party of the first
part, has authorized, issued and outstanding stock itemized by
class, par value of shares, shares without par value and series
within the class is as follows:
<TABLE>
<CAPTION>
Authorized Issued & Class of Stock
Shares Outstanding and Series Par Value
- -----------------------------------------------------------------
<S> <C> <C> <C>
46,028 44,438 $3 Convertible Preferred Without par
Stock value
4,000,000 2,420,406 1.20 Series A Cumulative Without par
Convertible Preference value
Stock
75,813 74,604 3.20 Series B Cumulative Without par
Convertible Preference value
Stock
45,000,000 12,381,029 Capital Stock $1.00 par
value
</TABLE>
WHEREAS, said c-N-k Corporation, party of the second part,
was incorporated and is existing under the laws of the State of
Florida and has a maximum amount of capital stock, which it is
authorized to have outstanding, of 1,000 shares of Common stock
having a par value of Ten Dollars ($10.00) each, of which capital
stock, 787 shares of said Common stock are now issued and
outstanding; and
WHEREAS, said Cape Farms, Inc., party of the third part, was
incorporated and is existing under the laws of the State of
Florida and has a maximum amount of capital stock, which it is
authorized to have outstanding, of 5,000 shares of Common stock
having a par value of One Dollar ($1.00) each, or which capital
stock, 5,000 shares of said Common stock are now issued and
outstanding; and
WHEREAS, said Chipper Corporation, party of the fourth part,
was incorporated and is existing under the laws of the State of
Florida and has a maximum amount of capital stock, which it is
authorized to have outstanding, of 50 shares of Common stock
without nominal or par value of which capital stock, 50 shares of
said Common stock are now issued and outstanding; and
WHEREAS, said Farm Production Corporation, party of the
fifth part, was incorporated and is existing under the laws of
the State of Florida and has a maximum amount of capital stock,
which it is authorized to have outstanding, of 5,000 shares of
Common stock having a par value of One Dollar ($1.00) each, of
which capital stock, 5,000 shares of said Common stock are now
issued and outstanding; and
WHEREAS, said Lantana Flower Farms, Inc., party of the sixth
part, was incorporated and is existing under the laws of the
State of Florida and has a maximum amount of capital stock, which
it is authorized to have outstanding, of 1,000 shares of Common
stock having a par value of Fifty Dollars ($50.00) each, of which
capital stock, 787 shares of said Common stock are now issued and
outstanding; and
WHEREAS, the principal office in the State of Florida of
United Brands Company, the party of the first part, is located at
1111 South Bayshore Drive, in the City of Miami, County of Dade,
and the principal office of c-N-k Corporation, the party of the
second part, is located at 7001 Lantana Road, in the City of
Lantana, County of Palm Beach, State of Florida, and the
principal office of Cape Farms, Inc., the party of the third
part, is located at 255 University Drive, in the City of Coral
Gables, County of Dade, State of Florida, and the principal
office of Chipper Corporation, the party of the fourth part, is
located at 255 University Drive, in the City of Coral Gables,
County of Dade, State of Florida, and the principal office of
Farm Production Corporation, the party of the fifth part, is
located at 255 University Drive, in the City of Coral Gables,
County of Dade, State of Florida, and the principal office of
Lantana Flower Farms, Inc., the party of the sixth part, is
located at 7001 Lantana Road, in the City of Lantana, County of
Palm Beach, State of Florida; and
WHEREAS, the Board of Directors of each of the corporations,
parties hereto, to the end that greater efficiency and economy in
the management of the business carried on by each corporation may
be accomplished, deem it advisable and generally to the advantage
and welfare of said corporations and their respective
stockholders that such corporations merge into United Brands
Company as the Surviving Corporation, under and pursuant to the
provisions of the law of the State of Florida and the law of the
State of New Jersey.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements, provisions and grants hereinafter
contained the corporations, parties to this agreement, by and
between their respective board of directors have agreed and do
hereby agree each with the other that pursuant to the provisions
of the law of the State of Florida and the law of the State of
New Jersey, United Brands Company, the party of the first part,
c-N-k Corporation, party of the second part, Cape Farms, Inc.,
the party of the third part, Chipper Corporation, the party of
the fourth part, Farm Production Corporation, the party of the
fifth part, and Lantana Flower Farms, Inc., the party of the
sixth part, do hereby agree as follows:
1. United Brands Company, party of the first part, does
hereby merge c-N-k Corporation, party of the second part, Cape
Farms, Inc., party of the third part, Chipper Corporation, party
of the fourth part, Farm Production Corporation, party of the
fifth part, and Lantana Flower Farms, Inc., party of the sixth
part, with and into itself, and c-N-k Corporation; party of the
second part, Cape Farms, Inc., party of the third part, Chipper
Corporation, party of the fourth part, Farm Production
Corporation, party of the fifth part, and Lantana Flower Farms,
Inc., party of the sixth part, shall be merged with and into
United Brands Company, the party of the first part.
2. United Brands Company, the party of the first part,
shall be the Surviving Corporation and shall continue to exist as
a domestic corporation under the laws of New Jersey. The
Articles of Incorporation as amended and By-Laws of United Brands
Company, party of the first part, shall continue as the Articles
of Incorporation and By-Laws of the Surviving Corporation.
3. The Directors of United Brands Company, party of the
first part, shall continue as the Directors of the Surviving
Corporation.
4. All shares of authorized and outstanding capital stock
of c-N-k Corporation, party of the second part, Cape Farms, Inc.,
party of the third part, Chipper Corporation, party of the fourth
part, Farm Production Corporation, party of the fifth part, and
Lantana Flower Farms, Inc., party of the sixth part, such stock
being owned in its entirety by United Brands Company, party of
the first part, and all rights in respect thereof, shall be
canceled forthwith on the effective date of the merger, and the
certificates representing such shares shall be surrendered and
canceled.
5. On or after the effective date of this contemplated
merger c-N-k Corporation, party of the second part, Cape Farms,
Inc., party of the third part, Chipper Corporation, party of the
fourth part, Farm Production Corporation, party of the fifth
part, and Lantana Flower Farms, Inc., party of the sixth part
shall cease to exist. Their property shall become the property
of United Brands Company, party of the first part, as the
Surviving Corporation. The Surviving Corporation shall possess
all the rights, privileges, powers and franchises as well of a
public nature as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of said
corporations so merged, and all and singular, the rights,
privileges, powers and franchises of each of said corporations,
and all property, real, personal and mixed, and all debts due to
any of said corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each
of said corporations shall be vested in the corporation; and all
property, rights, privileges, powers and franchises, and all and
every other interest shall be thereafter as effectually the
property of the corporation as they were of the several and
respective constituent corporations, and the title to any real
estate, whether by deed or otherwise, under the laws of the State
of Florida, vested in any of said corporations shall not revert
or be in any way impaired by reason of said merger provided, that
all rights of creditors and all liens upon the property of any of
said corporations shall be preserved unimpaired, and all debts,
liabilities and duties of said constituent corporations shall
thenceforth attach to the corporation, and may be enforced
against it to the same extent as if said debts, liabilities and
duties had been incurred or contracted by it.
6. This Agreement shall be filed as required by the
provisions of the Florida Statutes, and shall be effective
November 30, 1970.
IN WITNESS WHEREOF, a majority of the directors of United
Brands Company, party of the first part, and a majority of the
directors of c-N-k Corporation, party of the second part, a
majority of the directors of Cape Farms, Inc., party of the third
part, a majority of the directors of Chipper Corporation, party
of the fourth part, a majority of the directors of Farm
Production Corporation, party of the fifth part, and a majority
of the directors of Lantana Flower Farms, Inc., party of the
sixth part, being each of the parties to this Agreement, have,
this 1st day of November, 1970, signed this Agreement of Merger
under the corporate seals of said corporations.
/s/ Eli M. Black
------------------------------
/s/ John M. Fox
------------------------------
/s/ W. B. Mason
------------------------------
/s/ G. P. Gardner, Jr.
------------------------------
/s/ Richard D. Hill
------------------------------
/s/ M.C. Kaplan
------------------------------
Signed, sealed and delivered
in the presence of:
/s/ M. Robert Gallop
/s/ James A. MacKenzie ------------------------------
- ------------------------------
/s/ Thomas K. Warner
------------------------------
/s/ Samuel D. Lunt
------------------------------
A Majority of the Directors of
UNITED BRANDS COMPANY
Signed, sealed and delivered /s/ John M. Fox
in the presence of: ------------------------------
/s/ James A. MacKenzie /s/ W. B. Mason
- ------------------------------ ------------------------------
A Majority of the Directors of
c-N-k CORPORATION
CAPE FARMS, INC.
CHIPPER CORPORATION
FARM PRODUCTION CORPORATION
LANTANA FLOWER FARMS, INC.
<PAGE>
I, James A. MacKenzie, Secretary of United Brands Company, a
corporation of the State of New Jersey,
DO HEREBY CERTIFY, in accordance with the provisions of the New
Jersey Statutes, that the foregoing Agreement of Merger, as
approved by vote of the Board of Directors of United Brands
Company on behalf of United Brands Company, and by consent of the
Board of Directors of United Brands Company in its capacity as
sole shareholder of c-N-k Corporation, Cape Farms, Inc., Chipper
Corporation, Farm Production Corporation and Lantana Flower
Farms, Inc., corporations of the State of Florida.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of said United Brands Company this 12 day of
November, 1970.
/s/ James A. MacKenzie
------------------------------
James A. MacKenzie, Secretary
UNITED BRANDS COMPANY
<PAGE>
I, James A. Mackenzie, Secretary of c-N-k Corporation, Cape
Farms, Inc., Chipper Corporation, Farm Production Corporation and
Lantana Flower Farms, Inc., corporations of the State of Florida,
DO HEREBY CERTIFY, in accordance with the provisions of the
Florida Statutes, that the foregoing Agreement of Merger, as
approved by vote of the Board of Directors of United Brands
Company on behalf of United Brands Company, and by consent of the
Board of Directors of United Brands Company in its capacity as
sole shareholder of c-N-k Corporation, Cape Farms, Inc., Chipper
Corporation, Farm Production Corporation and Lantana Flower
Farms, Inc., corporations of the State of Florida.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seals of said c-N-k Corporation, Cape Farms, Inc.,
Chipper Corporation, Farm Production Corporation and Lantana
Flower Farms, Inc., this 12 day of November, 1970.
/s/ James A. MacKenzie
------------------------------
James A. MacKenzie, Secretary
c-N-k Corporation
Cape Farms, Inc.
Chipper Corporation
Farm Production Corporation
Lantana Flower Farms, Inc.
<PAGE>
THE ABOVE AGREEMENT OF MERGER, having been executed by a
majority of the Board of Directors of each of the corporations,
parties thereto, and having been adopted by the stockholders of
each of said corporations, the President and Secretary of each
corporate party hereto, do now hereby execute this Agreement of
Merger under the corporate seals of their respective
corporations, by authority of the directors and stockholders
thereof, as the respective act, deed and agreement of each of
said corporations, on this 11 day of November, 1970.
UNITED BRANDS COMPANY
By /s/ G. Burke Wright
----------------------------
Vice President
By /s/ James A. MacKenzie
----------------------------
James A. MacKenzie
Secretary
c-N-k CORPORATION
CAPE FARMS, INC.
CHIPPER CORPORATION
FARM PRODUCTION CORPORATION
LANTANA FLOWER FARMS, INC.
By /s/ William B. Mason
----------------------------
William B. Mason, President
By /s/ James A. MacKenzie
----------------------------
James A. MacKenzie,
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION (RESTATED)
OF
UNITED BRANDS COMPANY
United Brands Company, a corporation organized under
the laws of the State of New Jersey (the "Corporation") hereby
certifies:
(1) That the name of the Corporation is United Brands
Company.
(2) That at a meeting of the Board of Directors of the
Corporation, at which a quorum was present and acting throughout,
the Board of Directors adopted the following resolutions
proposing and declaring advisable certain amendments to the
Certificate of Incorporation (Restated) of the Corporation:
FIRST. That Section IV of the Certificate of
Incorporation (Restated) of the Corporation be amended to
authorize a new class of 10 million shares of $1.00 par value,
Non-Voting Cumulative Preferred Stock, which may be issued in
different series with the Board of Directors determining the
specific terms of each series without further action by the
shareholders.
SECOND. That the Certificate of Incorporation
(Restated) of the Corporation be amended to add a new
Section VIII as follows:
Section VIII
To the fullest extent permitted by the New Jersey
Business Corporation Act as the same exists or may
hereafter be amended, an officer or a director of the
Corporation shall not be liable to the Corporation or
its shareholders for monetary damages for breach of any
duty, except that nothing contained herein shall
relieve an officer or a director from liability for
breach of a duty based upon an act or omission (a) in
breach of such person's duty of loyalty to the
Corporation or its shareholders, (b) not in good faith
involving a knowing violation of law, or (c) resulting
in receipt by such person of an improper personal
benefit.
Any amendment or modification of the foregoing
provisions of this Section shall not adversely affect
any right or protection of an officer or a director of
the Corporation existing at the time of such amendment
or modification, and such right or protection shall
continue as to a person who has ceased to be an officer
or a director and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(3) That the Amendments were adopted at the Annual
Meeting of Shareholders held on May 28, 1987.
(4) That the number of shares entitled to vote upon
the amendments was 15,377,064 shares of Common Stock.
(5) That the number of shares voted for the amendment
of Section IV of the Certificate of Incorporation (Restated) was
13,927,527 and the number of shares voted against such amendment
was 79,447.
(6) That the number of shares voted for the amendment
adding a new Section VIII to the Certificate of Incorporation
(Restated) was 14,192,732 and the number of shares voted against
such amendment was 50,910.
IN WITNESS WHEREOF, United Brands Company has caused
this Certificate of Amendment to be executed on behalf of the
Corporation by its Chairman of the Board and its Secretary as of
this 31st day of May, 1987.
UNITED BRANDS COMPANY
By /s/ Carl H. Lindner
----------------------------
Carl H. Lindner, Chairman of
the Board and Chief
Executive Officer
ATTEST:
/s/ Dennis M. Doyle
- ------------------------------
Dennis M. Doyle, Secretary
(T2-31)
<PAGE>
CERTIFICATE PURSUANT TO SECTION 14A:7-15.1
TO AMEND THE CERTIFICATE OF INCORPORATION
OF UNITED BRANDS COMPANY
Pursuant to Section 14A:7-15.1 of the New Jersey Business
Corporation Act, the undersigned, Fred J. Runk, Vice President of
United Brands Company (the "Company") hereby certifies the
following:
1. The name of the corporation is United Brands Company.
2. A 3-for-1 stock split of the Company's shares of
Capital Stock was adopted by an action by written consent by all
of the members of the Executive Committee of the Board of
Directors on April 27, 1988, attached hereto as Exhibit A.
3. The 3-for-1 stock split will not adversely affect the
rights or preferences of the holders of outstanding shares of any
class or series of the Company and will not increase the number
of authorized but unissued shares.
4. The 12,792,157 outstanding shares of the Company's
Capital Stock, $1.00 par value, will be divided 3 for 1 into
25,584,314 outstanding shares of Capital Stock, with $.33 par
value.
5. Article IV of the Certificate of Incorporation of the
Company is hereby amended in subparagraph (i) as follows:
(i) 45,000,000 shares of Capital Stock, par value $.33
per share ("Capital Stock"),
6. The 3-for-1 stock division will become effective as of
May 31, 1988.
Signed at Cincinnati, Ohio, this 18th day of May, 1988.
/s/ Fred J. Runk
------------------------------
Fred J. Runk
Vice President
<PAGE>
Exhibit A
OFFICER'S CERTIFICATE
John J. Gerah, being the duly elected and acting Assistant
Secretary of United Brands Company, certifies that the attached
Exhibit A is a true and correct copy of resolutions adopted by
the Executive Committee of the Board of Directors of the Company
in an action taken in writing pursuant to the corporation laws of
New Jersey signed by all the members of such Committee and dated
as of April 27, 1988, which resolutions remain in full force and
effect as of this date.
Signed at Cincinnati, Ohio this 17th day of May, 1988
/s/ John J. Gerah
------------------------------
John J. Gerah
<PAGE>
EXHIBIT A
UNITED BRANDS COMPANY
EXECUTIVE COMMITTEE
AN ACTION TAKEN IN WRITING BY THE MEMBERS OF THE EXECUTIVE
COMMITTEE OF THE BOARD OF DIRECTORS OF UNITED BRANDS COMPANY
RESOLVED: That this Corporation's Capital Stock, $1.00 par
value, be split on the basis of three-for-one so that the par
value be reduced to $.33 per share and two additional shares
shall be issued for each share now outstanding to shareholders of
record at the close of business on May 20, 1988 with such
additional shares to be distributed on May 31, 1988.
RESOLVED: That the number of Capital Stock subject to stock
options as of the close of business on May 20, 1988 and the
respective option prices be correspondingly adjusted to reflect
the 3-for-1 stock split.
RESOLVED: That the conversion right and the conversion
price of the 5 1/2% Convertible Subordinated Debentures due
February 1, 1994 outstanding on May 20, 1988 shall be adjusted to
reflect the 3-for-1 stock split which will result in a conversion
ratio of 1 share per $18.333 of the aggregate principal amount.
RESOLVED: That the Transfer Agent and Registrar for the
Corporation's Capital Stock be and hereby is authorized and
directed to record, register, countersign and deliver
certificates upon original issue representing the shares of
Capital Stock, par value $.33, to be issued as a result of the
3-for-1 Stock Split, and that the authority of the Transfer Agent
and Registrar is increased to include such additional shares.
BE IT FURTHER RESOLVED: That the Corporation's officers are
directed to take all steps necessary and incidental to the
consummation of this stock split including, but not limited to,
listing of the additional shares of Capital Stock on the
New York, Boston and Pacific Stock Exchanges and filing a
certificate with the Secretary of State of New Jersey.
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION (RESTATED)
OF
UNITED BRANDS COMPANY
United Brands Company, a corporation organized under
the laws of the State of New Jersey (the "Corporation") hereby
certifies:
(1) That the name of the Corporation is United Brands
Company.
(2) That at a meeting of the Board of Directors of the
corporation, at which a quorum was present and acting throughout,
the Board of Directors adopted the following resolution proposing
and declaring advisable a certain amendment to the Certificate of
Incorporation (Restated) of the Corporation:
That Section IV of the Certificate of
Incorporation (Restated) of the Corporation be amended
to increase the authorized shares of Capital Stock,
$1.00 par value, from 45,000,000 million shares to
100,000,000 shares.
(3) That the Amendments were adopted at the Annual
Meeting of Shareholders held on June 2, 1988.
(4) That the number of shares entitled to vote upon the
amendment was 12,788,457 shares of Common Stock.
(5) That the number of shares voted for the amendment
of Section IV of the Certificate of Incorporation (Restated) was
11,897,813 and the number of shares voted against such amendment
was 78,821, with 7,429 shares abstaining.
IN WITNESS WHEREOF, United Brands Company has caused
this Certificate of Amendment to be executed on behalf of the
Corporation by its Chairman of the Board and its Secretary as of
this 5th day of June, 1988.
UNITED BRANDS COMPANY
By /s/ Carl H. Lindner
----------------------------
Carl H. Lindner, Chairman of
the Board and Chief
Executive Officer
ATTEST:
/s/ Robert A. Dearth, Jr.
- --------------------------------
Robert A. Dearth, Jr., Secretary
<PAGE>
CERTIFICATE OF CORRECTION
TO THE
CERTIFICATE PURSUANT TO SECTION 14A:7-15.1
TO AMEND THE CERTIFICATE OF INCORPORATION OF
UNITED BRANDS COMPANY
The undersigned, Thomas E. Mischell, Vice President of
United Brands Company (the "Company"), a New Jersey corporation,
hereby certifies the following:
1. On May 19, 1988, United Brands Company filed a
Certificate Pursuant to Section 14A:7-15.1 to Amend the
Certificate of Incorporation of United Brands Company (a copy of
which is attached hereto) to report a 3-for-1 stock split
effective as of May 31, 1988.
2. Paragraph 4 of this Certificate should be corrected to
read as follows:
"4. The 12,792,157 outstanding shares of the Company's
Capital Stock, $1.00 par value, will be divided 3 for 1
into 38,376,471 outstanding shares of Capital Stock,
$.33 par value per share."
Signed at Cincinnati, Ohio this 9th day of March, 1989.
/s/ Thomas E. Mischell
------------------------------
Name: Thomas E. Mischell
-------------------------
Title: Vice President
------------------------<PAGE>
United Brands Company
Certificate of Amendment
to the
Certificate of Incorporation (Restated)
United Brands Company, a corporation organized under
the laws of the State of New Jersey (the "Corporation"), hereby
certifies:
(1) That the name of the Corporation is United Brands
Company.
(2) That the Board of Directors of the Corporation
adopted the following resolutions proposing a certain amendment
to the Certificate of Incorporation (Restated) of the
Corporation:
RESOLVED, that the Board of Directors approves the
amendment of Section I of the Company's Certificate of
Incorporation (Restated) to read:
"The name of the Corporation is Chiquita
Brands International, Inc.";
RESOLVED, that the Board of Directors directs that
the proposed amendment be submitted for approval by the
written consent of the holders of a sufficient number
of shares of the Company to take such action.
(3) That pursuant to Section 14A:5-6 of the New Jersey
Business Corporation Act, the Amendment was adopted by Written
Consent dated February 22, 1990 and signed by the holders of
shares being sufficient to take action at a meeting.
(4) That the number of shares entitled to vote upon or
express consent for the Amendment was 38,862,274 shares of
Capital Stock $0.33 par value.
(5) That the number of shares consenting in writing to
the Amendment was 32,010,607.
(6) That not less than ten days prior to the
effectiveness of such action, notice of the adoption of such
Amendment was communicated to all shareholders who did not
consent thereto in writing.
(7) That the Amendment shall become effective at
10:00 a.m. Eastern Standard Time on March 20, 1990.
IN WITNESS WHEREOF, United Brands Company has caused
this Certificate of Amendment to be executed on behalf of the
Corporation by its Executive Vice President, Chief Administrative
Officer as of this 15th day of March, 1990.
UNITED BRANDS COMPANY
By /s/ Steven G. Warshaw
----------------------------
Steven G. Warshaw, Executive
Vice President, Chief
Administrative Officer
<PAGE>
CERTIFICATE OF MERGER
OF
UB HOLDING COMPANY
INTO
CHIQUITA BRANDS INTERNATIONAL, INC.
TO: The Secretary of State The Secretary of State
State of Delaware State of New Jersey
Pursuant to the provisions of Section 14A:10-7 Corporations,
General, of the New Jersey Statutes (the "NJS") and the Delaware
General Corporations Laws ("DGCL"), the undersigned corporations
hereby execute the following Certificate of Merger.
ARTICLE ONE
The name of the corporations proposing to merge and the States
under the laws of which such corporations are organized are as
follows:
<TABLE>
<CAPTION>
Name of Corporation State of Incorporation
<S> <C>
UB Holding Company Delaware
Chiquita Brands International, Inc. New Jersey
</TABLE>
ARTICLE TWO
The surviving corporation shall be Chiquita Brands
International, Inc. (hereinafter referred to as the "Surviving
Corporation").
ARTICLE THREE
The plan of merger is as set forth in the Agreement and Plan
of Merger between Chiquita Brands International, Inc. and
UB Holding Company attached hereto as Exhibit I (the "Agreement")
and is by this reference made a part hereof as if fully set forth
herein. The Certificate of Incorporation of Chiquita Brands
International, Inc. shall be the Certificate of Incorporation of
the Surviving Corporation.
ARTICLE FOUR
The plan of merger was approved by the Board of Directors of
the Surviving Corporation by Unanimous Written Consent dated
March __, 1990, and no vote of the shareholders of the Surviving
Corporation was required because of the applicability of
Section 14A:10-3(4) of the NJS. The Agreement was approved,
adopted, certified, executed and acknowledged by the Surviving
Corporation as provided by Section 252 of the DGCL.
ARTICLE FIVE
The Agreement was approved by the Board of Directors of
UB Holding Company ("Holding") by unanimous written consent dated
March __, 1990, duly adopted by the holders of all 179.611 shares
of the issued and outstanding common stock of Holding by
unanimous written consent dated March __, 1990, and approved,
adopted, certified executed and acknowledged by Holding, all as
provided by Sections 251 and 252 of the DGCL. The applicable
provisions of the laws of Delaware have been, or upon compliance
with filing and recording requirements will have been, complied
with.
ARTICLE SIX
The Surviving Corporation agrees that it may be served with
process in the State of Delaware in any proceeding for
enforcement of any obligation of Holding, as well as for
enforcement of any obligation of Chiquita arising from the
merger, including any suit or other preceding to enforce the
right of any stockholders as determined in the appraisal
proceedings pursuant to the provisions of Section 262 of the
DGCL.
ARTICLE SEVEN
The Surviving Corporation hereby makes an irrevocable
appointment of the Secretary of State of Delaware as its agent to
accept service of process in any proceeding mentioned in the
foregoing paragraph. The Secretary of State is requested to mail
a copy of any process in such proceeding to:
Charles R. Morgan, Esq.
Vice President, General Counsel & Secretary
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
ARTICLE EIGHT
The Surviving Corporation further agrees that it will
promptly pay the dissenting stockholders of Holding the amount,
if any, to which they shall be entitled under the provisions
under the DGCL with respect to the rights of dissenting
stockholders.
ARTICLE NINE
The executed Agreement is on file at the principal place of
business of Chiquita located at 250 East Fifth Street,
Cincinnati, Ohio 45202, which Agreement will be furnished upon
request and without cost to any stockholder of either constituent
corporation to the merger.
ARTICLE TEN
IN WITNESS WHEREOF, each of the undersigned corporations has
caused this Certificate of Merger to be executed in its name by
its authorized officer as of the 28th day of March, 1990.
Attest: CHIQUITA BRANDS INTERNATIONAL,
INC.
s/ John J. Gerah By: /s/ Steven G. Warshaw
- ------------------------------ ---------------------------
John J. Gerah Steven G. Warshaw
Assistant Secretary Executive Vice President
UB HOLDING COMPANY
/s/ James C. Kennedy By: /s/ Thomas E. Mischell
- ------------------------------ ---------------------------
James C. Kennedy Thomas E. Mischell
Secretary Vice President
<PAGE>
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 28th day of March, 1990, before me personally
appeared John J. Gerah, who acknowledged himself to be the
Assistant Secretary of Chiquita Brands International, Inc., a
corporation, and that he is such officer, being authorized to do
so, has executed the foregoing instrument for the purposes
therein contained on behalf of the corporation.
/s/ L. Jennifer Holterhoff
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 28th day of March, 1990, before me personally
appeared Steven G. Warshaw, who acknowledged himself to be the
Executive Vice President of Chiquita Brands International, Inc.,
a corporation, and that he is such officer, being authorized to
do so, has executed the foregoing instrument for the purposes
therein contained on behalf of the corporation.
/s/ L. Jennifer Holterhoff
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 28th day of March, 1990, before me personally
appeared Thomas E. Mischell, who acknowledged himself to be the
Vice President of UB Holding Company, a corporation, and that he
is such officer, being authorized to do so, has executed the
foregoing instrument for the purposes therein contained on behalf
of the corporation.
/s/ Leslie M. Conradi
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 28th day of March, 1990, before me personally
appeared James C. Kennedy, who acknowledged himself to be the
Secretary of UB Holding Company, a corporation, and that he is
such officer, being authorized to do so, has executed the
foregoing instrument for the purposes therein contained on behalf
of the corporation.
/s/ Leslie M. Conradi
------------------------------
Notary Public
<PAGE>
EXHIBIT I
AGREEMENT AND PLAN OF MERGER
BETWEEN
CHIQUITA BRANDS INTERNATIONAL, INC.
AND
UB HOLDING COMPANY
This Agreement and Plan of Merger ("Agreement") is entered
into as of the 28th day of March, 1990 by and between Chiquita
Brands International, Inc., a New Jersey corporation
("Chiquita"), UB Holding Company, a Delaware corporation
("Holding") (Chiquita and Holding are sometimes referred to
herein as the "Constituent Corporations") American Financial
Corporation, an Ohio corporation ("AFC"), Great American
Insurance Company, an Ohio corporation ("GAI") and Great American
Communications Company, a Florida corporation ("GACC"), under the
following circumstances:
1. Chiquita is a corporation duly organized and
validly existing under the laws of the state of New
Jersey and has authorized Capital Stock consisting of
100,000,000 shares of Capital Stock, with a par value
of $.33 per share ("Common Stock") of which 38,899,074
shares are issued and outstanding;
2. Holding is a corporation duly organized and
validly existing under the laws of the state of
Delaware and has authorized Capital Stock consisting of
1,000 shares of Common Stock, with a par value of $1.00
per share of which 179.611 shares are issued and
outstanding;
3. AFC, GAI and GACC (collectively the "Holding
Stockholders") own all of the issued and outstanding
shares of Holding Common Stock, and join in this
Agreement for the purposes set forth in Article V
hereof;
4. Boards of Directors of the Constituent
Corporations have by unanimous written consent approved
this Agreement of Merger;
5. The Stockholders of Holding have by unanimous
written consent adopted this Agreement of Merger; and
6. As Chiquita is to be the surviving corporation of
the Merger, no vote of the shareholders of Chiquita is
required because of the applicability of
Section 14A:10-3(4) of the New Jersey Business
Corporation Act.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein and in accordance with the
laws of the states of New Jersey and Delaware, the parties hereto
agree that Holding shall be merged with and into Chiquita and
that Chiquita shall be the surviving corporation, and that the
terms and conditions of such merger shall be as follows:
ARTICLE I
1.1 At the effective time of the merger, Holding shall be
merged with and into Chiquita which shall be the Surviving
Corporation and Chiquita shall continue its corporate existence
under the laws of the State of New Jersey.
1.2 This Agreement and such supporting documents as are
required shall be filed as promptly as possible with the
Secretary of State of New Jersey and the Secretary of State of
Delaware and the effective time of the merger shall be at the
time of the filing of the necessary documents with such
Secretaries of State.
ARTICLE II
2.1 At the Effective Time, each one ten-thousandth of an
outstanding share of Common Stock of Holding, by operation of the
Merger, shall be converted into and become, without any action on
the part of the holder thereof, one share of Common Stock of
Chiquita. Chiquita warrants that when issued the Chiquita Common
Stock will be duly authorized, fully paid and non-assessable and
free and clear of all liens and encumbrances.
2.2 After the Effective Time, each holder of Certificates
representing shares of Holding Common Stock which have been
converted to Chiquita Common Stock pursuant to Section 2.1 hereof
shall be entitled to receive upon the surrender of such
Certificates a Certificate or Certificates representing the
number of shares of Common Stock of Chiquita to which such
shareholder is entitled. Until such time as such Holding
Certificates are presented, surrendered and exchanged, each such
Certificate of Holding Common Stock shall be deemed for all
purposes to evidence ownership of the number of shares of
Chiquita Common Stock into which they shall have been converted
pursuant to the Merger.
2.3 At the Effective Time, the 17,961,100 shares of
Chiquita Common Stock held by Holding shall, by virtue of the
Merger and without any action on the part of the Surviving
Corporation, cease to be outstanding, shall be canceled and
retired without payment of any consideration therefor and shall
cease to exist.
ARTICLE III
3.1 The Certificate of Incorporation of Chiquita following
the Merger shall be as presently recorded in the office of the
Secretary of State of New Jersey.
3.2 The By-Laws of Chiquita in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation.
ARTICLE IV
Effects of the Merger
From the Effective Time, the Merger shall have the effects
provided by the laws of the States of New Jersey and Delaware.
without limiting the generality of the foregoing, upon the
Effective Time the separate existence of Holding shall cease,
Holding shall be merged with and into Chiquita as the Surviving
Corporation and the Surviving Corporation, without further deed
or action shall possess all assets and property of every
description, and every interest therein, wherever located; all
rights, privileges, immunities, powers, franchises and authority
(of a public as well as a private nature) of each of the
Constituent Corporations and all obligations belonging to or due
each of the Constituent Corporations. Title to real estate or
any interest therein, invested in each Constituent Corporation,
shall not revert or any way be impaired by reason of the Merger.
The Surviving Corporation shall be liable for all the obligations
of each Constituent Corporation, including liability to
dissenting shareholders. Any claim existing, or action or
proceeding pending by or against either Constituent Corporation
may be prosecuted to judgment, with right of appeal, as if the
Merger had not taken place, or the Surviving Corporation may be
substituted in place of the Constituent Corporation. All rights
of creditors of each Constituent Corporation shall be preserved
unimpaired and all liens upon the property of either Constituent
Corporation shall be preserved unimpaired but only on the
property affected by such liens immediately before the Effective
Time. Whenever conveyance, assignment, transfer, deed or other
instrument or act is necessary to vest property or rights in the
Surviving Corporation, the officers of the respective Constituent
Corporations shall execute, acknowledge and deliver such
instruments and do such acts. For such purposes, the existence
of the Constituent Corporations and the authority of their
respective officers and directors is continued, notwithstanding
the Merger.
ARTICLE V
5.1 The Holding Stockholders represent and warrant to
Chiquita that as of the date hereof, and as of the Effective
Time, Holding has no liabilities or obligations which, upon
consummation of the Merger, would become obligations of the
Surviving Corporation.
5.2 The Holding Stockholders represent and warrant to
Chiquita that immediately prior to the Effective Time, the only
assets of Holding will be 17,961,100 shares of Chiquita Common
Stock.
5.3 Notwithstanding anything to the contrary contained
herein, the Holding Stockholders hereby indemnify Chiquita
against, hold it harmless from, and reimburse it for, any and all
claims, expenses, losses, damages, costs, and/or fees arising
from or related to: (i) any breach of the representations and
warranties of the Holding stockholders contained in this
Article V; and (ii) the Merger and related transactions
contemplated herein.
ARTICLE VI
Miscellaneous
6.1 This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time.
6.2 Any provision of this Agreement may be waived at any
time by the party which is, or whose shareholders are, entitled
to the benefits thereof and this Agreement may be amended and
supplemented at any time. After approval hereof by the
shareholders of Holding, no amendment shall be made which changes
the provisions relating to rights of the shareholders of Holding
on conversion of their Common Stock as provided in Section 2.1
hereof or which in any way materially adversely affects the
rights of shareholders of Holding without the further approval of
such shareholders.
6.3 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the date first stated above by their duly
authorized officers.
WITNESS:
CHIQUITA BRANDS INTERNATIONAL,
INC.
/s/ Jack Painter a New Jersey corporation
- ------------------------------
/s/ John J. Gerah BY: /s/ Steven G. Warshaw
- ------------------------------ ---------------------------
Steven G. Warshaw
Executive Vice President &
Chief Administrative
Officer
UB HOLDING COMPANY
/s/ Sandra J. Collins a Delaware corporation
- ------------------------------
/s/ Barbara Grosser BY: /s/ Thomas E. Mischell
- ------------------------------ ---------------------------
Thomas E. Mischell
Vice President
AMERICAN FINANCIAL CORPORATION
/s/ Barbara Grosser an Ohio corporation
- ------------------------------
/s/ Sandra J. Collins BY: /s/ Thomas E. Mischell
- ------------------------------ ---------------------------
Thomas E. Mischell
Vice President
GREAT AMERICAN INSURANCE
COMPANY
/s/ Sandra J. Collins an Ohio corporation
- ------------------------------
/s/ Barbara Grosser BY: /s/ Karen Holley Horrell
- ------------------------------ ---------------------------
Karen Holley Horrell
Senior Vice President,
General Counsel & Secretary
GREAT AMERICAN COMMUNICATIONS
COMPANY
/s/ Sandra J. Collins a Florida corporation
- ------------------------------
/s/ Barbara Grosser BY: /s/ Thomas E. Mischell
- ------------------------------ ---------------------------
Thomas E. Mischell
Vice President
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 28th day of March, 1990, before me personally
appeared Steven G. Warshaw, who acknowledged himself to be the
Executive Vice President and Chief Administrative Officer of
Chiquita Brands International, Inc., a corporation, and that he
is such officer, being authorized to do so, has executed the
foregoing instrument for the purposes therein contained on behalf
of the corporation.
/s/ Teresa M. Masur
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 26th day of March, 1990, before me personally
appeared Thomas E. Mischell, who acknowledged himself to be the
Vice President of UB Holding Company, a corporation, and that he
is such officer, being authorized to do so, has executed the
foregoing instrument for the purposes therein contained on behalf
of the corporation.
/s/ Leslie M. Conradi
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 26th day of March, 1990, before me personally
appeared Thomas E. Mischell, who acknowledged himself to be the
Vice President of American Financial Corporation, a corporation,
and that he is such officer, being authorized to do so, has
executed the foregoing instrument for the purposes therein
contained on behalf of the corporation.
/s/ Leslie M. Conradi
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 26th day of March, 1990, before me personally
appeared Karen Holley Horrell, who acknowledged herself to be the
Senior Vice President, General Counsel and Secretary of Great
American Insurance Company, a corporation, and that she is such
officer, being authorized to do so, has executed the foregoing
instrument for the purposes therein contained on behalf of the
corporation.
/s/ Sandra J. Collins
------------------------------
Notary Public
STATE OF OHIO )
: SS:
COUNTY OF HAMILTON )
On this 26th day of March, 1990, before me personally
appeared Thomas E. Mischell, who acknowledged himself to be the
Vice President of Great American Communications Company, a
corporation, and that he is such officer, being authorized to do
so, has executed the foregoing instrument for the purposes
therein contained on behalf of the corporation.
/s/ Leslie M. Conradi
------------------------------
Notary Public
<PAGE>
CERTIFICATE OF CORRECTION
TO THE
"CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION (RESTATED)
OF
UNITED BRANDS COMPANY"
The undersigned, Charles R. Morgan, Vice President, General
Counsel and Secretary of Chiquita Brands International, Inc.,
formerly known as "United Brands Company" (the "Corporation"), a
New Jersey corporation, hereby certifies the following:
1. On June 16, 1988, the Corporation, then known as United
Brands Company, filed a "Certificate of Amendment to the
Certificate of Incorporation (Restated) of United Brands Company"
(the "Certificate"), a copy of which is attached hereto, for the
purpose of increasing the authorized Capital Stock from
45,000,000 shares to 100,000,000 shares. The Certificate
erroneously referred to the Capital Stock as having a par value
of $1.00 per share rather than $0.33 per share.
2. Paragraph 2 of the Certificate is corrected to read in
part as follows:
That Section IV of the Certificate of Incorporation
(Restated) of the Corporation be amended to increase
the authorized shares of Capital Stock, $0.33 par
value, from 45,000,000 shares to 100,000,000 shares.
Signed at Cincinnati, Ohio this 14th day of May, 1990.
/s/ Charles R. Morgan
------------------------------
Charles R. Morgan
Vice President, General
Counsel and Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
CHIQUITA BRANDS INTERNATIONAL, INC.
TO: Secretary of State
State of New Jersey
Pursuant to the provisions of N.J.S. 14A:7-2(2), the
undersigned corporation, Chiquita Brands International, Inc. (the
"Corporation"), executes the following Certificate of Amendment
to its Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation").
1. The name of the Corporation is Chiquita Brands
International, Inc.
2. The following resolutions, establishing and designating
a series of shares and fixing and determining the
relative rights and preferences thereof, were duly
adopted by the Executive Committee of the Board of
Directors of the Corporation as of the thirtieth day of
October, 1992, pursuant to the authority vested in the
Board of Directors by the Certificate of Incorporation,
exercised on behalf of the Board of Directors by the
Executive Committee pursuant to resolutions of the
Board of Directors so authorizing it to act:
RESOLVED, that pursuant to the authority
expressly vested in the Executive Committee of the
Board of Directors of the Corporation by the
Restated Certificate of Incorporation, as amended,
and by resolutions of the Board of Directors, the
Executive Committee of the Board of Directors
hereby classifies One Million (1,000,000) shares
of the Corporation's Series Preference Stock as a
new series designated "Mandatorily Exchangeable
Cumulative Preference Stock, Series C," without
par value (the "Series C Preference Stock").
RESOLVED, that the terms and conditions
of the Series C Preference Stock, including
its rights, preferences, privileges, voting
powers, restrictions, qualifications,
limitations as to dividends, and terms and
conditions for conversion shall be as set
forth in Exhibit A attached hereto.
RESOLVED, that the Corporation's Restated
Certificate of Incorporation, as amended, is
hereby further amended to add to Section IV of
such certificate a new Subsection F entitled
"Special Provisions Applicable to Series C
Preference Stock," in the form attached hereto as
Exhibit A, and the proper officers of the
Corporation are authorized to execute and file, as
necessary, any documents or certificates with the
New Jersey Secretary of State to effect such
amendment.
3. The resolutions were adopted by unanimous written
consent by the Executive Committee of the Board of
Directors as of October 30, 1992.
4. The Restated Certificate of Incorporation of the
Corporation, as amended, is further amended so that the
designation and number of shares of each class and
series acted upon in the resolutions, and the relative
rights, preferences and limitations of each such class
and series are as stated in Exhibit A attached hereto,
which is the same exhibit referred to in the foregoing
resolutions.
IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Amendment to the Restated Certificate of
Incorporation this 30th day of October, 1992.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /S/ STEVEN G. WARSHAW
--------------------------------
Steven G. Warshaw
Executive Vice President and
Chief Administrative Officer
<PAGE>
EXHIBIT A
SUBSECTION F. SPECIAL PROVISIONS APPLICABLE TO SERIES C
PREFERENCE STOCK
There is hereby established Series C Preference Stock which
shall be designated "Mandatorily Exchangeable Cumulative
Preference Stock, Series C" ("Series C Preference Stock") and
shall consist of One Million (1,000,000) shares, and no more.
The relative, participating, optional and other special rights
and the qualifications, limitations and restrictions of the
Series C Preference Stock, other than those specified for all
series of Series Preference Stock in Subsection B of this Section
IV, shall be as follows:
(a) Dividends. (i) In respect of the period beginning on
the date of issuance of the Series C Preference Stock and ending
on and including September 7, 1995 (the "Preferred Period"), the
holders of outstanding shares of the Series C Preference Stock
shall be entitled to receive (subject to the rights of holders of
shares of $3.00 Cumulative Preferred Stock or any series of
Series Preference Stock and/or any other class or series of
preferred stock which the Corporation may in the future issue
which ranks prior to or on a parity with the Series C Preference
Stock with respect to dividends), when, as and if declared by the
Board of Directors out of funds legally available therefor,
cumulative preferential cash dividends at the per share rate of
$1.65 per quarter and no more ("Preferential Dividends"),
accruing and payable on the seventh day of March, June, September
and December of each year during the Preferred Period (each such
date being hereinafter referred to as a "Preferential Dividend
Payment Date") commencing December 7, 1992; provided, however,
that the Preferential Dividend payable on December 7, 1992 (the
"Initial Preferential Dividend") shall be equal to the sum of (x)
$0.85 times a fraction, the numerator of which is the number of
days from September 8, 1992 to and including the date of issuance
of the Series C Preference Stock and the denominator of which is
90, plus (y) $1.65 times a fraction, the numerator of which is
the number of days from the date of issuance of the Series C
Preference Stock to and including December 7, 1992 and the
denominator of which is 90. If December 7, 1992 or any other
Preferential Dividend Payment Date shall not be a business day,
then the Preferential Dividend Payment Date shall be on the next
succeeding business day. Each such dividend will be payable to
holders of record as they appear on the stock books of the
Corporation on such record date, not less than 10 nor more than
60 days preceding the Preferential Dividend Payment Date, as
shall be fixed by the Board of Directors. Dividends on the
Series C Preference Stock in respect of the Preferred Period
shall accrue on a quarterly basis commencing from the date of
issuance of the Series C Preference Stock, and dividends accruing
on each Preferential Dividend Payment Date shall accumulate to
the extent not paid on such date. Accumulated unpaid dividends
shall not bear interest.
(ii) So long as any shares of Series C Preference Stock
are outstanding, no dividend (including, but not limited to, a
dividend or distribution paid in shares of, or warrants or rights
to subscribe for or purchase shares of, Capital Stock or in any
other stock of the Corporation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
Capital Stock or upon any other stock of the Corporation ranking
junior to or (except as provided in the following sentence) on a
parity with Series C Preference Stock as to dividends or upon
liquidation, nor shall any Capital Stock nor any other stock of
the Corporation ranking junior to or on a parity with Series C
Preference Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the
Corporation ranking junior to Series C Preference Stock as to
dividends and upon liquidation) unless, in each case, the full
Preferential Dividends, if any, accumulated on all outstanding
shares of the Series C Preference Stock through the most recent
Preferential Dividend Payment Date shall have been paid or
deposited for payment or contemporaneously are declared and paid
or deposited for payment through the most recent Preferential
Dividend Payment Date. When dividends have not been paid in full
upon the shares of Series C Preference Stock, all dividends and
other distributions declared upon the Series C Preference Stock
and any other shares of the Corporation ranking on a parity as to
dividends and such other distributions with the shares of Series
C Preference Stock shall be declared pro rata so that the amount
of dividends and other distributions declared per share on the
Series C Preference Stock and such other shares shall in all
cases bear to each other the same ratio that accrued dividends
per share on the shares of Series C Preference Stock and such
other shares bear to each other. Holders of the shares of Series
C Preference Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided.
(iii) Any dividend payment made on shares of Series C
Preference Stock shall first be credited against the earliest
accrued but unpaid dividend due with respect to shares of Series
C Preference Stock.
(iv) At the option of the Corporation, following the
giving of notice to holders of record of Series C Preference
Stock prior to the applicable record date, the Corporation may
deliver on any Preferential Dividend Payment Date, in lieu of the
cash dividends described in clause (i) above, a number of shares
of Capital Stock equal to the amount of cash dividends described
in such clause (i) divided by the Current Market Price (as
hereinafter defined) of the Capital Stock determined as of the
second Trading Date (as hereinafter defined) immediately
preceding the relevant Notice Date (as hereinafter defined). Such
option may be exercised by the Corporation in whole or in part.
The notice required pursuant to this paragraph shall be provided
by mailing notice of the Corporation's election, first class
postage prepaid, to each holder of record of the Series C
Preference Stock, at such holder's address as it appears on the
stock register of the Corporation. Each such mailed notice shall
state, as appropriate, the record date, the number of shares of
Capital Stock to be delivered per share of Series C Preference
Stock and the Current Market Price used to calculate such number
of shares of Capital Stock. No fractional shares of Capital
Stock shall be issued pursuant to this Subsection F(a)(iv) but,
in lieu of any fraction of a share of Capital Stock which would
otherwise be issuable in respect of the aggregate number of
shares of the Series C Preference Stock held by the same holder,
each such holder shall have the right to receive an amount in
cash equal to the same fraction of the Current Market Price of
the Capital Stock determined as of the second Trading Date
immediately preceding the relevant Notice Date or a cash payment
equal to such holder's proportionate interest in the net proceeds
(following the deduction of applicable transaction costs) from
the sale, promptly by an agent on behalf of all such holders, of
shares of Capital Stock representing the aggregate of such
fractional shares.
(b) Liquidation. (i) Upon any dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary
or involuntary (collectively, a "Liquidation"), the holders of
shares of Series C Preference Stock shall be entitled to receive
out of the assets of the Corporation available for distribution
to shareholders, after payment of all debts and other liabilities
of the Corporation and all liquidation preferences of holders of
shares of $3.00 Cumulative Preferred Stock and/or any other class
or series of preferred stock which the Corporation may in the
future issue which ranks prior to the Series C Preference Stock
with respect to liquidation rights, but before any distribution
or payment is made to holders of Capital Stock of the Corporation
or on any other shares of the Corporation ranking junior to the
shares of Series C Preference Stock upon liquidation, liquidating
distributions in the amount of $90 per share, plus an amount
equal to all Preferential Dividends accrued and unpaid thereon
(including dividends accumulated and unpaid) to the date of
Liquidation, and no more. If upon any Liquidation the amounts
payable with respect to the Series C Preference Stock and any
other shares of the Corporation ranking as to any such
distribution on a parity with the Series C Preference Stock are
not paid in full, the holders of shares of Series C Preference
Stock and of such other shares will share ratably in any such
distribution of assets of the Corporation in proportion to the
full respective distributable amounts to which they are entitled.
After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of Series C
Preference Stock will not be entitled to any further
participation in any distribution or payments by the Corporation.
(ii) Neither the merger nor consolidation of the Corporation
into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the
Corporation, nor a sale, transfer or lease of all or any part of
the assets of the Corporation, shall be deemed to be a
Liquidation for purposes of this Subsection F(b).
(c) Conversions.
(i) Automatic Conversion on Final Conversion Date. Unless
earlier converted in accordance with the provisions hereof, on
September 7, 1995 (the "Final Conversion Date"), each outstanding
share of Series C Preference Stock shall automatically convert
into:
(A) that number of shares of Capital Stock as
shall be equal to the product of (x) the Common
Equivalent Rate (determined as provided in Subsection
F(c)(iv)) determined as of the Final Conversion Date,
and (y) the Appreciation Adjustment Factor (determined
as provided in Subsection F(c)(v)) determined as of the
second Trading Date preceding the Final Conversion
Date; and
(B) the right to receive an amount in cash equal
to all accrued and unpaid dividends on such share to
and including the Final Conversion Date, whether or not
declared, out of funds legally available therefor;
provided, however, that to the extent that on the Final
Conversion Date the Corporation shall have failed to fulfill its
obligation to pay or deposit (in accordance with Subsection
F(c)(x)) the funds set forth in clause (B) above and shall not
have previously notified holders of Series C Preference Stock of
its exercise of its option, pursuant to the following paragraph,
to deliver shares of Capital Stock in whole or partial
fulfillment of its obligations pursuant to clause (B) above, then
each outstanding share of Series C Preference Stock shall
automatically convert into that number of shares of Capital Stock
as shall equal the sum of (x) the number of shares determined in
accordance with clause (A) above, plus (y) the number of shares
determined by subtracting from the amount of cash described in
clause (B) above, the amount of such cash actually paid or
deposited (in accordance with Subsection F(c)(x)), and dividing
the remainder by the Current Market Price of the Capital Stock
determined as of the second Trading Date immediately preceding
the Final Conversion Date.
At the option of the Corporation, following the giving of
notice thereof to holders of record of Series C Preference Stock
in accordance with Subsection F(c)(x), it may deliver on the
Final Conversion Date, in lieu of the cash described in clause
(B) above, a number of shares of Capital Stock equal to the
amount of cash described in such clause (B) divided by the
Current Market Price of the Capital Stock determined as of the
second Trading Date immediately preceding the Notice Date. Such
option may be exercised by the Corporation for all or part of
such cash consideration.
(ii) Automatic Conversion Upon the Occurrence of Certain
Events. Immediately prior to the effectiveness of a merger or
consolidation of the Corporation that results in the conversion
or exchange of the Capital Stock into or for, or that results in
the holders of Capital Stock obtaining the right to receive,
other securities or other property, whether of the Corporation or
of any other entity (any such merger or consolidation is referred
to herein as a "Merger or Consolidation"), other than a Merger or
Consolidation in which the Series C Preference Stock remains
outstanding and holders of Series C Preference Stock obtain the
right to receive the same securities or other property that they
would have received with respect to the number of shares of
Capital Stock which such holders would have received pursuant to
clause (A) (only) of this Subsection F(c)(ii) upon conversion of
their shares of Series C Preference Stock immediately prior to
the effectiveness of the Merger or Consolidation, each
outstanding share of Series C Preference Stock shall
automatically convert into:
(A) that number of shares of Capital Stock as
shall be equal to the product of (x) the Common
Equivalent Rate determined as of the effective date of
the Merger or Consolidation, and (y) the Appreciation
Adjustment Factor determined as of the second Trading
Date prior to the applicable Notice Date; plus
(B) the right to receive an amount of cash equal
to the accrued and unpaid dividends on such share of
Series C Preference Stock to and including the
Settlement Date (as hereinafter defined); plus
(C) the right to receive an amount of cash (the
"Remaining Dividend Premium"), equal on the date of
issuance of the Series C Preference Stock to $8.80 plus
the amount by which the Initial Preferential Dividend
would have exceeded $0.85, declining on December 7,
1992 by the amount by which the Initial Preferential
Dividend exceeded $0.85, and declining thereafter by
$0.80 on each Preferential Dividend Payment Date from
and including March 7, 1992 to zero on September 7,
1995, in each case determined as of the Settlement
Date; plus
(D) if the effective date of such Merger or
Consolidation shall occur on a date which is prior to the
payment date of a cash dividend which has been declared on
shares of Capital Stock but after the record date for such
dividend payment, the right to receive an amount of cash
equal to $0.85; plus
(E) if the effective date of such Merger or
Consolidation shall occur on a Preferential Dividend Payment
Date and no amount shall be payable pursuant to clause (D)
immediately above, the right to receive an amount of cash
equal to $0.85;
provided, however, that to the extent that on the effective date
the Corporation shall have failed to fulfill its obligation to
pay or deposit (in accordance with Subsection F(c)(x) below) the
funds set forth in clauses (B),(C), (D) and (E) above and shall
not have previously notified holders of Series C Preference Stock
of its exercise of its option, pursuant to the following
paragraph, to deliver shares of Capital Stock in whole or partial
fulfillment of its obligations pursuant to clauses (B),(C), (D)
and (E) above, then each outstanding share of Series C Preference
Stock shall automatically convert into that number of shares of
Capital Stock as shall equal the sum of (x) the number of shares
determined in accordance with clause (A) above, plus (y) a number
of shares determined by subtracting from the amount of cash
described in clauses (B), (C), (D) and (E) above the amount of
such cash actually paid or deposited (in accordance with
Subsection F(c)(x)), and dividing the remainder by the Current
Market Price of the Capital Stock determined as of the second
Trading Date immediately preceding the effective date of such
Merger or Consolidation.
At the option of the Corporation, following the giving of
notice thereof to holders of record of Series C Preference Stock
in accordance with Subsection F(c)(x), it may deliver on the
effective date of such Merger or Consolidation, in lieu of the
cash described in clauses (B), (C), (D) and (E) above, a number
of shares of Capital Stock equal to the amount of cash described
in such clauses (B),(C), (D) and (E) divided by the Current
Market Price of the Capital Stock determined as of the second
Trading Date immediately preceding the Notice Date. Such option
may be exercised by the Corporation for all or part of such cash
consideration.
(iii) Conversion at the Option of the Corporation. At any
time and from time to time prior to the Final Conversion Date,
the Corporation shall have the right to convert, in whole or in
part, the outstanding shares of Series C Preference Stock. Each
outstanding share of Series C Preference Stock to be converted
shall automatically convert into:
(A) that number of shares of Capital Stock as
shall be equal to the product of (x) the Common
Equivalent Rate determined as of the effective date of
the conversion, and (y) the Appreciation Adjustment
Factor determined as of the second Trading Date prior
to the applicable Notice Date; plus
(B) the right to receive an amount of cash equal
to the accrued and unpaid dividends on such share of
Series C Preference Stock to and including the
Settlement Date; plus
(C) the right to receive an amount of cash equal
to the Remaining Dividend Premium on such share of
Series C Preference Stock, determined as of the
Settlement Date; plus
(D) if the effective date of such conversion shall
occur on a date which is prior to the payment date of a cash
dividend which has been declared on shares of Capital Stock
but after the record date for such dividend payment, the
right to receive an amount of cash equal to $0.85; plus
(E) if the effective date of such conversion shall
occur on a Preferential Dividend Payment Date and no amount
shall be payable pursuant to clause (D) immediately above,
the right to receive an amount of cash equal to $0.85;
provided, however, that to the extent that on the effective date
of any such conversion the Corporation shall have failed to
fulfill its obligation to pay or deposit (in accordance with
Subsection F(c)(x) below) the funds set forth in clauses (B),(C),
(D) and (E) above and shall not have previously notified holders
of Series C Preference Stock to be converted of its exercise of
its option, pursuant to the following paragraph, to deliver
shares of Capital Stock in whole or partial fulfillment of its
obligations pursuant to clauses (B), (C), (D) and (E) above, then
each outstanding share of Series C Preference Stock to be
converted shall automatically convert into that number of shares
of Capital Stock as shall equal the sum of (x) the number of
shares determined in accordance with clause (A) above, plus (y) a
number of shares determined by subtracting from the amount of
cash described in clauses (B), (C), (D) and (E) above the amount
of such cash actually paid or deposited (in accordance with
Subsection F(c)(x)), and dividing the remainder by the Current
Market Price of the Capital Stock determined as of the second
Trading Date immediately preceding the effective date of any such
conversion.
At the option of the Corporation, it may deliver on the
effective date of any such conversion, in lieu of the cash
consideration described in clauses (B), (C), (D) and (E) above, a
number of shares of Capital Stock equal to the amount of cash
consideration described in such clauses (B), (C), (D) and (E)
divided by the Current Market Price of the Capital Stock
determined as of the second Trading Date immediately preceding
the Notice Date. Such option may be exercised by the Corporation
for all or part of such cash consideration.
(iv) Common Equivalent Rate; Adjustments. The Common
Equivalent Rate to be used to determine the number of shares of
Capital Stock to be delivered on the conversion of the Series C
Preference Stock into shares of Capital Stock pursuant to
Subsection F(c)(i), (ii) and (iii) shall be initially five (5)
shares of Capital Stock for each share of Series C Preference
Stock; provided, however, that such Common Equivalent Rate shall
be subject to adjustment from time to time as provided below in
this Subsection F(c)(iv). All adjustments to the Common
Equivalent Rate shall be calculated in 1/100ths of a share of
Capital Stock. Such rate in effect at any time is herein called
the "Common Equivalent Rate."
(A) If the Corporation shall:
(1) pay a dividend or make a distribution
with respect to the Capital Stock in shares of
Capital Stock (other than a dividend or
distribution which is also paid to holders of
Series C Preference Stock and in which such
holders shall receive, with respect to each share
of Series C Preference Stock, the same number of
shares of Capital Stock as shall be distributed
with respect to that number of shares of Capital
Stock as shall be equal to the product of (x) the
Common Equivalent Rate determined as of the
applicable record date for the determination of
shareholders entitled to receive such dividend or
distribution and (y) the Appreciation Adjustment
Factor determined as of the second Trading Date
prior to the applicable Notice Date),
(2) subdivide or split its outstanding shares
of Capital Stock,
(3) combine its outstanding shares of Capital
Stock into a smaller number of shares, or
(4) issue by reclassification of its shares
of Capital Stock any shares of Capital Stock of
the Corporation
then, in any such event, the Common Equivalent Rate shall be
adjusted by multiplying the Common Equivalent Rate in effect
immediately prior to the date of such event by a fraction,
of which the numerator shall be the number of outstanding
shares of Capital Stock immediately following such event,
and of which the denominator shall be the number of
outstanding shares of Capital Stock immediately prior to
such event. Such adjustment shall become effective at the
opening of business on the business day next following the
record date for determination of shareholders entitled to
receive such dividend or distribution in the case of a
dividend or distribution and shall become effective
immediately after the effective date in case of a
subdivision, split, combination, or reclassification.
(B) If the Corporation shall pay a dividend or make a
distribution to all holders of its Capital Stock of evidence
of its indebtedness or other assets (including securities of
the Corporation but excluding any cash dividends or
distributions and dividends referred to in clause (A)
above), or shall distribute to all holders of its Capital
Stock rights or warrants to subscribe for or purchase
securities of the Corporation or any of its subsidiaries,
(in each case other than a dividend or distribution which is
also paid or made to holders of Series C Preference Stock in
which such holders shall receive, with respect to each share
of Series C Preference Stock, the same evidence of
indebtedness or other assets, or the same rights or
warrants, as shall be paid or distributed with respect to
that number of shares of Capital Stock as shall be equal to
the product of (x) the Common Equivalent Rate determined as
of the applicable record date for the determination of
shareholders entitled to receive such dividend or
distribution and (y) the Appreciation Adjustment Factor
determined as of the second Trading Date prior to the
applicable Notice Date), then in each such case the Common
Equivalent Rate shall be adjusted by multiplying the Common
Equivalent Rate in effect immediately prior to the date of
such distribution by a fraction, of which the numerator
shall be the Current Market Price per share of Capital Stock
on the record date mentioned below, and of which the
denominator shall be such Current Market Price per share of
Capital Stock less the fair market value (as determined by
the Board of Directors of the Corporation, whose
determination shall be conclusive) as of such record date of
the portion of the assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants,
applicable to one share of Capital Stock. Such adjustment
shall become effective on the opening of business on the
business day next following the record date for the
determination of shareholders entitled to receive such
distribution.
(C) Anything in this Subsection F(c) notwithstanding,
the Board of Directors shall be entitled to make such upward
adjustments in the Common Equivalent Rate, in addition to
those required by this Subsection F(c), (1) as the Board of
Directors in its discretion shall determine to be advisable,
in order that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities, or a
distribution of securities convertible into or exchangeable
for stock (or any transaction which could be treated as any
of the foregoing transactions pursuant to Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by
the Corporation to its shareholders shall not be taxable;
and (2) as the Board of Directors in its discretion shall
determine to be necessary or appropriate in order to
preserve the relative rights of the holders of Capital
Stock, on the one hand, and the holders of Series C
Preference Stock, on the other hand, as such rights are set
forth in this Certificate of Incorporation.
(D) In any case in which this Subsection F(c)(iv)
shall require that an adjustment as a result of any event
become effective at the opening of business on the business
day next following a record date, and the date fixed for
conversion pursuant to Subsection F(c)(i), (ii) or (iii)
occurs after such record date, but before the occurrence of
such event, the Corporation may in its sole discretion elect
to defer the following until after the occurrence of such
event:
(1) issuing to the holder of any shares of the
Series C Preference Stock surrendered for conversion
the additional shares of Capital Stock issuable upon
such conversion over and above the shares of Capital
Stock issuable upon such conversion on the basis of the
Common Equivalent Rate prior to adjustment; and
(2) paying to such holder any amount in cash in
lieu of a fractional share of Capital Stock pursuant to
Subsection F(c)(vii).
(v) Appreciation Adjustment Factor; Adjustments. On any
date, the "Appreciation Adjustment Factor" shall be determined as
follows:
(A) If, on such date, the Current Market Price per
share of Capital Stock shall be less than or equal to the
Appreciation Cap (as hereinafter defined), then the
Appreciation Adjustment Factor shall be equal to one (1).
(B) If, on such date, the Current Market Price per
share of Capital Stock shall be greater than the
Appreciation Cap, then the Appreciation Adjustment Factor
shall be equal to a fraction, the numerator of which is the
Appreciation Cap and the denominator of which is the Current
Market Price per share of Capital Stock.
(C) The Appreciation Cap shall be initially $24.00 per
share of Capital Stock. If, as and when the Common
Equivalent Rate is adjusted, the Appreciation Cap shall be
adjusted, such that the ratio which the Appreciation Cap in
effect immediately following such adjustment bears to the
Appreciation Cap in effect immediately prior to such
adjustment is the same ratio as that which the Common
Equivalent Rate in effect immediately prior to such
adjustment bears to the Common Equivalent Rate in effect
immediately following such adjustment. The Appreciation Cap
in effect at any time is herein called the "Appreciation
Cap."
(vi) Notice of Adjustments. Whenever the Common Equivalent
Rate is adjusted as herein provided, the Corporation shall:
(A) forthwith compute the adjusted Common Equivalent
Rate and Appreciation Cap in accordance with this Subsection
F(c)(vi) and prepare a certificate signed by the Chief
Executive Officer, the Chairman, the President, any Vice
President or the Treasurer of the Corporation setting forth
the adjusted Common Equivalent Rate and Appreciation Cap,
the method of calculation thereof in reasonable detail and
the facts requiring such adjustment and upon which such
adjustment is based, and file such certificate forthwith
with the transfer agent or agents for the Series C
Preference Stock and the Capital Stock; and
(B) mail a notice stating that the Common Equivalent
Rate and the Appreciation Cap have been adjusted, the facts
requiring such adjustment and upon which such adjustment is
based and setting forth the adjusted Common Equivalent Rate
and Appreciation Cap to the holders of record of the
outstanding shares of the Series C Preference Stock at or
prior to the time the Corporation mails an interim statement
to its shareholders covering the quarter-yearly period
during which the facts requiring such adjustment occurred,
but in any event within 45 days of the end of such quarter-
yearly period.
In addition to the foregoing, the Corporation will calculate and
provide notice to the transfer agent or agents for the Series C
Preference Stock and the Capital Stock within 30 days after (1)
the date of initial issuance of the shares of Series C Preference
Stock, (2) each Preferential Dividend Payment Date or (3) the
occurrence of any event triggering an adjustment of the Common
Equivalent Rate, of the number of shares of Capital Stock
required to be reserved for issuance upon conversion of the
issued and outstanding shares of Series C Preference Stock
(calculated as if the Current Market Price of any shares of
Capital Stock issuable in payment of Preferential Dividends or
Remaining Dividend Premium were 30% of the lowest Current Market
Price of Capital Stock applicable during the preceding 100 days);
provided that no such notice need be sent if the number of shares
of Capital Stock then reserved is in excess of the number of
shares of Capital Stock required to be reserved as so calculated.
(vii) No Fractional Shares. No fractional shares of
Capital Stock shall be issued upon conversion of shares of the
Series C Preference Stock but, in lieu of any fraction of a share
of Capital Stock which would otherwise be issuable in respect of
the aggregate number of shares of the Series C Preference Stock
surrendered by the same holder for redemption or conversion on
any redemption or conversion date or in payment of accrued and
unpaid dividends, the Remaining Dividend Premium or any other
amount, the holder shall have the right to receive an amount in
cash equal to the same fraction of the Current Market Price of
the Capital Stock determined as of the second Trading Date
immediately preceding the relevant Notice Date or, with respect
to conversions pursuant to Subsection F(c)(i), the Final
Conversion Date, as the case may be, or a cash payment equal to
such holder's proportionate interest in the net proceeds
(following the deduction of applicable transaction costs) from
the sale, promptly by an agent on behalf of all such holders, of
shares of Capital Stock representing the aggregate of such
fractional shares.
(viii) Cancellation. All shares of Series C Preference
Stock which shall have been converted into or redeemed for shares
of Capital Stock or which shall have been purchased or otherwise
acquired by the Corporation shall assume the status of authorized
but unissued shares of Series Preference Stock undesignated as to
series.
(ix) Definitions. As used in this Subsection F,
(A) the term "business day" shall mean any day other
than a Saturday, Sunday, or a day on which banking
institutions in the States of New York or Ohio are
authorized or obligated by law or executive order to close;
(B) the term "Market Price" for any day means (1) if
the Capital Stock is listed or admitted for trading on the
New York Stock Exchange (or any successor to such exchange)
or, if not so listed or admitted, on any national or
regional securities exchange, the last sale price, or the
closing bid price if no sale occurred, of such class of
stock on the principal securities exchange on which such
class of stock is listed, or (2) if not listed or traded as
described in clause (1), the last reported sales price of
Capital Stock on the National Market System of the National
Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so
quoted, or (3) if not quoted as described in clause (2), the
mean between the high bid and the low asked quotations for
the Capital Stock as reported by the National Quotation
Bureau Incorporated if at least two securities dealers have
inserted both bid and asked quotations for such class of
stock on at least five of the ten preceding days. If the
Capital Stock is quoted on a national securities or central
market system in lieu of a market or quotation system
described above, then the closing price shall be determined
in the manner set forth in clause (1) of the preceding
sentence if actual transactions are reported and in the
manner set forth in clause (3) of the preceding sentence if
bid and asked quotations are reported but actual
transactions are not. If none of the conditions set forth
above is met, the closing price of Capital Stock on any day
or the average of such closing prices for any period shall
be the fair market value of such class of stock as
determined by a member firm of the New York Stock Exchange,
Inc. (or any successor to such exchange) selected by the
Corporation.
(C) the term "Current Market Price" per share of
Capital Stock on any day shall be the average of the daily
Market Prices for the ten consecutive Trading Dates ending
on and including the date of determination of the Current
Market Price (appropriately adjusted to take into account
the occurrence during such ten-day period, or following such
ten-day period and prior to the date on which shares of
Series C Preference Stock are converted into Capital Stock,
of any event that results in an adjustment of the Common
Equivalent Rate).
(D) the term "Notice Date" shall mean the following:
with respect to any notice given by the Corporation in
connection with a conversion (including any potential
conversion upon the effectiveness of a Merger or
Consolidation) of any of the Series C Preference Stock, the
earlier of the commencement of the mailing of such notice to
the holders of Series C Preference Stock or the date such
notice is first published in accordance with Subsection
F(c)(x); with respect to any notice given by the Corporation
in connection with its exercise of its option to deliver
shares of Capital Stock in lieu of cash in payment of
dividends on the Series C Preference Stock, including a
notice stating that the Corporation intends to exercise its
option to deliver shares of Capital Stock in satisfaction of
accrued and unpaid dividends on the Final Conversion Date,
the commencement of the mailing of such notice to the
holders of Series C Preference Stock; and with respect to
any notice given by the Corporation in connection with a
dividend or distribution referred to in Subsection F(c)(iv),
the earlier of the commencement of the mailing of notice of
such dividend or distribution to the holders of Capital
Stock or the date such notice is first published in an
Authorized Newspaper (as hereinafter defined).
(E) the term "Settlement Date" shall mean the
following: with respect to a Merger or Consolidation, the
business day immediately prior to the effective date of the
Merger or Consolidation; and with respect to a conversion of
any of the Series C Preference Stock pursuant to Subsection
F(c)(iii), the business day immediately prior to the
effective date of the conversion as set forth in the notice
given by the Corporation in connection therewith; and
(F) the term "Trading Date" shall mean (1) a date on
which the New York Stock Exchange (or any successor to such
exchange) is open for the transaction of business, or (2) if
the Capital Stock is not at such time listed or admitted for
trading on the New York Stock Exchange (or any successor to
such Exchange), a date upon which the principal national or
regional securities exchange upon which the Capital Stock is
listed or admitted to trading is open for the transaction of
business, or (3) if not listed or admitted to trading as
described in clauses (1) or (2), and if at such time the
sales price of Capital Stock is quoted on the National
Market System of the National Association of Securities
Dealers Automated Quotations System, or any similar system
of automated dissemination of quotations of securities
prices then in common use, a date for which such system
provides quotations with respect to securities upon which it
reports, or (4) if not so quoted, and if at such time the
bid and asked prices of Capital Stock are reported by the
National Quotation Bureau Incorporated, a date for which the
National Quotation Bureau Incorporated provides bid and
asked prices with respect to securities upon which it
reports, or (5) if not so quoted, any business day.
(x) Notice of Conversion. The Corporation will provide
notice of any conversion (including any potential conversion upon
the effectiveness of a Merger or Consolidation, but not including
any conversion on the Final Conversion Date) of shares of Series
C Preference Stock to holders of record of the Series C
Preference Stock to be converted not less than 15 nor more than
60 days prior to the date fixed for such conversion; provided,
however, that if the timing of the effectiveness of a Merger or
Consolidation makes it impracticable to provide at least 15 days
notice, the Corporation shall provide such notice as soon as
practicable prior to such effectiveness. Such notice shall be
provided by mailing notice of such conversion first class postage
prepaid, to each holder of record of the Series C Preference
Stock to be converted, at such holder's address as it appears on
the stock register of the Corporation, and by publishing notice
thereof in The Wall Street Journal or The New York Times or, if
neither such newspaper is then being published, any other daily
newspaper of national circulation (each, an "Authorized
Newspaper"). Each such mailed or published notice shall state,
as appropriate, the following:
(A) the conversion date;
(B) the number of shares of Series C Preference Stock
to be converted and, if less than all the shares held by
such holder are to be converted, the number of such shares
to be converted;
(C) the number of shares of Capital Stock deliverable
upon conversion;
(D) whether the Corporation is exercising any option to
deliver shares of Capital Stock in lieu of cash and the
Current Market Price to be used to calculate the number of
such shares of Capital Stock;
(E) the place or places where certificates for such
shares are to be surrendered for conversion; and
(F) that dividends on the shares of Series C
Preference Stock to be converted will cease to accrue on
such conversion date.
The Corporation's obligation to deliver shares of Capital
Stock and provide cash in accordance with this Subsection F(c)(x)
shall be deemed fulfilled if, on or before a conversion date, the
Corporation shall deposit, with a bank or trust company having an
office or agency in the Borough of Manhattan in New York City, or
which has an affiliate or correspondent having an office or
agency in the Borough of Manhattan in New York City, which
depository has a capital and surplus of at least $50,000,000,
such number of shares of Capital Stock as are required to be
delivered by the Corporation pursuant to this Subsection F(c)
upon the occurrence of the related conversion (including the
payment of fractional share amounts), together with shares of
Capital Stock and/or cash sufficient to pay all accrued and
unpaid dividends and/or any applicable Remaining Dividend Premium
on the shares to be converted as required by this Subsection
F(c), in trust for the account of the holders of the shares to be
converted (and so as to be and continue to be available
therefor), with irrevocable instructions and authority to such
bank or trust company that such shares and cash be delivered upon
conversion of the shares of Series C Preference Stock so
converted. Any interest accrued on such cash shall be paid to
the Corporation from time to time. Any shares of Capital Stock
or cash so deposited and unclaimed at the end of three years from
such conversion date shall be repaid and released to the
Corporation, after which the holder or holders of such shares of
Series C Preference Stock so converted shall look, subject to
applicable state escheat or unclaimed funds laws, only to the
Corporation for delivery of shares of Capital Stock and cash, if
applicable. Each holder of shares of Series C Preference Stock
to be converted shall surrender the certificates evidencing such
shares to the Corporation at the place designated in the notice
of such conversion and shall thereupon be entitled to receive
certificates evidencing shares of Capital Stock and cash, if
applicable, following such surrender and following the date of
such conversion. In case fewer than all the shares represented
by any such surrendered certificate are converted, a new
certificate shall be issued at the expense of the Corporation
representing the unconverted shares. If such notice of
conversion (if required) shall have been duly given, then,
notwithstanding that the certificates evidencing any shares of
Series C Preference Stock subject to conversion shall not have
been surrendered, the shares represented thereby subject to
conversion shall be deemed no longer outstanding, dividends with
respect to the shares subject to conversion shall cease to accrue
after the date fixed for conversion and all rights with respect
to the shares subject to conversion shall forthwith after such
date cease and terminate, except for the right of the holders to
receive the shares of Capital Stock and/or any applicable cash
amounts without interest upon surrender of their certificates
therefor; provided that if on the date fixed for conversion
shares of Capital Stock and cash, if applicable, necessary for
the conversion shall have been deposited by the Corporation in
trust for the account of the holders of the shares so to be
converted (and so as to be and continue to be available therefor)
as provided above, then the holder or holders of such shares of
Series C Preference Stock so converted shall look only to such
bank or trust company for delivery of shares of Capital Stock and
cash, if applicable, unless and until such shares of Capital
Stock and cash are repaid and released to the Corporation. If
fewer than all the outstanding shares of Series C Preference
Stock are to be converted at the option of the Corporation,
shares to be converted shall be selected by the Corporation from
outstanding shares of Series C Preference Stock by lot or pro
rata (as nearly as may be) or by any other method determined by
the Board of Directors of the Corporation in its sole discretion
to be appropriate and fair to the holders of Series C Preference
Stock.
(d) Voting Rights. (i) In addition to any voting rights to
which the holders of shares of Series C Preference Stock shall be
entitled pursuant to any other provision of the Certificate of
Incorporation or applicable law, each outstanding share of Series
C Preference Stock is entitled to vote on all matters submitted
to a vote of shareholders of the Corporation, each holder of
shares of Series C Preference Stock to have the number of votes
equal to the product of the number of shares of Series C
Preference Stock owned by such holder multiplied by the Common
Equivalent Rate in effect on the record date for determining the
shareholders of the Corporation entitled to vote. The Series C
Preference Stock and the Capital Stock shall vote as a single
class on all matters submitted to a vote of shareholders of the
Corporation.
(ii) In addition to the voting rights set forth in
Subsection F(d)(i), whenever, at any time, Preferential Dividends
payable on the Series C Preference Stock shall be in arrears with
respect to six (6) or more Preferential Dividend Payment Dates,
whether or not consecutive, the holders of shares of Series C
Preference Stock shall have the exclusive right, voting
separately as a class with holders of shares of any one or more
other series of Series Preference Stock and/or any other class or
series of shares ranking on a parity with shares of Series C
Preference Stock either as to dividends or on the distribution of
assets upon Liquidation and upon which like voting rights have
been conferred and are exercisable, to elect two directors of the
Corporation at the Corporation's next annual meeting of
shareholders and at each subsequent annual meeting of
shareholders until such right is terminated as provided in this
Subsection F(d)(ii). At elections for such directors, each
holder of shares of Series C Preference Stock shall be entitled
to the number of votes equal to the product of the number of
shares of Series C Preference Stock owned by such holder
multiplied by the Common Equivalent Rate in effect on the record
date for determining the shareholders of the Corporation entitled
to vote (the holders of shares of any other series of Series
Preference Stock and/or other class or series of shares ranking
on such a parity being entitled to such number of votes, if any,
for each share of stock held as may be applicable to them). Upon
the vesting of such voting right in the holders of shares of
Series C Preference Stock, the maximum authorized number of
members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled
by vote of the holders of shares of Series C Preference Stock
(with the holders of shares of any one or more other class or
series of shares ranking on such a parity) as set forth herein.
The right of the holders of shares of Series C Preference Stock,
voting separately as a class with the holders of shares of any
one or more other series of Series Preference Stock and/or other
class or series of shares ranking on such a parity, to elect
members of the Board of Directors of the Corporation as aforesaid
shall continue until such time as all dividends accumulated on
shares of Series C Preference Stock shall have been paid or
deposited for payment in full, at which time such right shall
terminate, except as by law expressly provided, subject to
revesting in the event of each and every subsequent default of
the character above mentioned.
Upon any termination of the right of the holders of Series C
Preference Stock and, if applicable, the holders of shares of any
one or more other series of Series Preference Stock and/or other
class or series of shares ranking on such a parity to vote as a
class for directors as herein provided, the term of office of all
directors then in office elected by shares of Series C Preference
Stock and such other series voting as a class shall terminate
immediately. If the office of any director elected by the
holders of shares of Series C Preference Stock and, if
applicable, the holders of shares of any one or more other series
of Series Preference Stock and/or other class or series of shares
on such a parity, voting as a class, becomes vacant by reason of
death, resignation, retirement, disqualification, removal from
office, or otherwise, the remaining director elected by the
holders of shares of Series C Preference Stock and, if
applicable, the holders of shares of any one or more other series
of Series Preference Stock and/or other class or series of shares
ranking on such a parity, voting as a class, may choose a
successor who shall hold office for the unexpired term in respect
of which such vacancy occurred. Whenever the special voting
powers vested in the holders of shares of Series C Preference
Stock and the holders of shares of any one or more other series
of Series Preference Stock and/or other class or series of shares
ranking on such a parity to vote as a class for directors as
provided in this Subsection F(d)(ii) shall have expired, the
number of directors shall become such number as may be provided
for in the By-Laws, or resolution of the Board of Directors
thereunder, irrespective of any increase made pursuant to the
provisions of this Subsection F(d)(ii).
(e) Increase in Shares. The number of shares of Series C
Preference Stock may, to the extent of the Corporation's
authorized and unissued Series Preference Stock, be increased by
further resolution duly adopted by the Board of Directors and the
filing of an amendment to the Certificate of Incorporation of the
Corporation.
(f) Exclusive Rights. Each holder of shares of Series C
Preference Stock shall hold such Series C Preference Stock
subject to the right of the Corporation to effect a conversion in
accordance with the provisions of Subsection F(c) hereof and, in
the event of such a conversion shall have the right to receive,
as full payment, discharge and satisfaction of the obligations of
the Corporation with respect to such Series C Preference Stock,
only those shares of Capital Stock and cash, if applicable,
delivered as provided in accordance with Subsection F(c) hereof.
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
CHIQUITA BRANDS INTERNATIONAL, INC.
TO: Secretary of State
State of New Jersey
Pursuant to the provisions of N.J.S. 14A:7-2(2), the
undersigned corporation, Chiquita Brands International, Inc. (the
"Corporation"), executes the following Certificate of Amendment
to its Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation").
1. The name of the corporation is Chiquita Brands
International, Inc.
2. The following resolutions, establishing and designating
a series of shares and fixing and determining the
relative rights and preferences thereof, were duly
adopted by the Executive Committee of the Board of
Directors of the Corporation as of the 8th day of
February, 1994, pursuant to the authority vested in the
Board of Directors by the Certificate of Incorporation,
exercised on behalf of the Board of Directors by the
Executive Committee pursuant to resolutions of the
Board of Directors so authorizing it to act:
RESOLVED, that pursuant to the authority
expressly vested in the Executive Committee of the
Board of Directors of the Corporation by the
Restated Certificate of Incorporation, as amended,
and by resolutions of the Board of Directors, the
Executive Committee of the Board of Directors
hereby classifies Two Million, Eight Hundred
Seventy-Five Thousand (2,875,000) shares of the
Corporation's Non-Voting Cumulative Preferred
Stock as a new series designated "$2.875 Non-
Voting Cumulative Preferred Stock, Series A,"
$1.00 par value (the "Series A Preferred Stock").
RESOLVED, that the terms and conditions
of the Series A Preferred Stock, including
its rights, preferences, privileges, voting
powers, restrictions, qualifications,
limitations, and terms and conditions for
conversion shall be as set forth in Exhibit A
attached hereto.
RESOLVED, that the Corporation's Restated
Certificate of Incorporation, as amended, is
hereby further amended to add to Section IV of
such certificate a new Subsection G entitled
"Special Provisions Applicable to Series A
Preferred Stock," in the form attached hereto as
Exhibit A, and the proper officers of the
Corporation are authorized to execute and file, as
necessary, any documents or certificates with the
New Jersey Secretary of State to effect such
amendment.
3. The resolutions were adopted by unanimous written
consent by the Executive Committee of the Board of
Directors as of February 8, 1994.
4. The Certificate of Incorporation is further amended so
that the designation and number of shares of each class
and series acted upon in the resolutions, and the
relative rights, preferences and limitations of each
such class and series are as stated in Exhibit A
attached hereto, which is the same exhibit referred to
in the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Amendment to the Certificate of Incorporation this
10th day of February, 1994.
CHIQUITA BRANDS INTERNATIONAL, INC.
By:/s/ William A. Tsacalis
--------------------------------
William A. Tsacalis
Vice President and
Controller
<PAGE>
EXHIBIT A
SUBSECTION G. SPECIAL PROVISIONS APPLICABLE TO SERIES A
PREFERRED STOCK
There is hereby established Series A Preferred Stock which
shall be designated "$2.875 Non-Voting Cumulative Preferred
Stock, Series A" $1.00 par value ("Series A Preferred Stock") and
shall consist of Two Million, Eight Hundred Seventy-Five Thousand
(2,875,000) shares, and no more. The relative, participating,
optional and other special rights and the qualifications,
limitations and restrictions of the Series A Preferred Stock
shall be as follows:
(a) Dividends.
(i) The holders of outstanding shares of the Series A
Preferred Stock shall be entitled to receive (subject to the
rights of holders of shares of Mandatorily Exchangeable
Cumulative Preference Stock, Series C, or any series of Non-
Voting Cumulative Preferred Stock or Series Preference Stock
and/or any other class or series of preferred or preference stock
which the Corporation may in the future issue which ranks prior
to or on a parity with the Series A Preferred Stock as to
dividends), when, as and if declared by the Board of Directors
out of funds legally available therefor, cumulative preferential
cash dividends at the per share rate of $.71875 per quarter and
no more ("Preferential Dividends"), payable on the seventh (7th)
day of March, June, September and December of each year (each
such date being hereinafter referred to as a "Preferential
Dividend Payment Date") commencing June 7, 1994; provided,
however, that the Preferential Dividend payable on June 7, 1994
(the "Initial Preferential Dividend") with respect to any share
of Series A Preferred Stock outstanding on the record date for
the Initial Preferential Dividend shall be computed in accordance
with Subsection G(a)(iv). If June 7, 1994 or any other
Preferential Dividend Payment Date shall not be a business day,
then the Preferential Dividend Payment Date shall be on the next
succeeding business day. Each such dividend will be payable to
holders of record as they appear on the stock books of the
Corporation on such record date, not less than 10 nor more than
60 days preceding the Preferential Dividend Payment Date, as
shall be fixed by the Board of Directors. Dividends on the
Series A Preferred Stock shall accrue from the date of issuance
of the Series A Preferred Stock, and dividends accrued as of each
Preferential Dividend Payment Date shall accumulate to the extent
not paid on such date. Accumulated unpaid dividends shall not
bear interest. All payments of Preferential Dividends to holders
of Series A Preferred Stock shall be rounded up to the nearest
whole cent.
(ii) So long as any shares of Series A Preferred Stock
are outstanding:
(A) no dividend (other than a dividend or distribution
paid in shares of, or warrants or rights to subscribe for or
purchase shares of, Capital Stock or any other stock of the
Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
Capital Stock or upon any other stock of the Corporation ranking
junior to or (except as provided in the following sentence) on a
parity with the Series A Preferred Stock as to dividends,
(B) nor shall any Capital Stock nor any other stock of
the Corporation ranking junior to or on a parity with the Series
A Preferred Stock as to dividends be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking
junior to the Series A Preferred Stock as to dividends and upon
liquidation),
(C) nor shall the Corporation purchase or otherwise
acquire (except pursuant to a purchase or exchange offer made on
the same terms to all holders of shares of Series A Preferred
Stock), or convert in part, but not in whole, into shares of
Capital Stock at the option of the Corporation pursuant to
Subsection G(c)(ii) outstanding shares of Series A Preferred
Stock,
unless, in each case, the full Preferential Dividends, if any,
accumulated on all outstanding shares of the Series A Preferred
Stock through the most recent Preferential Dividend Payment Date
shall have been paid or deposited for payment or
contemporaneously are declared and paid or deposited for payment.
When dividends have not been paid in full upon the shares of
Series A Preferred Stock, all dividends and other distributions
declared upon the Series A Preferred Stock and any other shares
of the Corporation ranking on a parity as to dividends and such
other distributions with the shares of Series A Preferred Stock
shall be declared pro rata so that the amount of dividends and
other distributions declared per share on the Series A Preferred
Stock and such other shares shall in all cases bear to each other
the same ratio that accumulated unpaid dividends per share on the
shares of Series A Preferred Stock and such other shares bear to
each other. Holders of the shares of Series A Preferred Stock
shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as
herein provided.
(iii) Any dividend payment made on shares of Series A
Preferred Stock shall first be credited against the earliest
accumulated unpaid dividend due with respect to shares of Series
A Preferred Stock.
(iv) Any dividends payable for any period greater or less
than a full quarterly dividend period shall be computed on the
basis of a 360-day year consisting of twelve 30-day months.
(b) Liquidation.
(i) Upon any dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary
(collectively, a "Liquidation"), the holders of shares of Series
A Preferred Stock shall be entitled to receive out of the assets
of the Corporation available for distribution to shareholders,
after payment of all debts and other liabilities of the
Corporation and all liquidation preferences of holders of shares
of any class or series of preferred or preference stock which the
Corporation may in the future issue which ranks prior to the
Series A Preferred Stock with respect to liquidation rights, but
before any distribution or payment is made to holders of Capital
Stock of the Corporation or on any other shares of the
Corporation ranking junior to the shares of Series A Preferred
Stock upon liquidation, liquidating distributions in the amount
of $50 per share, plus an amount equal to all accumulated unpaid
Preferential Dividends thereon to the date of Liquidation, and no
more. If upon any Liquidation the amounts payable with respect
to the Series A Preferred Stock and any other shares of the
Corporation ranking as to any such distribution on a parity with
the Series A Preferred Stock are not paid in full, the holders of
shares of Series A Preferred Stock and of such other shares will
share ratably in any such distribution of assets of the
Corporation in proportion to the full respective distributable
amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are
entitled, the holders of shares of Series A Preferred Stock will
not be entitled to any further participation in any distribution
or payments by the Corporation.
(ii) Neither the merger nor consolidation of the Corporation
into or with any other corporation or other entity, nor the
merger or consolidation of any other corporation or other entity
into or with the Corporation, nor a sale, transfer or lease of
all or any part of the assets of the Corporation for cash,
securities or other property, shall be deemed to be a Liquidation
for purposes of this Subsection G(b).
(c) Conversions.
(i) Automatic Conversion Upon the Occurrence of Certain
Events. Immediately prior to the effectiveness of a merger or
consolidation of the Corporation that results in the conversion
or exchange of the Capital Stock into or for, or that results in
the holders of Capital Stock obtaining the right to receive,
cash, securities or other assets, whether of the Corporation or
of any other person or entity (any such merger or consolidation
is referred to herein as a "Merger or Consolidation"), other than
a Merger or Consolidation in which the Series A Preferred Stock
remains outstanding and holders of Series A Preferred Stock
obtain the right to receive upon conversion of their shares into
Capital Stock or any other security the same cash, securities or
other assets that they would have received with respect to the
maximum number of shares of Capital Stock which such holders
would have received (other than in payment of accumulated unpaid
dividends) upon conversion of their shares of Series A Preferred
Stock (at the option of the Corporation pursuant to clause (ii)
of this Subsection G(c) or at the option of the holder pursuant
to clause (iii) of this Subsection G(c), whichever is greater)
immediately prior to the effectiveness of the Merger or
Consolidation, each outstanding share of Series A Preferred Stock
shall automatically convert into the maximum number of shares of
Capital Stock which such holders would have received (other than
in payment of accumulated unpaid dividends) upon conversion of
their shares of Series A Preferred Stock (at the option of the
Corporation pursuant to clause (ii) of this Subsection G(c) or at
the option of the holder pursuant to clause (iii) of this
Subsection G(c), whichever is greater), plus the right to receive
an amount of cash equal to the accumulated unpaid dividends on
such share of Series A Preferred Stock to and including the
Settlement Date (as defined in Subsection G(c)(viii)).
(ii) Conversion at the Option of the Corporation. (A) At any
time and from time to time on and after February 15, 1997 and
prior to February 15, 2001, and upon notice given as provided
herein, the Corporation may convert, in whole or in part, the
outstanding shares of Series A Preferred Stock; provided,
however, that the Corporation may exercise its right to convert
only if the Market Price (as defined in Subsection G(c)(viii)) of
the Capital Stock for 20 Trading Dates (as defined in Subsection
G(c)(viii)) within any period of 30 consecutive Trading Dates,
including the last Trading Date of such 30 consecutive Trading
Date period (the "Measuring Date"), shall have exceeded $24.70
per share, subject to adjustment as provided below (the "Strike
Price"). On the date fixed for conversion, each outstanding
share of Series A Preferred Stock to be converted pursuant to
this Subsection G(c)(ii)(A) shall convert into that number of
shares of Capital Stock as shall be determined in accordance with
the Conversion Rate (as defined in Subsection G(c)(iv)) as in
effect on the date of conversion, plus the right to receive an
amount of cash equal to the accumulated unpaid dividends on such
share of Series A Preferred Stock to and including the Settlement
Date. The Strike Price shall be proportionately adjusted when, as
and if the Conversion Rate shall be adjusted pursuant to
Subsection G(c)(iv).
(B) At any time and from time to time on and after February
15, 2001, and upon notice given as provided herein, the
Corporation may convert, in whole or in part, the outstanding
shares of Series A Preferred Stock. On the date fixed for
conversion, each outstanding share of Series A Preferred Stock to
be converted pursuant to this Subsection G(c)(ii)(B) shall
convert into:
(1) the lesser of (x) that number of shares of
Capital Stock as shall equal $50 divided by the Current
Market Price (as defined in Subsection G(c)(viii)) per
share of Capital Stock on the date of conversion, or
(y) 10 shares of Capital Stock, subject to adjustment
as provided below (the "Maximum Conversion Rate"); plus
(2) the right to receive an amount of cash equal
to the accumulated unpaid dividends on such share of
Series A Preferred Stock to and including the
Settlement Date; plus
(3) the right to receive an amount of cash equal
to dividends accrued since the immediately preceding
Preferential Dividend Payment Date, calculated in
accordance with Subsection G(a)(iv); provided, however,
that no amount shall be due and payable pursuant to
this clause (3) if the conversion date follows a record
date for the payment of a Preferential Dividend and
precedes the next succeeding Preferential Dividend
Payment Date.
The Maximum Conversion Rate shall be proportionately adjusted
when, as and if the Conversion Rate shall be adjusted pursuant to
Subsection G(c)(iv).
(iii) Conversion at the Option of the Holder. At any time
and from time to time after the 60th day following the final
closing of the initial public offering of Series A Preferred
Stock, each holder of Series A Preferred Stock shall have the
right to convert, in whole or in part, the outstanding shares of
Series A Preferred Stock; provided, however, that if the shares
of Series A Preferred Stock to be converted have been earlier
called for conversion at the option of the Corporation, the right
of the holder to convert such shares will terminate as of 5:00
P.M., New York City time, on the business day immediately
preceding the date fixed for such conversion. Each outstanding
share of Series A Preferred Stock to be converted at the option
of the holder shall convert into that number of shares of Capital
Stock as shall be determined in accordance with the Conversion
Rate in effect on the Settlement Date, plus the right to receive
an amount of cash equal to the accumulated unpaid dividends on
such share of Series A Preferred Stock to be converted to and
including the Settlement Date. In order to convert shares of
Series A Preferred Stock into Capital Stock the holder thereof
shall surrender, at the office in the United States designated by
the Corporation in writing from time to time for registration of
transfers and conversion, the certificate or certificates
therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at said office that such holder
elects to convert such shares and shall state in writing therein
the name or names (with addresses) in which such holder wishes
the certificate or certificates for Capital Stock to be issued.
Shares of Series A Preferred Stock surrendered for conversion
after the close of business on a record date for payment of
Preferential Dividends and before 9:00 A.M., New York time, on
the next succeeding Preferential Dividend Payment Date must be
accompanied by payment of an amount equal to the Preferential
Dividend thereon which is to be paid on such Preferential
Dividend Payment Date. Shares of Series A Preferred Stock shall
be deemed to have been converted on the date of the surrender of
such certificate or certificates for shares for conversion as
provided above, and the person or persons entitled to receive the
Capital Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such Capital
Stock on such date. As soon as practicable on or after the date
of conversion as aforesaid, the Corporation will issue and
deliver a certificate or certificates for the number of full
shares of Capital Stock issuable upon such conversion, together
with cash for any fraction of a share, as provided in Subsection
G(c)(vi), to the person or persons entitled to receive the same.
(iv) Conversion Rate; Adjustments. The Conversion Rate to
be used to determine the number of shares of Capital Stock to be
delivered on the conversion of the Series A Preferred Stock into
shares of Capital Stock pursuant to Subsections G(c)(i), (ii) and
(iii) shall be initially 2.6316 shares of Capital Stock for each
share of Series A Preferred Stock; provided, however, that such
Conversion Rate shall be subject to adjustment from time to time
as provided below in this Subsection G(c)(iv). All adjustments
to the Conversion Rate shall be calculated in 1/100ths of a share
of Capital Stock. No adjustment of less than one percent (1%) of
the Conversion Rate shall be required; however, any such
adjustment not made due to such limitation shall be carried
forward and shall be taken into account in any subsequent
adjustment. Such rate in effect at any time is herein called the
"Conversion Rate."
(A) If the Corporation shall:
(1) pay a dividend or make a distribution
with respect to the Capital Stock in shares of
Capital Stock (other than a dividend or
distribution which is also paid to holders of
Series A Preferred Stock and in which such holders
shall receive, with respect to each share of
Series A Preferred Stock, the same number of
shares of Capital Stock as shall be distributed
with respect to the maximum number of shares of
Capital Stock into which such share of Preferred
Stock shall then be convertible at the option of
the Corporation pursuant to Subsection G(c)(ii) or
at the option of the holder pursuant to Subsection
G(c)(iii), whichever is greater),
(2) subdivide or split its outstanding shares
of Capital Stock,
(3) combine its outstanding shares of Capital
Stock into a smaller number of shares, or
(4) issue by reclassification of its shares
of Capital Stock any shares of Capital Stock of
the Corporation,
then, in any such event, the Conversion Rate shall be
adjusted by multiplying the Conversion Rate in effect
immediately prior to the date of such event by a fraction,
of which the numerator shall be the number of outstanding
shares of Capital Stock immediately following such event,
and of which the denominator shall be the number of
outstanding shares of Capital Stock immediately prior to
such event. Such adjustment shall become effective at the
opening of business on the business day next following the
record date for determination of shareholders entitled to
receive such dividend or distribution in the case of a
dividend or distribution and shall become effective
immediately after the effective date in case of a
subdivision, split, combination, or reclassification.
(B) If the Corporation shall pay a dividend or make a
distribution to all holders of its Capital Stock of evidence
of its indebtedness or other assets (including securities of
the Corporation but excluding any regular quarterly
dividends payable solely in cash out of funds legally
available therefor at a rate fixed from time to time by the
Board of Directors or distributions and dividends referred
to in clause (A) above), or shall distribute to all holders
of its Capital Stock rights or warrants to subscribe for or
purchase securities of the Corporation or any of its
subsidiaries (in each case other than a dividend or
distribution which is also paid or made to holders of Series
A Preferred Stock in which such holders shall receive, with
respect to each share of Series A Preferred Stock, the same
evidence of indebtedness or other assets, or the same rights
or warrants, as shall be paid or distributed with respect to
the maximum number of shares of Capital Stock into which
each share of Preferred Stock shall then be convertible at
the option of the Corporation pursuant to Subsection
G(c)(ii) or at the option of the holder pursuant to
Subsection(G)(c)(iii), whichever is greater), then in each
such case the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior
to the date of such distribution by a fraction, of which the
numerator shall be the Current Market Price per share of
Capital Stock on the record date mentioned below, and of
which the denominator shall be such Current Market Price per
share of Capital Stock less the fair market value (as
determined by the Board of Directors of the Corporation,
whose determination shall be conclusive) as of such record
date of the portion of the assets or evidences of
indebtedness so distributed, or of such subscription rights
or warrants, applicable to one share of Capital Stock. Such
adjustment shall become effective on the opening of business
on the business day next following the record date for the
determination of shareholders entitled to receive such
distribution.
(C) Anything in this Subsection G(c)(iv)
notwithstanding, the Board of Directors shall be entitled to
make such upward adjustments in the Conversion Rate, in
addition to those required by this Subsection G(c)(iv), (1)
as the Board of Directors in its discretion shall determine
to be advisable, in order that any stock dividends,
subdivision of shares, distribution of rights to purchase
stock or securities, or a distribution of securities
convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended, or any successor section thereto)
hereafter made by the Corporation to its shareholders shall
not be taxable; and (2) as the Board of Directors in its
discretion shall determine to be necessary or appropriate in
order to preserve the relative rights of the holders of
Capital Stock, on the one hand, and the holders of Series A
Preferred Stock, on the other hand, as such rights are set
forth in this Certificate of Incorporation.
(D) In any case in which this Subsection G(c)(iv)
shall require that an adjustment as a result of any event
become effective at the opening of business on the business
day next following a record date, and the date fixed for
conversion pursuant to Subsection G(c)(i), (ii) or (iii)
occurs after such record date, but before the occurrence of
such event, the Corporation may in its sole discretion elect
to defer the following until after the occurrence of such
event:
(1) issuing to the holder of any shares of the
Series A Preferred Stock surrendered for conversion the
additional shares of Capital Stock issuable upon such
conversion over and above the shares of Capital Stock
issuable upon such conversion on the basis of the
Conversion Rate prior to adjustment; and
(2) paying to such holder any amount in cash in
lieu of a fractional share of Capital Stock pursuant to
Subsection G(c)(vi).
(v) Notice of Adjustments. Whenever the Conversion Rate is
adjusted as herein provided, the Corporation shall:
(A) forthwith compute the adjusted Conversion Rate in
accordance with Subsection G(c)(iv) and prepare a
certificate signed by the Chief Executive Officer, the
Chairman, the President, any Vice President or the Treasurer
of the Corporation setting forth the adjusted Conversion
Rate, Maximum Conversion Rate and, if applicable, Strike
Price, the method of calculation thereof in reasonable
detail and the facts requiring such adjustment and upon
which such adjustment is based, and file such certificate
forthwith with the transfer agent or agents for the Series A
Preferred Stock and the Capital Stock; and
(B) mail a notice stating that the Conversion Rate,
Maximum Conversion Rate and, if applicable, Strike Price,
have been adjusted, the facts requiring such adjustment and
upon which such adjustment is based and setting forth the
adjusted Conversion Rate, Maximum Conversion Rate and, if
applicable, Strike Price, to the holders of record of the
outstanding shares of the Series A Preferred Stock at or
prior to the time the Corporation mails an interim financial
statement to its shareholders covering the quarter-yearly
fiscal period during which the facts requiring such
adjustment occurred, but in any event within 45 days of the
end of such quarter-yearly fiscal period.
In addition to the foregoing, the Corporation will calculate and
provide notice to the transfer agent or agents for the Series A
Preferred Stock and the Capital Stock within 30 days after (1)
the date of initial issuance of the shares of Series A Preferred
Stock, or (2) the occurrence of any event triggering an
adjustment of the Maximum Conversion Rate, of the number of
shares of Capital Stock required to be reserved for issuance upon
conversion of the issued and outstanding shares of Series A
Preferred Stock; provided that no such notice need be sent if the
number of shares of Capital Stock then reserved is in excess of
the number of shares of Capital Stock required to be reserved as
so calculated.
(vi) No Fractional Shares. No fractional shares of Capital
Stock shall be issued upon conversion of shares of Series A
Preferred Stock but, in lieu of any fraction of a share of
Capital Stock which would otherwise be issuable in respect of the
aggregate number of shares of the Series A Preferred Stock
surrendered by the same holder for conversion on any conversion
date, the holder shall have the right to receive an amount in
cash equal to the same fraction of the Current Market Price of
the Capital Stock on the date of conversion.
(vii) Cancellation. All shares of Series A Preferred Stock
which shall have been converted into shares of Capital Stock or
which shall have been purchased or otherwise acquired by the
Corporation shall assume the status of authorized but unissued
shares of Non-Voting Cumulative Preferred Stock undesignated as
to series.
(viii) Definitions. As used in this Subsection G:
(A) The term "business day" shall mean any day other
than a Saturday, Sunday, or a day on which banking
institutions in the States of New York or Ohio are
authorized or obligated by law or executive order to close.
(B) The term "Current Market Price" per share of
Capital Stock on any day shall be the average of the daily
Market Prices for the five consecutive Trading Dates ending
on the Trading Date immediately preceding the date of
determination of the Current Market Price (appropriately
adjusted to take into account the occurrence during such
five-day period, or following such five-day period and prior
to the date on which shares of Series A Preferred Stock are
converted into Capital Stock, of any event that results in
an adjustment of the Conversion Rate).
(C) The term "Market Price" for any day means (1) if
the Capital Stock is listed or admitted for trading on the
New York Stock Exchange (or any successor to such exchange)
or, if not so listed or admitted, on any national or
regional securities exchange, the last sale price, or the
closing bid price if no sale occurred, of the Capital Stock
on the principal securities exchange on which the Capital
Stock is listed, or (2) if not listed or traded as described
in clause (1), the last reported sales price of the Capital
Stock on the National Market System of the National
Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so
quoted, or (3) if not quoted as described in clause (2), the
mean between the high bid and the low asked quotations for
the Capital Stock as reported by the National Quotation
Bureau Incorporated if at least two securities dealers have
inserted both bid and asked quotations for the Capital Stock
on at least five of the ten preceding days. If the Capital
Stock is quoted on a national securities or central market
system in lieu of a market or quotation system described
above, then the closing price shall be determined in the
manner set forth in clause (1) of the preceding sentence if
actual transactions are reported and in the manner set forth
in clause (3) of the preceding sentence if bid and asked
quotations are reported but actual transactions are not. If
none of the conditions set forth above is met, the closing
price of Capital Stock on any day or the average of such
closing prices for any period shall be the fair market value
of the Capital Stock as determined by a member firm of the
New York Stock Exchange, Inc. (or any successor to such
exchange) selected by the Corporation.
(D) The term "Notice Date" shall mean the following:
with respect to any notice given by the Corporation in
connection with a conversion (including any potential
conversion upon the effectiveness of a Merger or
Consolidation) of any of the Series A Preferred Stock, the
date of mailing of such notice to the holders of Series A
Preferred Stock.
(E) The term "Settlement Date" shall mean the
following: with respect to a Merger or Consolidation, the
business day immediately prior to the effective date of the
Merger or Consolidation; with respect to a conversion of any
of the Series A Preferred Stock at the option of the
Corporation pursuant to Subsection G(c)(ii), the business
day immediately prior to the effective date of the
conversion as set forth in the notice given by the
Corporation in connection therewith; and with respect to a
conversion of any of the Series A Preferred Stock at the
option of the holder pursuant to Subsection G(c)(iii), the
date upon which the certificates representing shares of
Series A Preferred Stock are surrendered for conversion.
(F) The term "Trading Date" shall mean (1) a date on
which the New York Stock Exchange (or any successor to such
exchange) is open for the transaction of business, or (2) if
the Capital Stock is not at such time listed or admitted for
trading on the New York Stock Exchange (or any successor to
such Exchange), a date upon which the principal national or
regional securities exchange upon which the Capital Stock is
listed or admitted to trading is open for the transaction of
business, or (3) if not listed or admitted to trading as
described in clauses (1) or (2), and if at such time the
sales price of Capital Stock is quoted on the National
Market System of the National Association of Securities
Dealers Automated Quotations System, or any similar system
of automated dissemination of quotations of securities
prices then in common use, a date for which such system
provides quotations with respect to securities upon which it
reports, or (4) if not so quoted, and if at such time the
bid and asked prices of the Capital Stock are reported by
the National Quotation Bureau Incorporated, a date for which
the National Quotation Bureau Incorporated provides bid and
asked prices with respect to securities upon which it
reports, or (5) if not so quoted, any business day.
(ix) Notice of Conversion. The Corporation shall provide
notice of any exercise of its right to convert shares of Series A
Preferred Stock to holders of record of the Series A Preferred
Stock to be converted by mailing a notice of conversion (within
five business days after the Measuring Date, in the case of any
Notice Date with respect to a conversion date prior to February
15, 2001) to such holders, which notice will specify an effective
date of conversion that is not less than 15 nor more than 60 days
after the date of such notice. The Corporation will provide
notice of any potential conversion upon the effectiveness of a
Merger or Consolidation not less than 15 nor more than 60 days
prior to the effective date thereof; provided, however, that if
the timing of the effectiveness of a Merger or Consolidation
makes it impracticable to provide at least 15 days' notice, the
Corporation shall provide such notice as soon as practicable
prior to such effectiveness. Each such notice shall be provided
by mailing notice of such conversion first class postage prepaid,
to each holder of record of the Series A Preferred Stock to be
converted, at such holder's address as it appears on the stock
register of the Corporation. Each such notice shall state, as
appropriate, the following:
(A) the conversion date;
(B) the number of shares of Series A Preferred Stock to
be converted and, if less than all the shares held by such
holder are to be converted, the number of such shares to be
converted;
(C) the number of shares of Capital Stock deliverable
upon conversion, or a description of the formula pursuant to
which such number shall be determined;
(D) the place or places where certificates for such
shares are to be surrendered for conversion; and
(E) that dividends on the shares of Series A Preferred
Stock to be converted will cease to accrue on the effective
date of conversion.
The Corporation's obligation to deliver shares of Capital
Stock and provide cash in accordance with this Subsection
G(c)(ix) shall be deemed fulfilled if, on or before an effective
date of conversion, the Corporation shall deposit, with a bank or
trust company having an office or agency in the Borough of
Manhattan in New York City, or which has an affiliate or
correspondent having an office or agency in the Borough of
Manhattan in New York City, which depository has a capital and
surplus of at least $50,000,000, such number of shares of Capital
Stock as are required to be delivered by the Corporation pursuant
to this Subsection G(c) upon the occurrence of the related
conversion, together with cash sufficient to pay all accumulated
unpaid dividends, cash in lieu of fractional share amounts and/or
any additional payment pursuant to Subsection G(c)(ii)(B)(3), if
applicable, on the shares to be converted as required by this
Subsection G(c), in trust for the account of the holders of the
shares to be converted, with irrevocable instructions and
authority to such bank or trust company that such shares and cash
be delivered upon conversion of the shares of Series A Preferred
Stock so converted. Any interest accrued on such cash shall be
paid to the Corporation from time to time. Any shares of Capital
Stock or cash so deposited and unclaimed at the end of three
years from such conversion date shall be repaid and released to
the Corporation, after which the holder or holders of such shares
of Series A Preferred Stock so converted shall look, subject to
applicable state escheat or unclaimed funds laws, only to the
Corporation for delivery of shares of Capital Stock and cash, if
applicable. Each holder of shares of Series A Preferred Stock to
be converted shall surrender the certificates evidencing such
shares to the Corporation at the place designated in the notice
of such conversion and shall thereupon be entitled to receive
certificates evidencing shares of Capital Stock and cash, if
applicable, following such surrender and following the date of
such conversion. In case fewer than all the shares of Series A
Preferred Stock represented by any such surrendered certificate
are converted, a new certificate shall be issued at the expense
of the Corporation representing the unconverted shares. If such
notice of conversion (if required) shall have been duly given,
then, notwithstanding that the certificates evidencing any shares
of Series A Preferred Stock subject to conversion shall not have
been surrendered, the shares represented thereby subject to
conversion shall be deemed no longer outstanding, dividends with
respect to the shares of Series A Preferred Stock subject to
conversion shall cease to accrue after the date fixed for
conversion and all rights with respect to such shares subject to
conversion shall forthwith after such date cease and terminate,
except for the right of the holders to receive the shares of
Capital Stock and/or any applicable cash amounts without interest
upon surrender of their certificates therefor; provided that if
on the date fixed for conversion shares of Capital Stock and
cash, if applicable, necessary for the conversion shall have been
deposited by the Corporation in trust for the account of the
holders of the shares of Series A Preferred Stock so to be
converted as provided above, then the holder or holders of such
shares of Series A Preferred Stock so converted shall look only
to such bank or trust company for delivery of shares of Capital
Stock and cash, if applicable, unless and until such shares of
Capital Stock and cash are repaid and released to the
Corporation. No holder of a certificate of shares of Series A
Preferred Stock shall be, or have any rights as, a holder of the
shares of Capital Stock issuable in connection with the
conversion thereof, including, without limitation, voting rights
or the right to receive any dividend from the Corporation with
respect to such shares of Capital Stock, until surrender of such
certificate for a certificate representing such Capital Stock.
Upon such surrender, there shall be paid to the holder the amount
of any dividend or other distribution (without interest) which
became payable in respect of the number of whole shares of
Capital Stock issuable upon such surrender on or after the
conversion date, but which was not paid by reason of any earlier
failure to surrender certificates that represented shares of
Series A Preferred Stock. If fewer than all the outstanding
shares of Series A Preferred Stock are to be converted at the
option of the Corporation, shares to be converted shall be
selected by the Corporation from outstanding shares of Series A
Preferred Stock by lot or pro rata (as nearly as may be) or by
any other method reasonably determined by the Board of Directors
of the Corporation to be appropriate and fair to the holders of
Series A Preferred Stock.
(x) Corporation's Option to Pay Accumulated Unpaid Dividends
in Common Stock Upon Conversion on or after February 15, 2001.
Notwithstanding anything to the contrary contained herein, if the
effective date of any conversion is on or after February 15, 2001
and if on such date there are accumulated unpaid dividends with
respect to the Series A Preferred Stock to be so converted, then
on such effective date the Corporation may deliver, in lieu of
any cash payment in respect of accumulated unpaid dividends and,
if applicable, any additional payment pursuant to Subsection
G(c)(ii)(B)(3), that number of shares of Capital Stock the
aggregate Current Market Price of which on such date shall equal
the amount of such cash payment. Such option may be exercised by
the Corporation for all or part of such cash payment.
(xi) No Interest on Accumulated Unpaid Dividends. Any
payment with respect to accumulated unpaid dividends upon
conversion of shares of Series A Preferred Stock, whether such
payment is made in cash or, pursuant to Subsection G(c)(x), in
shares of Capital Stock, shall not provide for any interest on
such accumulated unpaid dividends.
(d) Voting Rights.
(i) Holders of Series A Preferred Stock shall have no right
to vote on any matter submitted to a vote of shareholders of the
Corporation, except as otherwise provided by applicable law and
this Subsection G(d). In addition to any voting rights to which
the holders of shares of Series A Preferred Stock shall be
entitled pursuant to applicable law, whenever, at any time,
Preferential Dividends payable on the Series A Preferred Stock
shall be in arrears with respect to six (6) or more Preferential
Dividend Payment Dates, whether or not consecutive, the holders
of shares of Series A Preferred Stock shall have the right,
voting separately as a class with holders of shares of any one or
more series of Non-Voting Cumulative Preferred Stock, Series
Preference Stock and/or any other class or series of shares
ranking on a parity with shares of Series A Preferred Stock as to
dividends and upon which like voting rights have been conferred
and are exercisable, to elect two directors of the Corporation at
the Corporation's next meeting of shareholders at which directors
are to be elected and at each subsequent meeting of shareholders
at which directors are to be elected until such right is
terminated as provided in this Subsection G(d). Upon the vesting
of such voting right in the holders of shares of Series A
Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by two and
the two vacancies so created shall be filled by vote of the
holders of shares of Series A Preferred Stock (voting as a class
with the holders of shares of any one or more other class or
series of shares ranking on such a parity) as set forth herein.
The right of the holders of shares of Series A Preferred Stock to
elect members of the Board of Directors of the Corporation as
aforesaid shall continue until such time as all dividends
accumulated on shares of Series A Preferred Stock shall have been
paid or deposited for payment in full, at which time such right
shall terminate, except as by law expressly provided, subject to
revesting in the event of each and every subsequent default of
the character above mentioned.
(ii) Upon any termination of the right of the holders of
Series A Preferred Stock and, if applicable, the holders of
shares of any one or more other series of Non-Voting Cumulative
Preferred Stock, Series Preference Stock and/or other class or
series of shares ranking on such a parity to vote as a class for
directors as herein provided, the term of office of all directors
then in office elected by shares of Series A Preferred Stock and
such other series voting as a class shall terminate immediately.
If the office of any director elected by the holders of shares of
Series A Preferred Stock and, if applicable, the holders of
shares of one or more other series of Non-Voting Cumulative
Preferred Stock, Series Preference Stock and/or other class or
series of shares on such a parity, voting as a class, becomes
vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, the
remaining director elected by the holders of shares of Series A
Preferred Stock and, if applicable, the holders of shares of any
one or more other series of Non-Voting Cumulative Preferred
Stock, Series Preference Stock and/or other class or series of
shares ranking on such a parity, voting as a class, may choose a
successor who shall hold office for the unexpired term in respect
of which such vacancy occurred. Whenever the special voting
powers vested in the holders of shares of Series A Preferred
Stock and the holders of shares of any one or more other series
of Non-Voting Cumulative Preferred Stock, Series Preference Stock
and/or other class or series of shares ranking on such a parity
to vote as a class for directors as provided in this Subsection
G(d)(ii) shall have expired, the number of directors shall become
such number as may be provided for in the By-Laws, or resolution
of the Board of Directors thereunder, irrespective of any
increase made pursuant to the provisions of this Subsection
G(d)(ii).
(iii) While any Series A Preferred Stock is outstanding,
the Corporation shall not, without the affirmative consent (given
in writing or at a meeting duly called for that purpose) of the
holders of at least two-thirds (2/3rds) of the aggregate number
of votes entitled to be exercised by holders of all affected
series of Non-Voting Cumulative Preferred Stock then outstanding
(provided that each other series shall have voting rights similar
or identical to the voting rights set forth in this Subsection
G(d)(iii)): (A) amend the Certificate of Incorporation of the
Corporation to authorize the creation of any class or series of
stock having a preference as to dividends or upon liquidation
senior to or on a parity with the Series A Preferred Stock
(hereinafter in this Subsection (G)(d)(iii) referred to as
"Senior Stock"); provided, however, that no such approval of
holders of Series A Preferred Stock (or other affected series of
Non-Voting Cumulative Preferred Stock having similar voting
rights) shall be required to amend the Certificate of
Incorporation of the Corporation to authorize the creation of any
series of Senior Stock that may be authorized out of the Non-
Voting Cumulative Preferred Stock or the Series Preference Stock,
the terms of which may be established by any amendment to the
Certificate of Incorporation of the Corporation which may be
adopted by the Board of Directors of the Corporation without
shareholder approval, or (B) amend, alter or repeal the
Certificate of Incorporation of the Corporation in a manner that
would materially adversely affect the terms of Series A Preferred
Stock.
(iv) With respect to any matter upon which holders of shares
of Series A Preferred Stock shall be entitled to vote pursuant to
this Subsection G(d), each such holder shall be entitled to
exercise the number of votes equal to the maximum number of
shares of Capital Stock into which the shares of Series A
Preferred Stock held by such holder shall then be convertible at
the option of the Corporation pursuant to Subsection G(c)(ii) or
at the option of the holder pursuant to Subsection (G)(c)(iii),
whichever is greater, on the record date for determining the
shareholders of the Corporation entitled to vote.
(e) Increase in Shares.
The number of shares of Series A Preferred Stock may, to the
extent of the Corporation's authorized and unissued Non-Voting
Cumulative Preferred Stock, be increased by further resolution
duly adopted by the Board of Directors and the filing of an
amendment to the Certificate of Incorporation of the Corporation.
(f) Exclusive Rights.
Each holder of shares of Series A Preferred Stock shall hold
such Series A Preferred Stock subject to the right of the
Corporation to effect a conversion in accordance with the
provisions of Subsection G(c) hereof and, in the event of such a
conversion, shall have the right to receive, as full payment,
discharge and satisfaction of the obligations of the Corporation
with respect to such Series A Preferred Stock, only those shares
of Capital Stock and cash, if applicable, delivered as provided
in accordance with Subsection G(c) hereof.
(g) Equal Rank.
All shares of Series A Preferred Stock shall be identical in
all respects, and all shares of Series A Preferred Stock shall be
of equal rank with shares of Mandatorily Exchangeable Cumulative
Preference Stock, Series C, in respect of the preference as to
dividends and to payments upon the Liquidation of the
Corporation.
EXHIBIT 10-a
Exhibit D
TRANSLATION
PUBLIC DOCUMENT NUMBER ONE HUNDRED THIRTY FOUR 134 WHEREBY THE
NATION, and UNITED BRANDS COMPANY, CHIRIQUI LAND COMPANY and COMPANIA
PROCESADORA DE FRUTAS, S.A., execute a Lease of Lands Contract.
Panama, January 8, 1976
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
In Panama City, Capital of the Republic and Seat of the Notarial
Circuit of the same name, on the eighth -8- of January of the year
one thousand nine hundred and seventy six -1976- before me, CECILIO
MORENO, Notary Public Second of the Circuit of Panama, with personal
identity card number eight-fifty two-nine hundred and fifty eight
(8-52-958) appeared personally before me the following persons whom I
know: Lieutenant Colonel RUBEN DARIO PAREDES, male, adult, married,
Panamanian and resident of this city, with personal identity card
number eight-seventy three-one hundred and seventy three (8-73-173),
Minister of Cattle and Agricultural Development, acting in the name
and on behalf of THE NATION, duly authorized for this act pursuant to
Law number five (5) of January the seventh (7) year one thousand nine
hundred and seventy six (1976), as the party of the first part,
hereinafter referred to as THE NATION, and the other party hereto,
Mr. WALLACE WRAY BOOTH, male, adult, married, American, in transit
through this city, with U.S. Passport number E-one million six
hundred seventy seven thousand nine hundred and eighty seven
(E-1677987), who declared he did not desire an interpreter as he
understood Spanish, who is duly empowered for the purposes of this
Contract, acting in the name of and representing the companies UNITED
BRANDS COMPANY, a corporation organized in accordance with the laws
of the State of New Jersey, United States of America, and duly
authorized to operate in the Republic of Panama, in accordance with
Volume seven hundred and thirty seven (737), Page four hundred and
ninety two (492), Entry one hundred thirty five thousand nine hundred
and thirty nine (135,939), of the Public Registry, Commercial
Companies Section, authorized for this act as appears on page two
hundred and twenty (220) of Volume one thousand two hundred and
nineteen (1219), Entry one hundred twenty eight thousand eight
hundred and forty six "C", CHIRIQUI LAND COMPANY, a corporation
organized in accordance with the laws of the State of Delaware,
United States of America and duly authorized to operate in the
Republic of Panama, in accordance with Volume thirty nine (39), Page
four hundred and sixty six (466), Entry five thousand three hundred
and forty five Bis (5345 Bis) of the Public Registry, Commercial
Companies Section, authorized for this act in accordance with Page
five hundred and thirty two (532), of Volume one thousand two hundred
and two (1202), Entry one hundred twenty seven thousand three hundred
and sixty four "A" (127,364 "A"), and COMPANIA PROCESADORA DE FRUTAS,
corporation organized in accordance with the laws of the State of
Delaware, United States of America and duly authorized to operate in
the Republic of Panama, in accordance with Volume six hundred and
eighty eight (688), Page three hundred and fifty five (355), Entry
one hundred thirty one thousand two hundred and twenty four
(131.224), of the Public Registry, Commercial Companies Section,
authorized for this act, as per Page number two hundred and seventy
seven (277) of Volume one thousand two hundred and eight (1208),
Entry one hundred eighteen thousand and twenty one "C" (118,021 "C"),
and who hereinafter shall be referred to jointly as THE COMPANY,
agree to this Land Lease Contract in accordance with the following
clauses: - - - - - - - - - - - - - - - - - - - - - - -
FIRST CLAUSE: - From all the lands that THE NATION has purchased from
THE COMPANY by virtue of the Purchase-Sale Agreement executed on this
same date, THE NATION leases to THE COMPANY an area of approximately
fifteen thousand and seven hundred (15,700) hectares of which
approximately twelve thousand and seven hundred (12,700) hectares are
comprised of agricultural lands and three thousand (3,000) hectares
of lands to be utilized for installations, buildings, stores, storage
and other uses.- - - -
SECOND CLAUSE: - The lands that THE NATION leases to THE COMPANY are
described in the maps identified as annexes I, II, III, IV and V,
which are part of this Agreement. Copies of these maps have been
signed by the parties and the signatures authenticated by a Notary
Public. - - - - - - - - - - - - - - - - - -
THIRD CLAUSE: - THE COMPANY accepts the lands leased in their present
conditions and shall use them in its activities which entail in
addition to production, packing, transportation, exportation of
bananas and their derivatives, use of equipment and machinery, other
accessory activities which are performed for the benefit of the
banana industry and its workers, including among others the following
activities: agricultural, livestock, milk producing, recreational,
commercial and services. - - - - -
FOURTH CLAUSE: - During the duration of this Contract, THE COMPANY
shall use the leased lands with the efficiency and good care which it
has used previously during the normal periods of operation, exclusive
of the force majeure contingencies or inevitable accident. THE
NATION guarantees THE COMPANY the pacific use of the lands for the
purposes for which they were leased. - - - - - - - - - - - - - -
FIFTH CLAUSE: - The lands leased shall be returned by THE COMPANY to
THE NATION upon the termination of this Contract in the state that
they then may be, without any responsibility whatsoever for suitable
uses which they might have been put to with respect to the normal
activities of THE COMPANY, and without any responsibility for damages
due to force majeure or inevitable accident. In addition, THE NATION
grants THE COMPANY the rights to draw water to aqueducts, to right of
way, to passage and the like with respect to national lands in which
the structures related to the activities of THE COMPANY are situated,
such as pipelines, irrigation, drainage, aqueducts sewage, railroads,
communications lines, telephones and telegraphs. In exercising these
rights for new structures or installations, THE COMPANY shall make
prior compensation for the resulting damages which it may have
created. THE COMPANY shall be able to construct new structures or
alter existing ones, in which case THE NATION shall make available to
it, free access and right of way to national lands in accordance
with the plans proved by THE NATION through the Ministry of Cattle
and Agricultural Development. - - - - - -
It is understood the lease rent agreed upon under the present
Contract, includes the payment for the rights described in this
Clause. - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SIXTH CLAUSE: - The rental payment for the lands referred to in this
Contract amounts to ONE MILLION BALBOAS (B/. 1.000.000.00) a year,
payable in four (4) equal installments at the end of each quarter on
the due dates of March thirty first (31), June thirtieth (30),
September thirtieth (30) and December thirty first (31) of each year.
- - - - - - - - - - - - - - - - - - - - -
SEVENTH CLAUSE: - THE COMPANY shall be able to return to THE NATION,
in the conditions which are delineated in the Fifth Clause of this
Contract, those lands which is (SIC) deemed unnecessary for its
operations, in which case the rental payment shall be reduced
proportionally. Likewise, in the event of expansion of the
activities of THE COMPANY, or should it need the use of other lands,
THE NATION, within the availabilities anticipated for these purposes
shall lease them to THE COMPANY and the rental payment shall be
adjusted proportionally. THE COMPANY shall formulate a written
request and THE NATION shall make available said lands to THE COMPANY
within a period not exceeding eight (8) months. Within a sixty (60)
day period following the execution of this Contract, the parties
shall agree on the location and area of the lands which shall be
maintained readily available for these purposes. In any event, THE
NATION will not be obliged to maintain lands in reserve whose total
area exceeds two thousand (2,000) hectares. - - - - - - - - - - - - -
EIGHTH CLAUSE: - The initial leasehold term shall consist of a period
of five (5) years, commencing on January first (1) one thousand nine
hundred and seventy six (1976). Said term shall be extendible
yearly, by mutual agreement, on the anniversaries of same, that is,
the first day of January of each year for consecutive periods of one
year each. That is to say that on the first anniversary date or
January first (1) one thousand nine hundred and seventy seven (1977),
with only four (4) years remaining of the initial period in force,
the term shall be extendible for an additional year so as to have new
period consisting of another 5-year term commencing on that date and
subsequently each year on each anniversary date. Said extensions of
one year shall be deemed to be automatically agreed upon by the
parties if within a ninety (90) day period prior to the anniversary
date of each term neither party has notified the other in writing of
its decision not to extend. - - - - - - - -
In the event that one of the parties notifies the other of its
decision to not extend the term, this notification shall take effect
without the necessity of further confirmation during the subsequent
four (4) years. - - - - -
NINTH CLAUSE: - THE COMPANY, that is, the companies United Brands
Company, Chiriqui Land Company and Compania Procesadora de Frutas, S.
A., execute the present Contract and jointly and severally assume all
the rights and obligations arising from the same. - - - - - - - - - -
- - - - - - - - - - - - - - -
TENTH CLAUSE: - This Contract shall take effect commencing on January
first (1) one thousand nine hundred and seventy six (1976). - - - - -
- - - - - - - - - - - - - - - - - - - - - - - -
This instrument was read to the persons appearing herein in the
presence of witnesses Mr. Fernando Manfredo, with personal identity
card number eight-forty nine-two hundred and thirty nine, Mr. Ruben
Darlo Herrera, with personal identity card number three-twenty
one-eight hundred and ninety-three (3-21-893), and the formal
witnesses Mr. Artemio Saavedra, with personal identity card number
seven- thirty eight-four hundred and forty four (7-38-444), and
Angiolina Varcasia, with personal identity card number eight-forty
nine-two hundred and ninety-four (8-49-294) adults, residents of this
city, whom I know and who have the necessary capacity, they found
this instrument to be in order and extended their approval to the
same by signing all before my presence which I certify. This
instrument bears the number one hundred and thirty four 134.
Executed by Lieutenant Colonel RUBEN DARIO PAREDES. - - - WALLACE W.
BOOTH. - - - Fernando Manfredo. - - - Ruben D. Herrera. - - - Artemio
Saavedra. - - - Angiolina Varcasia. - - - C. MORENO, Notary Public
Second. - - - This copy is as its original which I provide, sign and
seal, in Panama City, Republic of Panama, on January eight (8), of
the year one thousand nine hundred and seventy six (1976).
/s/ C. Moreno
Notary Public Second
TRANSEXD.POL
TRANSLATION
EXHIBIT E
PUBLIC DOCUMENT NUMBER ONE HUNDRED AND THIRTY-FIVE- - - - - - 135
whereby THE NATION, UNITED BRANDS COMPANY, CHIRIQUI LAND COMPANY and
COMPANIA PROCESADORA DE FRUTAS, execute this Operations Contract.
Panama, January 8, 1976
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
In Panama City, the capital of this Republic, and the seat of the
Notary Circuit of the same, on January 8, 1976, CECILIO MORENO,
Second Notary Public of the Panama Circuit, with personal identity
number eight-fifty-two-nine hundred-fifty-eight (8-52-958),
personally appeared Lt. Colonel RUBEN DARIO PAREDES, male, adult,
married, Panamanian, and resident of this city, with personal
identity number eight-seventy-three-one hundred seventy-three
(8-73-173), Minister of Cattle and Agricultural Development,
representing and acting on behalf of THE NATION, duly authorized
pursuant to Law Number Five (5) of the seventh (7th) of January, one
thousand nine hundred and seventy-six (1976), on the one hand, and on
the other, WALLACE WRAY BOOTH, male, adult, American, married, in
transit, with American passport number E - one million six hundred
seventy-seven thousand nine hundred eighty-seven (E-1677987), who
declared he did not wish an interpreter as he could understand and
speak Spanish, acting on behalf of UNITED BRANDS COMPANY, a company
incorporated according to the laws of the State of New Jersey, United
States of America, and duly authorized to operate in the Republic of
Panama, as recorded in Volume seven hundred thirty-seven (737), folio
number four hundred ninety-two (492), entry number one hundred
thirty-five thousand nine hundred thirty-nine (135,939) of the Public
Registry, Section of Commercial Companies, duly authorized for this
act, as shown at folio two hundred twenty (220), - - - volume one
thousand two hundred and nineteen (SIC 219), entry number one hundred
twenty-eight thousand eight hundred forty-six "C" (128,846 "C")
CHIRIQUI LAND COMPANY, company organized according to the laws of the
State of Delaware, United States of America, and duly authorized to
act in the Republic of Panama, as recorded in volume thirty-nine
(39), folio four hundred and sixty-six (466), entry five thousand
three hundred and forty-five (5345) Bis of the Public Registry,
Commercial Companies Section, duly authorized by this act, as shown
at folio five hundred and thirty-two (532), - - - - volume one
thousand two hundred and two (1202), - - - - - - entry one hundred
twenty-seven thousand three hundred and sixty-four ("A") and COMPANIA
PROCESADORA DE FRUTAS, company organized in accordance with the laws
of the State of Delaware, United States of America, and duly
qualified to act in the Republic of Panama, as recorded in volume six
hundred and eighty-eight (688), folio three hundred and fifty-five
(355), entry number one hundred thirty-one thousand two hundred and
twenty-four (131,224), of the Public Registry, Commercial Companies
Section, duly authorized for this act, pursuant to folio number two
hundred and seventy-seven (277), - - - - - - volume one thousand two
hundred and eight (1208),- - - - entry number one hundred eighteen
thousand and twenty-one "C" (118,021 "C") - - - - - - whom
hereinafter shall all be referred to as THE COMPANY, agree to this
Operations Contract in accordance with the following clauses:
FIRST CLAUSE: The activities of THE COMPANY in the Republic of
Panama shall be governed by the stipulations of this Contract, of the
Purchase-Sale Agreement and that of the Land-Lease Agreement,
executed on this same date, and also by the Panamanian statutory
provisions of general application which are not contrary to the
stipulations of these Contracts. - - - - -
SECOND CLAUSE: By virtue of the request of THE COMPANY and prior
approval of THE NATION, by means of the Ministry of Cattle and
Agricultural Development, THE COMPANY may partially substitute banana
farming for that of other cattle and agricultural activities or
industrial-agricultural activities.
THIRD CLAUSE: THE COMPANY shall have the right to export without
being subject to licenses or permits, the bananas or related products
which it may produce or acquire in this country. - - - - - - - - -
FOURTH CLAUSE: With the exception of contingency of force majeure or
caso fortuito, THE COMPANY agrees to maintain an annual minimum
production suitable for export of twenty-two (22) million
forty/forty-two (40/42) pound boxes and to export said production.
Likewise, THE COMPANY obligates itself to purchase all bananas, up to
a limit which does not exceed thirty percent (30%) of the total
actually exported, produced by national producers in the Districts of
Baru, Alanje in Chiriqui and Changuinola, Bocas del Toro, which may
be offered for sale to THE COMPANY subject to the varieties,
classifications and specifications established by THE COMPANY and at
the prices which may be agreed to with said producers. - - - - - - -
- - - - - - - -
FIFTH CLAUSE: So that THE NATION may be able to establish sales in
the international markets, THE COMPANY, at the request of THE NATION,
authorizes the producers which may have contracts with THE COMPANY,
in which they are bound to sell fruit to THE COMPANY, to sell to THE
NATION or to any of its branches, in terms satisfactory to these
producers, bananas they produce, on prior written notice to THE
COMPANY of at least ninety (90) days. In this event, the limit of
thirty percent (30%) referred to in the previous clause shall be
adjusted in the corresponding amount. - - - - - - -
SIXTH CLAUSE: It is understood that the approval by THE COMPANY
referred to in the foregoing clause, shall be given without
diminishing compliance by the said producers of their monetary
obligations to THE COMPANY and banking entities, including price
differentials due to services rendered by THE COMPANY to said
producers and the investments made by THE COMPANY in producers'
farms, the corresponding amount and proportion pursuant to the terms
and conditions agreed upon, unless THE NATION expressly assumes
totally or partially such obligations. In due time, THE NATION,
through the Ministry of Industry and Commerce, and THE COMPANY shall
agree to the mechanisms and procedures which may be deemed adequate
before proceeding to comply with the stipulations of this clause and
of the foregoing clause. - - - - - - - - - - - - - - - - - - - - - -
- - - - - -
SEVENTH CLAUSE: THE COMPANY agrees to supply THE NATION, through the
state company named Corporacion Bananera del Pacifico (COPABA),
banana boxes (F.O.B.) in accordance with the following: - - - - - - -
- - - - - - - - - - - - - - - - - - - -
- - - - - - - - One (1). Corporacion Bananera del Pacifico shall make
the written request to THE COMPANY with at least ninety (90) days
notice prior to each shipment, and shall present semiannual estimates
on a monthly basis regarding future shipments. - - - - - - - - - - -
Two (2). THE COMPANY shall assist in the handling of shipments of
Corporacion Bananera del Pacifico in the same manner that it has up
to now, and the latter shall reimburse THE COMPANY with a number of
banana boxes from its production equivalent to the number actually
supplied by THE COMPANY. - - - - - - - Three (3). THE COMPANY does
not assume the obligation to supply to Corporacion Bananera del
Pacifico annual quantities of banana in excess of that which may be
delivered by it to THE COMPANY each calendar year. - - - - - - - Four
(4). THE COMPANY shall provide Corporacion Bananera del Pacifico
with reports concerning the availability of additional banana for
export at the prices and subject to the terms deemed to be mutually
satisfactory. - - -
EIGHTH CLAUSE: THE NATION grants THE COMPANY the right of the use of
the piers of Puerto Armuelles and Almirante, their related equipment
and appurtenances, and acknowledges the priority of the banana
industry. For such right, THE COMPANY shall pay the National Port
Authority representing THE NATION the sum of FIFTY THOUSAND BALBOAS
(B/.5O,OOO.OO) annually for each pier, payable quarterly in four
equal installments, no later than the last working day of each
quarter. - - - - - - - - THE COMPANY shall perform the maintenance
and repair of said piers. The expenses for these tasks shall be
prorated between THE COMPANY and THE NATION, based upon the relative
degree of use made of said installations by THE COMPANY, with THE
COMPANY carrying the expenses connected with their use and THE NATION
assuming all other expenses. For this purpose, within an eighteen
(18) month period following the execution of this Contract, THE
NATION, through the National Port Authority, by mutual agreement with
THE COMPANY, shall establish the procedure for determining the
allocation expenses based on the degree of use of these piers.
Nevertheless, it is understood that during the first two years that
this Contract is in force, the maintenance and repair expenses shall
be carried exclusively by THE COMPANY. - - - - - - - - - - - - - - -
- - - - - - - - - -
The parties shall agree with respect to the requirement of new
capital investments for the replacement, remodeling or enlargement of
the above-mentioned piers, and with respect to the financing and
implementation of said investments. - - - - - - - -
NINTH CLAUSE: THE COMPANY shall pay to THE NATION during the
duration of this Contract, an annual fee of FIVE HUNDRED THOUSAND
BALBOAS (B/.5OO,OOO) for the right to operate, transport its
products, and load and use, with priority, the railroads in the
banana divisions of Bocas del Toro and Puerto Armuelles. The payment
shall be made in four equal quarterly installments, no later than the
last working day of each quarter.
- - - - - - - - THE COMPANY shall perform the maintenance and repairs
of the railroad lines it uses in the Bocas del Toro and Puerto
Armuelles Divisions and the resulting expenditures for this shall be
totally carried by THE COMPANY. THE COMPANY shall control the
railroad traffic in the Bocas del Toro Division and shall continue
coordinating the traffic in the banana operations area of Puerto
Armuelles with the National Railways of Chiriqui.
The parties shall come to an agreement with respect to the
requirement of new capital investments for the purpose of restoring
the railroad lines used by THE COMPANY in that segment of the
principal way between Progresso and Puerto Armuelles and with regard
to the financing and implementation of said investments. - - - - - -
- - - - - - - - - - - - - - - - - - -
TENTH CLAUSE: THE COMPANY shall continue to provide to the public
passenger and freight service, in the same manner that it has been
doing to date, subject to the schedule of charges approved by THE
NATION, which shall not exceed cost plus a reasonable increment. - -
- - - - - - - - - - - - - - - - - - - -
- - - - - - - - THE COMPANY shall be obligated to transport
gratuitously on the respective regularly scheduled trains the mail of
the Republic:, and provide free service to uniformed member, of the
National Guard. Likewise, it shall grant free permits to public
servants of the respective provinces that may travel regularly in the
exercise of their duties. Any property of THE NATION shall be
transported on these trains at cost which may be determined by the
parties. - - - - - - - - - - - - - - -
ELEVENTH CLAUSE: THE COMPANY shall be able to operate any electrical
installations which it may need for the activities covered by this
Contract in the Divisions of Bocas del Toro and Puerto Armuelles,
making available to THE NATION and to the public whatever electricity
is not utilized by THE COMPANY. THE COMPANY shall be able to
continue to operate its own plant for its own use, even though THE
NATION may commence to provide the aforesaid public service in these
areas. The tariffs for the sale to THE NATION and to the public will
be approved by THE NATION and shall not be less than cost. THE
COMPANY shall cooperate with the IRHE for the increase of electricity
for public service within the operations area of THE COMPANY
according to the conditions which may be agreed upon in each
instance. - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - Likewise, THE COMPANY shall be able to operate
communications systems and installations which may be necessary for
its operations including the ship-to-shore, shore-to-ship
communications. This authorization includes the power to continue
operating those which presently exist between Puerto Armuelles and
Golfito and vice versa will continue to be processed by the Ministry
of Government and Justice. - - - - -
- - - - - - - - The establishment of new installations and
communications systems shall require the prior approval of THE NATION
through the Ministry of Government and Justice. - - - -
TWELFTH CLAUSE: THE NATION grants THE COMPANY the right to continue
operating those installations and works, which it actually uses to
supply water, including free consumption of the necessary water for
its activities. - - - - - - - - - - -
- - - - - - - - In the event new installations or other works of THE
COMPANY should be necessary, THE COMPANY shall submit the respective
plans to THE NATION, through the IDAAN for its prior approval.
- - - - - - - - The water not utilized by THE COMPANY in its works
shall be made available to THE NATION or to third parties according
to rates based upon actual expenses and regulated by IDAAN. The
investments in installations, and works and other expenditures,
including additional operation expenses to provide water for
irrigation, shall be borne by the users. THE COMPANY, under the
supervision of IDAAN, shall take the necessary steps to assure at all
times the suitability of drinking water for human consumption and
shall work together with that Institute in the expansion of the
notable water supply within the banana operation areas of THE
COMPANY. - - - - - - - - - - - - - - - - - - - - - -
THIRTEENTH CLAUSE: THE NATION grants to THE COMPANY authorization to
extract at no cost, sand, stone and gravel from national lands for
use in the activities covered by this Contract, provided the
pertinent formalities are fulfilled. - - -
FOURTEENTH CLAUSE: THE COMPANY, at all times, with the exception of
commitments entered into before the date of this Contract, shall give
preference to the utilization of Panamanian goods and services unless
their prices, quality, quantities, regularities and economic supply
conditions are not adequate or satisfactory for the development of
its activities. The right to select the goods and services shall
pertain exclusively to THE COMPANY, but such authority shall be
exercised in a reasonable manner to comply with the criteria
established in this clause. -
FIFTEENTH CLAUSE: In addition to the reports that THE COMPANY
presently submits to THE NATION concerning purchases of bananas
within the country, exportation and conditions of the international
market, THE COMPANY shall present annually to THE NATION, no later
than January 10 of each year, reports regarding the general plans for
operation in Panama, for each respective year, in connection with
production and exportation and the operations investment budget. THE
COMPANY shall also submit semiannual reports pertaining to the
sanitary conditions of the plantations and changes with respect to
production and exportation programs and any significant budgetary
changes. - - -
SIXTEENTH CLAUSE: In its employer-labor relations with respect to
the operations conducted in the country, THE COMPANY shall abide by
labor legislation in effect in the Republic of Panama and by the
collective agreements or individual labor contracts with its workers
in accordance with the requirements of such legislation. Upon the
expiration of the present Operations Contract and that of the
Land-Lease Agreement entered into on this date, THE COMPANY shall
deliver to THE NATION the total sum of their labor obligations which
THE COMPANY is obligated to comply with on behalf of its employees,
it being understood that for this reason THE NATION subrogates itself
to all the rights and obligations of THE COMPANY and exempts THE
COMPANY from any liability for the same. THE NATION shall
immediately pay for services and benefits to employees. - - - - - - -
- - - - - - - -
SEVENTEENTH CLAUSE: With respect to the operations that THE NATION
authorizes through this Contract, THE COMPANY shall be able to bring
into the country the foreign personnel that it requires, who are
either specialized or in training for specialization, provided the
general immigration requirements are fulfilled. The foreigner thus
employed shall commence work after having presented his request to
the Ministry of Labor and Social Welfare.
- - - - - - - - THE COMPANY shall submit quarterly to the Ministry of
Labor and Social Welfare a report that facilitates verification of
the percentage of foreigners actually hired. Once an application has
been decided upon, or subsequently thereto, said Ministry shall
instruct THE COMPANY to withdraw from the country that percentage of
its employees which exceeds the percentage authorized by law. - - - -
- - - - - - - -
EIGHTEENTH CLAUSE: THE COMPANY shall be exempt from taxes and other
assessments which are stipulated below: - - - -
- - - - - - - - One (1) - Taxes and assessments on the importation of
machinery, equipment, spare parts, fuel, paper and other items which
are necessary for the development of the banana operations at any
stage or place of operation. The goods exempt from import taxes may
be re-exported tax free and without being subject to licenses or
permits but shall not be sold nor, without the prior approval of THE
NATION, leased within the country, nor be destined for other purposes
than those for which they were acquired, unless the applicable import
taxes are first paid. THE COMPANY shall offer THE NATION first
option to purchase those goods which THE COMPANY decides to sell.
These exemptions shall be processed in the usual manner through the
Ministry of Treasury and Finance. - - - - - - - - - - - - - - - - - -
- - - - - - - - -
- - - - - - - - Two (2) - Any kind of assessment on banana operations
in any of its phases except those which are stipulated in this
Contract. - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - Three (3) - Taxes and any other assessments issued or
levied upon cargo loaded or unloaded by any ship whose principal
cargo is comprised of products of THE COMPANY, or equipment,
machinery, spare parts, paper, fuel and other imports for its
activities. The rates and expenses generally applicable for
immigration services, sanitation, customs and wharfage shall be
excepted. - - - - - - - - - - - - - - - - - -
- - - - - - - - Four (4) - Taxes which may be assessed on payments of
dividends to or received by the shareholders of THE COMPANY or the
sums which it may remit outside the country. - - - - - - - -
- - - - - - - - Five (5) - Taxes or any assessments related to pier
facilities, mooring, tonnage or which may be ascribed to ships
activities or to the use of the ports of Almirante or Puerto
Armuelles or their replacements, with the exception of that
established in the Eighth Clause of this Contract. - - - - - - -
- - - - - - - - Six (6) - Import taxes over a three-year period on the
fruits harvested in new growing areas or those replaced in accordance
with the plans or programs previously approved by the Ministry of
Cattle and Agricultural Development. The three-year period shall
commence on the date or shipment on which the exportation in
commercial quantities of the said fruit commences. The Ministry of
Cattle and Agricultural Development shall verify the information
submitted by THE COMPANY concerning the tax-exempt portion and can
only object to it within a period of thirty days following the date
this information is received. -
- - - - - - - - Seven (7) - Any type of taxes and assessments levied
upon the sale to THE NATION of the properties of THE COMPANY. - - - -
- - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - Eight (8) - Revenue stamps or any other assessment
resulting from the execution and registration of this Contract and
from the Purchase-Sale and Land-Lease Contracts executed on this same
date. - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - Nine (9) - Any type of assessment on capital, except
taxes levied on patents or licenses of general application. - - - - -
- - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - Ten (10) - Consular fees. - - - - - - - - - - - -
- - - - - - - - Eleven (11) - Property taxes on improvements to
edifices constructed on lands used for the banana business, such as: -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - a) with respect to railroads: main tracks and spurs,
fixed and rolling stock, stations, repair shops and warehouses for
merchandise and materials; b) with respect to aqueducts and sewer
systems, of irrigation, pipe lines and electrical plants: works,
buildings, plants and other installations, and c) with respect to
communication systems: telegraph, telephone lines, offices and other
installations. Commercial and residential buildings are excluded. - -
- -
- - - - - - - - Twelve (12) - (Transitory) - - - - - - - - -
- - - - - - - - The amount of banana export tax in excess of that which
may result from application of the rate established by Law Number
Four (4) of January seven (7), one thousand nine hundred and
seventy-six (1976), from October twenty-first (21st), one thousand
nine hundred and seventy-four (1974) until the effective date of said
law, which exemption is granted as a result of prior agreements
between THE NATION and THE COMPANY, by which THE COMPANY gave THE
NATION the right to occupy its reserve lands, plus the obligation
assumed by THE NATION to immediately enact a new banana export tax
law based on competitive conditions of the market and by virtue of
which it was determined that THE COMPANY shall pay to the Treasury as
said tax the sum of thirty-five cents of a Balboa (B/.0.35) for each
box of bananas exported. -
NINETEENTH CLAUSE: THE COMPANY shall be subject to payment of income
taxes on the basis of a fixed rate of fifty percent (50%) on the
taxable income from Panamanian sources. - -
- - - - - - - - The determination of taxable income from Panamanian
sources shall be made pursuant to criteria which has been previously
applied. - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - The sums paid in accordance with the Eighth, Ninth,
Twentieth, Twenty-First and Twenty-Second Clauses shall be deemed
deductible expenses during the applicable fiscal period in addition
to other expenses accepted as such under Panamanian fiscal
legislation. Payment of income taxes shall be made quarterly and in
advance, according to the following procedure: No later than March
thirty-first (31st) of each year, and together with a sworn
declaration of its income which it may have obtained during the
previous taxable year, THE COMPANY shall present a declaration of
estimated net taxable income in that year and the amount of estimated
income tax shall be paid in four equal quarterly installments, on
April fifteenth (15th), July fifteenth (15th), October fifteenth
(15th), and no later than December twentieth (20th). The total of
the estimated tax shall be subject to quarterly review by THE
COMPANY, and should there be changes in the estimated sum, the sums
payable in the subsequent quarters shall be computed by deducting the
income computed on the basis of the new estimated payment made in
prior quarters, and dividing the remaining sum by the number of
quarters remaining for that year, thereby determining the sums
payable for each subsequent quarter. - - - - - - - - - - - - - -
- - - - - - - - If in accordance with the sworn declaration submitted
during the first quarter of the following year it is confirmed that
the total of the sums paid exceeds the sum total of the tax, the
difference shall be reimbursed to THE COMPANY by means of the
corresponding credit applicable to the first subsequent payment, and
if this were not sufficient, it shall be applied to the balance of
the subsequent payments until such sums amount to the total
overpayment. If the balance is in favor of THE NATION, THE COMPANY
shall pay the difference when presenting its sworn declaration. If
on the date of termination of this Contract there remains any balance
payable to either of the parties, it shall be discharged immediately
by the corresponding party upon presentation and correction of the
final income declaration. - - - - - - - - If the payments accrued
commencing with the first semester are less than the proportional
part of the final tax by an amount greater than twenty-five percent
(25%), the difference will be subject to the payment of interest, by
April fifteenth (15th) at the latest, at an annual rate of seven
percent (7%). The computation for these purposes shall be made in
the following manner:
- - - - - - - - a) The difference between the first two quarterly
payments and half of the total amount of the final tax. - - - - -
- - - - - - - - b) The difference between the first three quarterly
payments and three quarters of the total amount of the final tax. - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - c) The difference between the four quarterly payments
and the final tax total. - - - - - - - - - - - - - - - - - - - Should
any of these differences be a minus figure and exceed twenty-five
percent (25%) of the half, three-quarters, and the total of the final
income tax, respectively, then they shall earn seven percent (7%)
interest computed at nine, six and three months, in the same order. -
- - - - - - - - - - - - - - - -
TWENTIETH CLAUSE: The exportation of bananas shall be subject to a
tax, as provided by law. The tax rate shall be subject to
modification by law in keeping with changes in the international
market and other economic conditions of THE COMPANY. Prior to the
enactment of the respective legislation, THE NATION shall grant THE
COMPANY a reasonable period of time during which to present its
position. The tax payments shall be made monthly within the first
twenty days of the following month.
TWENTY-FIRST CLAUSE: THE COMPANY shall pay as municipal taxes levied
upon the banana business an annual sum of TWO HUNDRED THOUSAND
BALBOAS (B/.200,000.00) to each one of the Municipalities of Baru and
Changuinola. Payment shall be made in twelve equal monthly
installments, no later than the last working day of each month. - - -
- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - THE COMPANY shall also pay the remaining municipal
taxes in effect on the date this Contract becomes effective, in the
same amount and manner in which it is presently paying. If after
said date THE COMPANY were liable for a larger sum of said taxes, or
were subject to levies upon the banana related activities, these
additional obligations in each instance would be assumed by THE
NATION. - - - -
TWENTY-SECOND CLAUSE: THE COMPANY shall be subject to the rest of
the taxes, assessments, tariffs and other national contributions
which are not of the kind specified in this Contract, provided that
in each instance the assessments are of general application. For
this purpose, those assessments which are only applicable to one type
of economic activity or which specifically apply to banana operations
shall not be considered to be of general application. - - - - - - - -
- - - -- - - - - -
TWENTY-THIRD CLAUSE: Even if THE NATION were to establish in Panama
foreign exchange controls, THE NATION shall make available to THE
COMPANY foreign exchange readily convertible for a sum not less than
that which it may need for the following, irrespective of the source
or nature of THE COMPANY funds: - - - - - - - - - - - - - - - - - - -
- - - -
- - - - - - - - One (1) - Payment for goods and services obtained from
abroad for its Panamanian operations.
- - - - - - - - Two (2) - The payment of capital and interest on debts
payable in foreign currency contracted for its investments or
operations in Panama.- - - - - - - - - - - - - - - - - - - -
- - - - - - - - Three (3) - Remittances of profits and distribution of
capital. - - - - - - - - - - - - - - - - - - - - - -
TWENTY-FOURTH CLAUSE: Upon the expiration of the Lease Agreement,
THE COMPANY accepts the obligation to sell to THE NATION and THE
NATION agrees to buy from THE COMPANY, all capital assets and other
property, including growing crops and inventories on hand which may
be property of THE COMPANY, located in the Provinces of Chiriqui and
Bocas del Toro and which are directly or indirectly used in the
banana industry which THE COMPANY operates in the Republic of Panama.
The purchase price at the purchase date shall be determined in
accordance with the following terms: - - - - - - - - - - - - - - a)
For fixed assets, the value on the books in Panama, that is, the
original cost plus the cost of improvements which extend its useful
life or increase the commercial value, less the accrued depreciation;
- - - - - - - - - - - - - - - - - -
- - - - - - - - b) for inventories, the value on the books in Panama,
that is, the total original cost; and- - - - - - - - - -
- - - - - - - - c) for growing crops, the value determined by
application of the guidelines described in Annex "A" which is part of
this Contract.- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - There is excluded from the sale mentioned in these
clauses, cash on hand, bank deposits, accounts receivable, negotiable
instruments and intangible assets such as patents, industrial and
agricultural trademarks, trade names, commercial notices and signs,
and goodwill and any other deferred payments which have not been
expressly assumed by THE NATION.- - - - - - -
- - - - - - It is agreed that THE NATION shall not assume any
obligations or liabilities of THE COMPANY, with the exception of the
obligations arising from subsidiary guarantees granted in favor of
banking entities in connection with the Contracts with associate
producers which are enumerated in Annex "A", or subsidiary guarantees
which may be granted in future with the approval of THE NATION
through the Ministry of Cattle and Agricultural Development.- - - - -
- - - - - - - - - - - - - - - -
- - - - - -Payment of the price shall be made in the following manner:-
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - -a) On the date of execution of the Purchase-Sale Contract, a
payment in cash equivalent to thirty-five percent (35%) of said price
or an amount equal to the total labor obligations of THE COMPANY on
that date, whichever of the two is greater.- - - - - - - - - - - - - -
- - - - - - - - - - - - - - -
- - - - - - b) The remainder is interest calculated at an annual rate
of seven percent (7%) on pending balances, in ten equal annual
installments, the first of which shall be made on the expiration date
of the first year commencing from the date of the sale, and the
remaining nine payments to be made on each subsequent anniversary.- -
- - - - - - - - - - - - - - - - - - - -
- - - - - -In the event this Contract is terminated by an
administrative dissolution of same, as provided for in this Contract,
the payments shall be made as described in the paragraphs a) and b)
above, but all terms shall be delayed for one year. In this case,
THE COMPANY shall not be obligated to make payments on its labor
obligations until such date that THE COMPANY receives the first cash
payment from THE NATION.- - - - -
- - - - - -Irrespective of the provisions of this Clause, it is
expressly agreed between the parties that should the termination of
the Operation Contract and, consequently, the termination of the
Lease Agreement, be due to non-renewal of the term by THE COMPANY or
due to an administrative dissolution of the contracts for reasons
provided in these clauses and, further, if THE NATION is not able to
continue in the banana business, THE NATION shall not be obligated to
purchase but will have the option of burying the assets and
properties of THE COMPANY directly or indirectly related to the
banana business is of a partial nature, the option to buy herein
agreed upon shall be applicable to the assets and other properties
which are not to be operable and the commitment to purchase shall
exist with regard to the assets and other properties with which it
will continue to operate. If THE NATION elects not to buy capital
assets and property in accordance with the rules outlined above, in
this event the parties shall be free to negotiate and contract by
mutual agreement so that THE NATION may acquire them at their
residual or commercial value. In the event that the parties are
unable to arrive at an agreement on this matter within a period of
one hundred and eighty (180) days, THE COMPANY shall then be able to
dispose of such properties as it sees fit and without being subject
to taxes or levies of any kind.- - - - - - - - - - - - -
- - - - - -The payments mentioned in this clause shall be made in
dollars, United States currency, with the banking entity of that
country indicated by Seller.- - - - - - - - - - - - - - - - - - -
TWENTY-FIFTH CLAUSE: THE COMPANY shall be able to withdraw at any
time those goods belonging to it situated on land which THE NATION
has not leased to it, unless THE NATION decides to purchase them
pursuant to terms and conditions to which the parties may then agree.
The goods not withdrawn shall be subject to the Purchase Agreement as
stipulated in the Twenty-fourth Clause of this Contract.- - - - - - -
- - - - - - - - - - - - -
TWENTY-SIXTH CLAUSE: During the period that this Contract is in
effect, THE COMPANY shall continue to service and maintain its assets
situated in the Republic of Panama with the same efficiency and good
care which has been customary during normal periods of operation and
THE NATION guarantees it the undisturbed use thereof.- - - - - - - - -
- - - - - - - - - -
- - - - - -Furthermore, in the event that the term of the Land-Lease
Agreement is not extended pursuant to the provisions of the Eighth
Clause of the Land-Lease Agreement, during the remaining period until
its expiration THE NATION shall exercise adequate supervision of the
activities of THE COMPANY and shall have the right to participate in
THE COMPANY's management policies and therefore:- - - - - - - - - - -
- - - - -a) In those instances in which it considers it necessary, THE
NATION shall designate, at its own expense and without limitation as
to numbers, the personnel which it may deem convenient in line with
the personnel structure of THE COMPANY and on any level order that
the personnel designated by THE NATION can be prepared to supervise
the management of the banana business of THE COMPANY and its
relations with their central or regional offices, with respect to
Panamanian banana production and other agricultural products. The
personnel designated by THE NATION shall work along side and in
harmony and cooperation from the corresponding personnel of THE
COMPANY which will supply the personnel of THE NATION with the
necessary explanations and information suitable for their training.- -
- - - - - - - - - - - - - -b) THE COMPANY shall keep THE NATION
informed of its plans, measures, policies, activities and other
decisions which may impinge upon the Panamanian production of bananas
and other agricultural products. THE NATION shall participate in the
formulation, of the aforementioned decisions and shall be able to
object to any of these whenever they affect or tend to reduce or
discriminate, in any manner whatsoever, against the production of
bananas in Panama. It is understood that this clause does not refer
to decisions which may be of a purely routine nature. - - -
- - - - - -c) In the event that THE NATION believes that the necessary
measures to adequately maintain the value of the assets and other
properties used by THE COMPANY are not being taken, THE NATION shall
be able to request the appointment of a joint commission composed of
a representative of each of the parties hereto, and a third party
chosen by mutual agreement of the first two. Said commission shall
develop a program for the maintenance and repair of the fixed assets
and the care of the cultivations similarly to what may have been
customary during the normal periods of operation of THE COMPANY and
according to whatever other measures are adequate so that the assets
and other properties used by THE COMPANY do not depreciate in value.
If THE COMPANY should not effect such programs at its own expense,
THE NATION shall be able to do it for its own account, and the
expense thus incurred plus interest thereon at an annual rate of
seven percent (7%) shall be deducted from the first cash payment of
the selling price of said assets and other properties.- - - -
TWENTY-SEVENTH CLAUSE: THE COMPANY shall be free of all
responsibility with respect to any default or breach under this
Contract which may be due to causes of force majeure or caso fortui
to, within or without the country while they are in force. THE
COMPANY shall inform THE NATION in writing as soon as it may be
possible of the occurrence of any contingency due to force majeure or
caso fortuito. For the purpose of the present Contract, force
majeure shall include wars, revolutions, insurrections, civil
disturbances, blockades, embargoes, strikes and other labor
conflicts, riots, epidemics, viruses, fungi, and other maladies and
plagues, earthquakes, landslides, storms, floods, and other adverse
meteorological conditions, explosions, fires, thunders, orders or
instructions of any government or any entity or division of same,
chance incidents or those caused by anti-social groups, any failure
of installations or machinery wherever they may occur and any other
reason, whether or not they fall within the categories previously
mentioned, and with respect to which the affected party could not
exercise reasonable control and of such nature as to delay, restrain
or impede timely action by the party affected.- - - - - - -
TWENTY-EIGHTH CLAUSE: The present Operation Contract and the
Land-Lease Agreement which constitute a single transaction, shall
enter into effect simultaneously, consequently, if for any reason one
of the Agreements should expire, the other shall then also expire.
The two contracts shall be interpreted and be applicable as if the
two were considered to be one instrument.- -
TWENTY-NINTH CLAUSE: With the execution of the present Contract, both
parties shall deem terminated and definitively concluded any claim or
other difference which exists or could exist with respect to the
execution and compliance of the Contracts which up to this time were
in force between THE NATION and THE COMPANY, or with regard to
payment or failure to collect any kind of tax or any other amount
which may arise from the operations of THE COMPANY up to December 31,
1975, excluding that which THE COMPANY may have previously agreed to
cover. Each party shall take the necessary measures to terminate any
existing actions pending before any judicial tribunal or
administrative body of the Republic of Panama.- - - - - - - - - - - -
- - - - - -
THIRTIETH CLAUSE: THE NATION shall be able to declare
administratively the dissolution of this contract in the event of
default on the part of THE COMPANY, except in cases of force majeure
and caso fortuito with respect to any of the following obligations:- -
- - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - -One (1) - Default in payment of any of the pecuniary
obligations owed to THE NATION in accordance with the provisions of
this Contract or the Land-Lease Agreement. With respect to tax
debts, default shall not be considered to exist as long as the
obligations are pending final decision from any judicial tribunals.
- - - - - -Two (2) - The minimum annual production and exportation
described in the Fourth Clause of the present Contract.- - - - -
- - - - - -In such instances, before proceeding to obtain an
administrative dissolution, THE NATION shall notify THE COMPANY in
writing of the default and THE COMPANY shall have a period of thirty
(30) days in which to initiate measures intended to correct the
default within a reasonable period. In addition, a cause for
administrative dissolution shall be bankruptcy of THE COMPANY.- - - -
- - - - - - - - - - - - - - - -
THIRTY-FIRST CLAUSE: THE COMPANY, that is, UNITED BRANDS COMPANY,
CHIRIQUI LAND COMPANY and COMPANIA PROCESADORA DE FRUTAS, S.A. ,
execute the present Contract and thus jointly assume all of the
rights and obligations emanating from this Contract.- - - - - - - - -
- - - - - - - - - - - - - - - - - - -
THIRTY-SECOND CLAUSE: The present Contract shall be deemed in effect
from January 1, 1976 and, consequently, thereafter the contractual
relations between THE COMPANY and THE NATION shall be governed solely
by the stipulations of this Contract. The duration of this Contract
shall be the same as that of the Land-Lease Agreement executed on the
same day.- - -
EXHIBITE.pol
EXHIBIT 10-b
TRANSLATION
Instrument Number Fifty-five (55) -- In the City Of Tegucigalpa,
Central District, on the twenty-second day of April, 1976. -- Before
me, Cesar Augusto Mendez, Notary Public of San Pedro Sula, in transit
in this city, incorporated under number seven hundred twenty-seven
(727) there appears on the one hand Wallace W. Booth, of age,
married, Corporate Executive, North American, domiciled in the City
of Los Angeles, State of California, United States of America, in
transit in this city, as special representative of the Tela Railroad
Company, a corporation organized and existing in accordance with the
laws of the State of Delaware, United States of America, located in
the City of Wilmington, of said State, which was recognized as a
juridic person and authorized to engage in commerce in the Republic
of Honduras pursuant to resolution issued by the Executive Powers
through the Ministry of Government, Justice and Sanitation, the 20th
of February, 1913, which certificate I, the Notary, acknowledge
having before me. Hereinafter Tela Railroad Company shall be called
"The Company". Mr. Wallace W. Booth proves his authority with a
Special Power which I, the Notary, acknowledge having before me and
which was issued in the City of Boston, United States of America at
11:30 of the morning of the fourteenth of April of this year before
Notary Public, Celia H. Dick, by the Tela Railroad Company and which
contains sufficient powers for the execution of this act and
signature of this document and is duly legalized by the Ministry of
Foreign Affairs, Ministry of Government and Justice and the Supreme
Court of Justice of Honduras; and on the other hand there appears
Doctor Herman Pasais Leiva, of age, married, Doctor of Medicine and
Surgery, Honduran, domiciled in San Pedro Sula, in transit in this
city, who appears as General Manager and as such administrative Legal
and Extrajudicial representative of the National Railroad of
Honduras, an autonomous entity of the State of Honduras, with legal
personality, own patrimony and of indefinite duration, created by
Decree Number forty eight issued by the National Congress the
thirtieth of April nineteen hundred and fifty-eight, which contains
in Article thirty-three the representation of said Institution in its
General Manager with sufficient power for this type of act, I the
Notary acknowledge of having before me the certification of the
minutes of the meeting of the Board of Directors of the said
autonomous entity setting forth the election of Doctor Herman Pasais
Leiva as General Manager of the National Railroad of Honduras for a
period of six years which expires the sixteenth of September of this
year; I also acknowledge having before me the original Minutes of the
meetings of the Board of Directors of the National Railroad of
Honduras which approved the bases of the present contract and
authorized the manager to sign. Hereinafter in this document the
National Railroad of Honduras shall be called the National Railroad.
Also present is Mr. George M. Skelly, Jr., of age, married, attorney,
of North American nationality, in transit in this city, who is
present as interpreter of Spanish to English and vice versa, because
Mr. Wallace W. Booth does not know Spanish. I the Notary acknowledge
that Mr. George M. Skelly, knows the Spanish and English languages
because I am personally aware thereof and I also acknowledge that he
undertook before me the under signed Notary to faithfully fulfill his
commitment, and being assured by Mr. Wallace W. Booth and Doctor
Herman Pasais Leiva to have full right and exercise of their civil
liberties they spontaneously state:
First: The Company declares: That it is the legal owner of the
railroad which unites and passes through the following places: From
the City of Port of Tela to the City of Progreso, a length of ONE
HUNDRED SIXTY-FOUR AND EIGHT HUNDRED SIXTY-SEVEN THOUSANDTHS
(164.867) kilometers including its branchlines, spurs and bridges;
from the Village of La Lima to Karaco, a length of ONE HUNDRED
FORTY-ONE AND FIVE HUNDRED AND ELEVEN THOUSANDTHS (141.511)
kilometers including the branchlines, spurs and bridges, for a total
of THREE HUNDRED SIX AND THREE HUNDRED SEVENTY-EIGHT THOUSANDTHS
kilometers (306.378 kms.), including the spurs in Puerto Cortes.
That both lines, their branches and spurs are on their respective
ties, roadbeds and bridges which also belong to the Company and for
their use are serviced by telephone lines. That the said railroad
lines, their branchlines and spurs are described on a map marked #1,
a signed copy of which will be kept by the parties and which forms
part of the present contract, as does the inventory hereinafter to be
mentioned.
Second: The Company further states that it transfers its property
and dominion in the said railroad lines, to the National Railroad for
L.l.00 which it acknowledges receiving to its entire satisfaction,
which transfer includes everything mentioned in the previous clause.
That with the said railroad it transfers as "right of way" a strip of
land twenty meters wide on both sides of the main railroad lines for
their entire length; a strip of land ten meters wide on both sides of
the branch lines, and a strip of land five meters wide on both sides
of the spurs. Notwithstanding the foregoing, if in the future any of
the railroad spurs is lifted, the strip of land containing the "right
of way" shall cease to belong to the National Railroad and its rights
thereto shall revert to the Company. The width of the right of way
previously specified is applicable in rural areas in which the
Company is owner of the respective lands. It also hereby transfers to
the National Railroad, on urban lands belonging to the Company, the
strips of land which now constitute the right of way for normal
railroad operations. In order to precisely determine the last right
of way herein in this clause mentioned, the parties within a period
not greater than TWO (2) years from this date shall jointly prepare a
map which will identify and quantify the aforementioned right of way.
Third: The National Railroad states that it accepts the
transfer hereby made to it and acknowledges receipt of the aforesaid
railroad lines, of the right of way, and everything included in the
foregoing clauses under the terms and conditions stated.
Fourth: The National Railroad, taking into consideration that the
railroad lines acquired by this document have been used up to the
present time by the Company in its railroad transportation, by this
means and by this document leases to the Company for its use under
the following conditions:
A) The Company shall use in all its railroad
transportation operations, the lines
acquired by the National Railroad under this
document and the branchlines Lima-Bufalo and
La Mesa, and the stretch of railroad lines
Baracoa-Puerto Cortes owned by the National
Railroad. Wherever mention is made herein
of railroad lines there shall be included
therein everything described in the FIRST
and SECOND clauses of this document, which
has been transferred to the National
Railroad, and the branchlines and the
stretch of railroad lines mentioned in this
Section A which are also property of the
National Railroad. It shall mean the same
when used in the plural.
B) The Company shall pay the National Railroad
as rental for the lease set forth in this
clause and for the use of the branchlines
Lima-Bufalo and La Mesa and the stretch of
railroad line Baracoa-Puerto Cortes, the
annual sum of FIVE HUNDRED THOUSAND LEMPIRAS
(L.500,000.00) which shall be paid monthly
in advance at the offices of the National
Railroad in the City of San Pedro Sula
without the need to make demand or
collection.
C) This lease is for a period of EIGHT (8) years
commencing January 1, 1976 and can be extended by
agreement of both parties. Notwithstanding the
foregoing this lease shall be extended automatically
if one of the parties does not notify the other in
writing of its desire not to extend the lease at
least two years prior to the date of expiration. In
this case the lease shall continue in effect but
either of the parties during the years subsequent to
January 1, 1982 can notify the other in writing of
its desire to terminate in which case the lease
shall terminate two years after the subsequent
anniversary of the contract.
D) There shall be no right to request nor obtain a decrease
in the rental agreed on, because of temporary or
permanent non use of all or part of the railroad,
whether or not the non use is the result of the sole
decision of the Company, of causes imputable to it, or
of agreements of the Company with the National Railroad
or with third persons, or because of force majeure or
caso fortuito due to nature;
E) During the term of the agreed lease, the Company shall
carry out for its account the maintenance of the
railroad leased and the branchlines, spurs, and stretch
of railroad lines, the use of which has been given to
it, so that they shall be kept in a normal state of
service; similarly, it shall carry out the
rehabilitation and reconstruction of the railroad, its
branchlines and the stretch of railroad mentioned, in
case of their destruction or if they suffer damages
which places them fully or partially out of normal
service. The National Railroad can present proposals
for improving such maintenance, rehabilitation and
reconstruction and the Company shall adhere to such
proposals if they are, technically and economically
reasonable;
F) At the end of the period of the lease or any extensions
as provided for in FOURTH (4) clause of this instrument,
the Company must return to the National Railroad the
railway lines, branchlines and stretch of railway in
good condition or be it in a state of normal service.
Otherwise, it will pay the National Railroad the value
of the repairs which may be necessary so that the
railway will be in a state of normal service. The
determination of the good condition of the railway lines
returned to the National Railroad and its cost of repair
shall be made by the National Railroad and in case of a
dispute, it will be decided by two experts one named by
each of the parties, and in case of a disagreement, it
will be resolved by a third expert named by the two
experts and if they do not agree on naming the third,
the parties shall be free to resort to competent
judicial authorities to enforce their rights. Between
the start of the disagreement and the final opinion of
the experts not more than sixty (60) days shall pass.
G) If the Company desires in the future, while the lease is
in effect, to change the present system of railroad
transportation of bananas, it must act jointly with the
National Railroad. It is understood and agreed that the
present system of banana transportation in Honduras
consists of the transportation of bananas by railroad
cars and containers on platforms hauled on the railroad;
H) The employer-employee relations now existing between the
Company and its workers cannot be lessened as a result
of or because of the present contract; specifically,
there shall be no direct or indirect discharge of
railroad workers except in those cases provided for by
law.
I) It is agreed and accepted that the Company will ship
through the Port of Tela during the next FIVE (5) years
not less than one-third of its export of bananas. All
of the obligations of the Company agreed to in this
contract shall continue in effect even after the
aforementioned FIVE years, including payment of the
rental, the maintenance, rehabilitation and
reconstruction, as the case may be, including that of
the Progreso-Tela stretch of railroad;
J) The National Railroad as owner of the railroad line
acquired through this document, of the branchlines
Lima-Bufalo and La Mesa, and the stretch of railroad
Baracoa-Puerto Cortes shall have free transit
thereon for its equipment; so that no interruptions
shall occur in the railroad operations; the parties
within THIRTY (30) days from this date shall prepare
a traffic schedule and shall establish the bases for
operating and any revision thereof, which bases
shall provide for preferential right of use of the
railroad, branchlines, spurs and stretches to banana
trains, as at present.
Fifth: The Company states that it accepts the lease of the
railroad and the use of the branchlines, spurs, and the stretch of
railroad granted by the National Railroad under the terms and
conditions set forth in the foregoing clauses.
Sixth: The National Railroad further states: that it grants
the Company the right to easements so that it can maintain on and use
by crossing or paralleling and in the right of way of the railroad,
which is the subject matter of thin contract, with roads, canals,
drains, telephone and electric lines, water or petroleum pipelines,
drainage and irrigation systems, cable systems for transportation of
bananas to the packing stations and similar works, and the Company
shall do everything necessary so that the aforesaid works do not
damage the lines crossed and do not block the service thereon. The
National Railroad acknowledges that the Company has constructed and
presently maintains at various locations on the right of way which
the Company by this document has transferred together with the
railroad to the National Railroad, installations such as telephone
and electric lines, packing stations, irrigation pumps, roads,
cultivations, canals, drains, water or petroleum pipe systems,
irrigation and drainage and fruit transportation by cable systems,
buildings and other similar works relating to its agricultural and
cattle activities. Therefore, it grants the right for so long as the
installations and cultivations are maintained in service to continue
occupying the right of way in the same area which up to now they have
used. These cultivations and works shall be marked and specified
jointly by the National Railroad and the Company on a map which they
will prepare within ONE (1) year from this date; both parties shall
have a signed copy of this map. The Company, subject to prior
agreement with the National Railroad, can make new cultivations and
installations of that type, related to its agricultural and cattle
activities within the already mentioned right of way. Similarly, the
National Railroad grants the Company the right to continue the use,
by land vehicles, for so long as they are maintained in service, the
following bridges which presently have a wooden roadbed, Tacamiche,
Copen, Mico, Corozal, Ceibita, Tibombo, Ticamaya, Ulua and Puente,
Kilometer 48, Boqueron de Mezapa, Boqueron de El Progreso, two on
Farm Three. The maintenance or, if required, the rehabilitation and
reconstruction of the wooden roadbeds shall be for the account of the
Company. All of the easements and rights granted by the National
Railroad to the Company in this SIXTH clause are without cost and at
the end of the lease or its extension will renew them under the same
conditions contained in this SIXTH clause provided they directly
serve the banana and African Palm industry and other agricultural and
cattle activities operated by the Company.
Seventh: The Company declares that it accepts the easements and
rights granted to it by the National Railroad in the foregoing SIXTH
clause.
Eighth: The Company further states that at the end of the
EIGHTH (8) year previously mentioned, or if extended as provided in
FOURTH (4) clause of this instrument, the National Railroad can
acquire without cost, in whole or in part, the fixed and rolling
equipment, shops, stations, warehouses, and other property related to
the railroad operations, the betterments made thereto and new
equipment, as well as existing spare parts and accessories shall be
acquired at the value on the books of the Company in Honduras. For
purposes of this clause, it is understood that the rules governing
depreciation of the equipment to be acquired shall be those set forth
in letters Numbers AB-99/76-D and AB-l37/76-D attached of the 12 and
21 April 1976, respectively.
By separate document the parties have prepared an inventory of
the present assets of the Company which are directly and indirectly
related to the railroad complex, such inventory forms part of this
contract and is signed in duplicate by the Company and the National
Railroad, who will keep their respective copies for purposes agreed
on. It is understood and agreed that the present fixed and rolling
equipment is sufficient for the normal operations of the Company in
Honduras, therefore, it shall only make new investments for its
improvements when they are reasonably necessary. Similarly, the
Company must abstain from decreasing the railroad equipment shown on
the aforementioned inventory with the exception of decreases due to
normal wear and tear and railroad accidents. Notwithstanding, if the
National Railroad decides, during the term of this contract, to
purchase fixed or rolling equipment from the Company, the latter if
it can make the sale, shall make it at the value on the books in
Honduras. If the Company decides to increase its equipment it can do
so provided the National Railroad is unable to supply for sale at
book value, or lease the equipment required or is unable to supply
the respective service. For these purposes, the parties must advise
three (3) months in advance.
Ninth: The National Railroad states that it accepts the option
granted in the foregoing clause as well as the other stipulations
contained therein.
Tenth: Finally, both parties make known:
A) That the present terms and conditions presently
governing the commercial relations between the
National Railroad and the Company, especially with
respect to the lease of equipment rates shall
continue without change. Similarly, continuing
unchanged shall be the terms and conditions in
effect for the supply of reciprocal services between
the parties. Not later than SIXTY (60) days after
the date of this document, both parties will sign a
document embodying the customs, verbal and written
agreements and all contractual, legal and regulatory
dispositions presently existing with respect to
these relations and the interchange of services.
Notwithstanding the foregoing, commencing on this
date, the rental which the Company has been paying
for the use of the so-called nationalized railroad
lines and the Baracoa-Puerto Cortes stretch shall no
longer be in effect since payments for such is
included in the FIVE HUNDRED THOUSAND LEMPIRAS
(L.500,000.00) agreed to in this document;
B) This contract shall be governed by the laws of Honduras
and the competent tribunals with jurisdiction thereof
over compliance or noncompliance therewith shall be the
authorities of the judicial section of San Pedro Sula as
Courts of First Instance;
C) This contract obligates the Company even though it
changes its present corporate name or its capital or
commercial purposes or merges or transforms itself and
its successors; in any of these cases the new commercial
company or companies shall be jointly and severally
liable for the obligations undertaken by the Company
with the National Railroad through this document;
D) Noncompliance of any of the clauses of this contract by
one of the parties shall make it liable for the payment
of damages caused to the other, without prejudicing such
other actions as might exist at law for the
non-compliance; and
E) The parties can agree to amendments, extensions or
clarifications to this contract. If agreement to do so
is made it shall not be necessary to make them by public
document, but the extension, amendment or clarification
can be accomplished by a simple exchange of notes.
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
A. Computation
of primary
earnings
(loss) per
common share:
Income (loss)
from
continuing
operations $ (51,081) $ (221,708) $ 110,909 $ 95,831 $ 83,840
Income (loss)
from
discontinued
operations -- (62,332) 17,586 (1,913) (16,073)
Net income
(loss) used
to calculate
primary
earnings
per share $ (51,081) $ (284,040) $ 128,495 $ 93,918 $ 67,767
Shares used in
calculation
of per share
data:
Weighted average
common and
equivalent
Series C
preference
shares
outstanding 51,427 51,804 47,834 40,100 38,751
Dilutive effect
of assumed
exercise of
certain stock
options and
warrants -- -- 2,548 1,989 1,037
Weighted average
common shares
used to
calculate
primary
earnings
(loss) per
share 51,427 51,804 50,382 42,089 39,788
Primary earnings
(loss) per
common share:
- - Continuing
operations $ (.99) $ (4.28) $ 2.20 $ 2.28 $ 2.10
- - Discontinued
operations -- (1.20) .35 (.05) (.40)
- - Net income
(loss) $ (.99) $ (5.48) $ 2.55 $ 2.23 $ 1.70
</TABLE>
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC. EXHIBIT 11 (cont.)
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
B. Computation
of fully
diluted
earnings
(loss)
per common
share:
Income (loss)
from
continuing
operations $ (51,081) $ (221,708) $ 110,909 $ 95,831 $ 83,840
Additional
income as
a result
of assumed
conversion
of
convertible
debentures -- -- 4,836 1,175 2,064
Income (loss)
from
continuing
operations
used to
calculate
fully
diluted
earnings
per share (51,081) (221,708) 115,745 97,006 85,904
Income (loss)
from
discontinued
operations -- (62,332) 17,586 (1,913) (16,073)
Net income
(loss) used
to
calculate
fully
diluted
earnings
per share $ (51,081) $ (284,040) $ 133,331 $ 95,093 $ 69,831
Shares used in
calculation
of per share
data:
Weighted
average
common
shares
used to
calculate
primary
earnings
(loss)
per share 51,427 51,804 50,382 42,089 39,788
Additional
shares
resulting
from
assumed
exercise
of options
and assumed
conversions
of
convertible
subordinated
debentures -- -- 2,530 1,201 2,124
Weighted
average
common
shares
used to
calculate
fully
diluted
earnings
(loss)
per share 51,427 51,804 52,912 43,290 41,912
Fully
diluted
earnings
(loss)
per common
share:
- - Continuing
operations $ (.99) $ (4.28) $ 2.19 $ 2.24 $ 2.05
- - Discontinued
operations -- (1.20) .33 (.04) (.38)
- - Net income
(loss) $ (.99) $ (5.48) $ 2.52 $ 2.20 $ 1.67
</TABLE>
<TABLE>
<CAPTION>
CHIQUITA BRANDS INTERNATIONAL, INC. EXHIBIT 12
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(In thousands, except ratio amounts)
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Earnings:
Income
(loss) from
continuing
operations
before income
taxes $ (39,081) $ (216,708) $ 160,009 $ 153,531 $ 135,040
Interest expense 169,789 155,036 88,406 55,361 53,952
Portion of
rentals
representing
interest cost 58,499 85,810 74,070 66,247 53,324
Amortization of
capitalized
interest 3,745 3,010 1,900 1,125 870
Undistributed
earnings of
less-than-
fifty-percent
owned
investees (1,429) (3,588) (4,352) (116) (2,866)
$ 191,523 $ 23,560 $ 320,033 $ 276,148 $ 240,320
Fixed Charges:
Interest expense $ 169,789 $ 155,036 $ 88,406 $ 55,361 $ 53,952
Capitalized
interest 8,000 21,400 23,000 8,000 2,200
Portion of
rentals
representing
interest
cost 58,499 85,810 74,070 66,247 53,324
$ 236,288 $ 262,246 $ 185,476 $ 129,608 $ 109,476
Ratio of
earnings to
fixed
charges (a) (a) 1.73 2.13 2.20
Earnings $ 191,523 $ 23,560 $ 320,033 $ 276,148 $ 240,320
Fixed charges $ 236,288 $ 262,246 $ 185,476 $ 129,608 $ 109,476
Preferred
stock
dividends 4,278 778 -- -- --
$ 240,566 $ 263,024 $ 185,476 $ 129,608 $ 109,476
Ratio of
earnings to
combined
fixed charges
and preferred
stock
dividends (b) (b) 1.73 2.13 2.20
(a) Fixed charges exceeded earnings by $44,765 in 1993 and $238,686
in 1992.
(b) Combined fixed charges and preferred stock dividends exceeded
earnings by $49,043 in 1993 and $239,464 in 1992.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Data EXHIBIT 13
Chiquita Brands International, Inc. and Subsidiary Companies
(In thousands,
except per
share amounts) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
FINANCIAL
CONDITION
Working
capital $ 266,793 $ 482,338 $ 960,093 $ 433,424 $ 394,640
Capital
expendi-
tures 196,554 472,273 395,641 312,698 117,425
Total assets 2,740,753 2,880,624 2,937,344 1,913,674 1,373,480
Capital-
ization
Short-term
debt 192,207 229,286 187,821 106,698 58,540
Long-term
debt 1,438,378 1,411,319 1,202,839 494,182 385,250
Share-
holders'
equity 601,998 674,887 967,925 687,709 463,954
OPERATIONS
Net sales $ 2,532,925 $ 2,723,250 $ 2,604,128 $ 2,186,452 $ 1,892,657
Operating
income
(loss) 103,848 (96,588)* 197,818 166,180 157,746
Income (loss)
from
continuing
operations
before
income
taxes (39,081) (216,708)* 160,009 153,531 135,040
Income (loss)
from
continuing
operations (51,081) (221,708) 110,909 95,831 83,840
Discontinued
operations -- (62,332) 17,586 (1,913) (16,073)
Net income
(loss) (51,081) (284,040) 128,495 93,918 67,767
SHARE DATA
Average number
of common
shares
outstanding 51,427 51,804 50,382 42,089 39,788
Earnings
(loss) per
common share:
Primary
- - Continuing
operations $(0.99) $(4.28) $2.20 $2.28 $2.10
- - Discontinued
operations -- (1.20) .35 (.05) (.40)
- - Net income
(loss) (0.99) (5.48) 2.55 2.23 1.70
Fully diluted
- - Continuing
operations (0.99) (4.28) 2.19 2.24 2.05
- - Discontinued
operations -- (1.20) .33 (.04) (.38)
- - Net income
(loss) (0.99) (5.48) 2.52 2.20 1.67
Dividends
declared per
common share .44 .66 .55 .35 .20
Market price
per common
share:
High 17.50 40.13 50.63 32.00 17.63
Low 10.13 15.75 29.63 16.13 12.88
End of
year 11.50 17.25 40.00 32.00 17.38
Book value per
common share
at end of
year 11.33 12.93 19.39 15.21 11.94
* Includes restructuring and reorganization charges of $61.3 million
(see Note 2).
</TABLE>
6
<PAGE>
Statement of Management Responsibility
The financial information presented in this Annual Report is the
responsibility of Chiquita Brands International, Inc. management,
who believes that it presents fairly its consolidated financial
position and results of operations in accordance with generally
accepted accounting principles.
The Company's system of internal accounting controls, which is
supported by formal financial and administrative policies, is
designed to provide reasonable assurance that the financial records
are reliable for preparation of financial statements and that assets
are safeguarded against losses from unauthorized use or disposition.
Management reviews, modifies and improves these systems and controls
as changes occur in business conditions and operations. The
Company's worldwide internal audit function reviews the adequacy and
effectiveness of controls and compliance with policies.
The Audit Committee of the Board of Directors reviews the Company's
financial statements, accounting policies and internal controls. In
performing its reviews, the Committee meets with the independent
auditors, management and internal auditors periodically to discuss
these matters.
The Company engages Ernst & Young, an independent auditing firm, to
audit its financial statements and express an opinion thereon. The
scope of the audit is set by Ernst & Young who have full and free
access to all Company records and personnel in conducting their
audits. Representatives of Ernst & Young are free to meet with the
Audit Committee, with or without members of management present, to
discuss their audit work and any other matters they believe should be
brought to the attention of the Committee.
Report of Ernst & Young, Independent Auditors
The Board of Directors and Shareholders of
Chiquita Brands International, Inc.
We have audited the accompanying consolidated balance sheets of
Chiquita Brands International, Inc. and subsidiary companies as of
December 31, 1993 and 1992, and the related consolidated statements
of income, shareholders' equity and cash flow for each of the three
years in the period ended December 31, 1993. These financial
statements, appearing on pages 11 through 23, are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Chiquita Brands International, Inc. and subsidiary companies at
December 31, 1993 and 1992 and the consolidated results of their
operations and their cash flow for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted
accounting principles.
Ernst & Young
Cincinnati, Ohio
February 28, 1994
7
<PAGE>
Management's Analysis of Operations and Financial Condition
Chiquita Brands International, Inc. and Subsidiary Companies
Operations
1993 Continuing Operations Compared to 1992
Sales decreased 7% to $2.5 billion in 1993 primarily as a result of
lower banana volumes. Nevertheless, operating income for 1993 was
$103.8 million compared to an operating loss for 1992 of $96.6
million, which included restructuring and reorganization charges of
$61.3 million. This improvement is attributable to the continuing
benefits of Chiquita's multi-year investment spending program and the
ongoing effects of its restructuring and cost reduction efforts.
These programs address all aspects of the banana business including a
decreased reliance on high-cost purchased fruit, enhanced production
practices, shipping fleet realignment, reorganization and
consolidation of marketing organizations, and overhead reductions.
Since imposition of a new quota system on July 1, 1993 (see
"International Operations" below) which in effect restricts the
volume of Latin American bananas imported into the European Union
("EU"), 1993 prices within the EU increased to a higher level than in
prior years. This trend has continued into early 1994. Banana
prices outside the EU in 1993 following implementation of the quota
were lower than in previous years, as displaced EU volume entered
those markets. In early 1994, average price levels for markets
outside the EU have exceeded price levels for comparable pre-quota
periods as normal occasional supply limitations mitigated the impact
of displaced EU volume in these markets. Future pricing in these
non-EU markets may be affected by their ability to continue to absorb
the displaced EU volume and the continuing growth in per capita
consumption of bananas outside the EU.
Although total costs were substantially lower in 1993, the
depreciation and interest components of those costs are higher
(depreciation grew 28% to $102.6 million and net interest expense
increased 34% to $149.4 million) principally as a result of increased
reliance on owned production and shipping capacity, a majority of
which has been financed. These increased costs of ownership were
more than offset by lower costs resulting from the reduction of
purchased fruit and ship leases. The Company expects to continue to
benefit from its improved cost structure in 1994 and in future years.
In early 1994, Chiquita began refinancing certain of its outstanding
debt, which will result in future interest savings (see "Financial
Condition" below).
The effective tax rate is affected by the level and mix of income
between various U.S. and foreign jurisdictions in which the Company
operates. Income taxes for 1993 consisted principally of foreign
income taxes currently paid or payable. No tax benefit was recorded
in the 1993 operating results for U.S. net operating loss
carryforwards. In August 1993, the U.S. government enacted new tax
legislation which, among other things, increased the U.S. statutory
federal income tax rate from 34% to 35%. The new law did not have a
material impact on Chiquita's financial statements.
1992 Continuing Operations Compared to 1991
Sales increased 5% to $2.7 billion in 1992 principally due to
acquisitions in early 1992 and late 1991 and increased processed
foods volume partially offset by lower selling prices for bananas.
For 1992, Chiquita incurred an operating loss of $96.6 million
which included $61.3 million of restructuring and reorganization
charges discussed below. The operating loss of $35.3 million before
restructuring and reorganization charges resulted principally from
sharply increased banana costs and expenses. These costs were
significantly impacted by a widespread decline in product quality
early in 1992 caused by the extraordinary outbreak of disease and
unusual weather patterns (El Nino) affecting banana industry
cultivations. In response to these quality issues, Chiquita reduced
the volume of fruit it marketed during the second half of the year,
resulting in a significant amount of unrecovered costs. These
unusual quality issues were addressed by extraordinary control
measures and a reduction in the volume of lower quality purchased
fruit. As a result, the Company's product quality returned to
standard during the second half of 1992.
During the fourth quarter of 1992, the Company undertook a program
to adjust its fresh foods volume and cost infrastructure to
significantly reduce production, distribution and overhead costs.
This
8
<PAGE>
program, which included consolidation of operations, asset disposals
and workforce reductions, resulted in the above-mentioned
restructuring and reorganization charges of $61.3 million.
The decline in product quality in early 1992 also adversely
affected banana pricing during the first half of 1992, principally in
Europe and to a lesser extent in North America. Upon the restoration
of standard product quality, banana pricing returned to normal
seasonal levels during the second half of 1992.
The loss from continuing operations includes higher net interest
expense, arising principally from increased 1992 average borrowings
outstanding, and a third quarter non-recurring charge of
approximately $10 million for the settlement of shareholder
litigation.
Income taxes for 1992 included a $5 million charge for foreign
income taxes; however, no tax benefit was recorded in the 1992
operating results for U.S. net operating losses.
International Operations
Chiquita's products are distributed in more than 40 countries and
its international sales are usually made in U.S. dollars and major
European and Asian currencies. The Company manages currency risks
from sales originating in currencies other than the dollar generally
by exchanging local currencies for dollars immediately upon receipt,
and by engaging from time to time in various hedging activities.
Debt denominated in currencies other than the U.S. dollar serves as a
hedge of the net investment in those respective countries. In
addition, various hedging activities are used to offset currency
exchange movements on firm commitments and other transactions where
the potential for loss exists.
On July 1, 1993, the EU implemented a new quota effectively
restricting the volume of Latin American bananas imported into the EU
to approximately 80% of prior levels. The quota is administered
through a licensing system and grants preferred status to producers
and importers within the EU and its former colonies, while imposing
new quotas and tariffs on bananas imported from other sources,
including Latin America, Chiquita's primary source of fruit.
Challenges to the quota and many matters regarding implementation and
administration of the quota remain to be resolved. Prior to its
implementation, the principles underlying the new regulation were
ruled illegal under the General Agreement on Tariffs and Trade
("GATT") by a GATT dispute settlement panel. In early 1994, a second
GATT dispute settlement panel ruled against the current EU regulation
in favor of certain Latin American countries. GATT rulings in favor
of the Latin American countries could result in an increase in the
total volume of Latin American bananas, including banana volume of
the Company, which could be imported under the quota. However, there
can be no assurance that the EU will comply, or the manner in which
it would comply, with such rulings. Facing these changes and
uncertainties, the Company has undertaken extensive measures to
reorganize, consolidate and integrate its European banana
operations.
Discontinued Operations
During the fourth quarter of 1992, after evaluation of previously
announced reorganization plans and completion of other preparatory
actions, Chiquita adopted a plan of disposal for its Meat Division
operations. Pursuant to the plan, the Company completed the sale of
a major fresh pork processing facility in December 1992. During
1993, the Company evaluated numerous proposals for the sale of
various components of the Meat Division and engaged in extensive
activity in the execution of the balance of its disposal plan. These
activities resulted in significant cost reductions contributing to
improved Meat Division operating results, progress toward further
substantial cost reductions relating to retiree medical costs,
receipt of government and union subsidies, concessions and financial
incentives, and establishment of a new stand-alone credit facility to
fund the Meat Division's working capital needs. In addition, during
the second quarter of 1993, Chiquita purchased $16.7 million of
secured Meat Division debt held by a third-party lender. In February
1994, the Division's specialty meat operations were sold for
approximately $50 million in cash. The Company is continuing its
marketing efforts and expects to complete the divestiture of the
remaining Meat Division operations by the end of 1994.
9
<PAGE>
Net sales of discontinued operations have decreased to $1.5 billion
from $1.8 billion in 1992 and $2.0 billion in 1991 due primarily to
the closing of fresh beef operations in 1991 and 1992, and the sale
of the fresh pork processing facility in December 1992. However,
successful ongoing cost reduction efforts have contributed to the
improvement in Meat Division operating results to approximately
breakeven levels in 1993, as compared to a loss from operations of
$27.2 million in 1992.
The developments during 1993 regarding the Meat Division have not
had and are not expected to have a material adverse effect on
Chiquita's liquidity, financial condition or results of operations.
See Note 3 to the Consolidated Financial Statements for more
information on discontinued operations.
Financial Condition
Cash provided by continuing operations was $47.2 million in 1993 in
contrast to the $29.2 million negative operating cash flow for 1992
as a result of the Company's improved operating performance. In
1992, the decline in operating cash flow from 1991 levels was limited
to $51 million as a result of working capital management efforts and
because non-cash charges were a major component of 1992's substantial
loss. At December 31, 1993, Chiquita had $151 million of cash and
equivalents, not including $51 million of restricted cash on deposit
with banks as collateral for subsidiary borrowings. The Company
believes that this cash position, combined with increased cash flow
as a result of restructuring and cost reduction efforts, reduced
future capital spending discussed below and lower financing costs,
provide for the liquidity necessary to meet foreseeable needs.
Capital expenditures, most of which relate to transportation system
improvements and the purchase and development of fresh fruit
production capacity under a multi-year investment program, were
reduced to $197 million for 1993 from $410 million in 1992 and $340
million in 1991. This investment program is nearly complete and the
Company expects to reduce 1994 capital expenditures to approximately
$125 million, including $65 million for remaining ship construction
commitments.
External financing during the last three years relating to
Chiquita's investment spending program and for general corporate
purposes includes:
-
long-term subsidiary borrowings aggregating approximately $500
million;
-
three 1991 public debt offerings of approximately $600 million; and
-
a 1991 public sale of 5 million new capital shares for $208
million.
In addition, the Company has arranged financing for approximately
three-fourths of its 1994 shipping-related capital expenditures.
Acquisitions during the last three years have not required
significant cash outlays. In 1992, Chiquita issued 2.7 million
shares of capital stock in exchange for all outstanding common shares
of Friday Canning Corporation, a private-label vegetable processor.
Chiquita repurchased 1.7 million shares of capital stock during
1992 for approximately $35 million and 1.3 million shares in 1991 for
approximately $48 million. Also in 1992 Chiquita issued preference
stock in exchange for 3.2 million shares of its capital stock. The
preference shares, which provide dividends at a rate higher than the
dividend on capital stock, will be exchanged back into capital stock
no later than September 1995. (See Note 11 to the Consolidated
Financial Statements.)
The annual dividend rate on Chiquita capital stock increased from
$.60 per share in 1991 to $.68 per share in 1992. In connection with
efforts to strengthen its balance sheet, in mid-1993 the Company
reduced the annual dividend rate on its capital stock to $.20 per
share and began to pay preference stock dividends in the form of
shares of capital stock, as permitted by the terms of the preference
stock.
In early 1994, Chiquita received approximately $310 million from
public sales of 9 1/8% senior notes and preferred stock. In early
March 1994, the Company called for redemption its 9 1/8% Subordinated
Debentures due 1998 (effective interest rate of 13.2%) and its 11
7/8% Subordinated Debentures due 2003. The Company also plans to
redeem other subordinated debt and/or repay portions of its
outstanding subsidiary debt with the proceeds of these offerings.
10
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Income
Chiquita Brands International, Inc. and Subsidiary Companies
Year Ended December 31,
(In thousands, except per share amounts)1993 1992 1991
<S> <C> <C> <C>
Net sales $2,532,925 $2,723,250 $2,604,128
Operating expenses
Cost of sales 1,993,552 2,309,425
2,027,669
Selling, general and administrative
expenses 332,934 368,675
324,240
Depreciation 102,591 80,438
54,401
Restructuring and reorganization -- 61,300 --
2,429,077 2,819,838 2,406,310
Operating income (loss) 103,848 (96,588) 197,818
Interest income 20,377 43,301
47,319
Interest expense (169,789) (155,036)
(88,406)
Other income (expense), net 6,483 (8,385) 3,278
Income (loss) from continuing
operations before income taxes (39,081) (216,708) 160,009
Income taxes (12,000) (5,000)
(49,100)
Income (loss) from continuing operations (51,081) (221,708)
110,909
Discontinued operations -- (62,332) 17,586
Net income (loss) $(51,081) $(284,040) $128,495
Earnings (loss) per common share
Primary - Continuing operations $(.99)
$(4.28) $2.20
- Discontinued operations -
- - (1.20) .35
- Net income (loss) (.99)
(5.48) 2.55
Fully diluted -Continuing operations(.99) (4.28)
2.19
- Discontinued operations -
- - (1.20) .33
- Net income (loss) (.99)
(5.48) 2.52
Weighted average number of
common shares outstanding
Primary 51,427 51,804
50,382
Fully diluted 51,427 51,804
52,912
See Notes to Consolidated Financial Statements.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet
Chiquita Brands International, Inc. and Subsidiary Companies
December 31,
(In thousands, except share amounts) 1993 1992
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents $ 151,226 $ 387,969
Marketable securities -- 25,212
Trade receivables, less allowances of $11,051 and $9,698,
respectively 187,936 199,684
Other receivables, net 85,170 72,709
Inventories 307,073 350,578
Other current assets 39,054 34,571
Total current assets 770,459 1,070,723
Restricted cash 51,020 --
Net assets of discontinued operations 42,410 25,675
Property, plant and equipment, net 1,427,191 1,374,913
Investments and other assets 282,914 226,764
Intangibles, net 166,759 182,549
Total assets $2,740,753 $2,880,624
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and loans payable $ 112,796 $ 136,765
Long-term debt due within one year 79,411 92,521
Accounts payable 202,923 226,860
Accrued liabilities 108,536 132,239
Total current liabilities 503,666 588,385
Long-term debt of parent company 881,124 883,936
Long-term debt of subsidiaries 557,254 527,383
Accrued pension and other employee benefits 74,588 74,162
Other liabilities 122,123 131,871
Total liabilities 2,138,755 2,205,737
Shareholders' equity
Preferred and preference stock (648,310 shares outstanding)
52,270 52,270
Capital stock, $.33 par value (48,510,353 and
48,163,560 shares outstanding, respectively) 16,170
16,055
Capital surplus 494,240 490,369
Retained earnings 39,318 116,193
Total shareholders' equity 601,998 674,887
Total liabilities and shareholders' equity $ 2,740,753 $
2,880,624
See Notes to Consolidated Financial Statements.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
Chiquita Brands International, Inc. and Subsidiary Companies
Prefer-
red
and Total
Prefer- Share-
ence Capital Retained holders'
Stock Capital Stock Surplus Earnings Equity
(In thousands,
except share
amounts) Shares Par Value
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1990 $ -- 45,219,312 $15,073 $323,640 $348,996 $687,709
Capital stock
repurchased --(1,293,701) (431) (13,809) (34,012)
(48,252)
Stock options
exercised -- 758,846 253 14,530 -- 14,783
Shares sold
to public,
net of
offering costs -- 4,967,806 1,656 206,658 --
208,314
Other shares
issued -- 273,514 91 2,608 806 3,505
Net income -- -- -- -- 128,495 128,495
Dividends on
capital stock -- -- -- -- (26,629)
(26,629)
Balance at
December 31,
1991 -- 49,925,777 16,642 533,627 417,656 967,925
Capital stock
repurchased --(1,699,100) (566) (17,395) (16,542)
(34,503)
Stock options
exercised -- 297,573 99 4,549 -- 4,648
Preference
stock
issued in
exchange for
capital
stock 52,270 (3,241,546) (1,081) (32,909) (18,795) (515)
Shares issued
in an
acquisition -- 2,694,136 898 (751) 52,258
52,405
Other shares
issued -- 186,720 63 3,248 -- 3,311
Net loss -- -- -- -- (284,040) (284,040)
Dividends
Capital stock -- -- -- -- (33,566)
(33,566)
Preference
stock -- -- -- -- (778) (778)
Balance at
December 31,
1992 52,270 48,163,560 16,055 490,369 116,193 674,887
Capital
stock
repurchased -- (30,000) (10) (102) (325)
(437)
Stock
options
exercised -- 17,120 6 168 -- 174
Other
shares
issued -- 168,000 55 1,738 -- 1,793
Net loss -- -- -- -- (51,081) (51,081)
Dividends
Capital stock -- -- -- -- (21,191)
(21,191)
Preference
stock -- 191,673 64 2,067 (4,278) (2,147)
Balance at
December 31,
1993 $52,27048,510,353 $16,170 $494,240 $ 39,318 $601,998
See Notes to Consolidated Financial Statements.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flow
Chiquita Brands International, Inc. and Subsidiary Companies
Year Ended December 31,
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Cash provided (used) by:
Operations
Income (loss) from continuing operations $(51,081) $(221,708)$110,909
Depreciation and amortization 109,711 87,509 60,258
Restructuring and reorganization -- 45,600 --
Deferred income taxes (3,191) -- 9,173
Changes in current assets and liabilities
Receivables (7,571) 30,675 (41,840)
Inventories 40,535 24,910 (34,476)
Accounts payable and accrued liabilities (41,027) (39,502)(32,299)
Other current assets and liabilities (4,249) 33,904 (6,695)
Other 4,086 9,447 (43,314)
Cash flow from operations 47,213 (29,165) 21,716
Investing
Capital expenditures (196,554) (409,770) (340,149)
Deposits of restricted cash (51,020) -- --
Acquisitions and long-term investments(49,466) (35,217) (43,741)
Decrease (increase) in marketable securities 25,212 87,113
(90,942)
Proceeds from sale of ships and equipment 22,000 ---
- - Other 11,828 (8,126) 7,776
Cash flow from investing (238,000) (366,000) (467,056)
Financing
Debt transactions
Issuances of long-term debt 151,160 254,820 712,520
Repayments of long-term debt (132,839) (63,907) (63,953)
Increase (decrease) in notes and loans payable (25,621) (30,898)64,686
Stock transactions
Issuances of capital stock 1,854 6,101 218,753
Repurchases of capital stock (437) (34,503) (48,252)
Dividends (23,338) (34,344) (26,629)
Cash flow from financing (29,221) 97,269 857,125
Discontinued operations (16,735) (26,140) 4,474
Increase (decrease) in cash and equivalents (236,743) (324,036)416,259
Balance at beginning of year 387,969 712,005 295,746
Balance at end of year $151,226 $387,969 $712,005
See Notes to Consolidated Financial Statements.
</TABLE>
14
<PAGE>
Notes to Consolidated Financial Statements
Chiquita Brands International, Inc. and Subsidiary Companies
Note 1 -- Summary of Significant Accounting Policies
American Financial Corporation and its subsidiaries ("AFC") owned
approximately 46% of the voting stock of Chiquita Brands
International, Inc. ("Chiquita" or the "Company") as of December 31,
1993.
Consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. Intercompany balances
and transactions have been eliminated. Discontinued operations are
not consolidated (see Note 3).
Investments representing minority interests are accounted for by
the equity method when Chiquita has the ability to exercise
significant influence in the investees' operations; otherwise, they
are accounted for at cost. At December 31, 1993 and 1992,
investments in food-related companies of $54 million and $43 million,
respectively, were accounted for using the equity method. The excess
($15 million at December 31, 1993) of the carrying value over
Chiquita's share of the fair value of the investees' net assets at
the date of acquisition is being amortized over 40 years.
Cash and Equivalents
Cash and equivalents includes all unrestricted cash and highly
liquid investments with a maturity when purchased of three months or
less.
Inventories
Inventories are valued at the lower of cost or market. Cost for
growing crops and certain banana inventories is determined
principally on the "last-in, first-out" (LIFO) basis. Cost for other
inventory categories is determined principally on the "first-in,
first-out" (FIFO) or average cost basis.
Intangibles
Intangibles consist of goodwill and trademarks which are being
amortized over 40 years. Accumulated amortization was $30.5 million
and $25.2 million at December 31, 1993 and 1992, respectively.
Income Taxes
Deferred income taxes are recognized at current enacted tax rates
for temporary differences between the financial reporting and income
tax bases of assets and liabilities. Deferred taxes are not provided
on the undistributed earnings of subsidiaries operating outside the
U.S. that have been or are intended to be
permanently reinvested.
Translation of Foreign Currencies
Chiquita utilizes the U.S. dollar as its functional currency. Net
foreign exchange gains, which amounted to approximately $7.5 million,
$4.8 million and $2.8 million in 1993, 1992 and 1991, respectively,
are included in income.
The Company periodically enters into foreign exchange forward
contracts to hedge transactions denominated in foreign currencies.
Gains and losses on contracts used to hedge firm commitments are
deferred and included in the measurement of the transaction
underlying the commitment. Gains and losses on contracts used to
hedge other transactions are included in income on a current basis.
At December 31, 1993 the Company had foreign exchange forward
contracts aggregating approximately $74 million. The fair value of
these contracts, determined based on quoted market prices, was not
significant.
Earnings Per Share
Primary earnings per share is calculated on the basis of the
weighted average number of shares of common stock and equivalent
Series C preference stock outstanding during the year and the
dilutive effect, if any, of assumed conversion of other common stock
equivalents (stock options and warrants). Fully diluted earnings per
share includes the dilutive effect, if any, of assumed conversion of
convertible subordinated debentures.
Note 2 -- Restructuring and Reorganization
During the fourth quarter of 1992, the Company undertook a program
to adjust its fresh foods volume and cost infrastructure to
significantly reduce production, distribution and overhead costs.
This program, which included consolidation of operations, asset
disposals and workforce reductions, resulted in restructuring and
reorganization charges of $61.3 million.
15
<PAGE>
Note 3 -- Discontinued Operations
During the fourth quarter of 1992, after evaluation of
reorganization plans announced earlier that year and completion of
other preparatory actions, Chiquita adopted a plan of disposal for
all remaining Meat Division operations. Pursuant to the plan, the
Company immediately completed the sale of a major fresh pork
processing facility in December 1992. In February 1994, the
Division's specialty meat operations were sold for approximately $50
million in cash. The Company continues to be engaged in vigorous
marketing efforts with respect to the remaining Meat Division
operations and expects to complete the divestitures of these
operations by the end of 1994.
Meat Division operating results included in Chiquita's Consolidated
Statement of Income as "Discontinued operations" are as follows:
<TABLE>
<CAPTION>
(In thousands) 1992 1991
<S> <C> <C>
Net sales $1,767,564 $2,023,269
Income (loss) from operations,
net of income taxes of $5,800 in 1991 (27,232)
17,586
Estimated loss on disposal (35,100) --
Discontinued operations $ (62,332) $ 17,586
</TABLE>
Meat Division operating results were approximately breakeven for
1993 on net sales of approximately $1.5 billion. Results for 1991
included the receipt of $29.3 million in a settlement with a labor
union, reduced by $9 million in charges for the restructuring of
certain production and distribution facilities.
The estimated loss on disposal includes the effects of
postretirement medical benefit obligations. Chiquita has reevaluated
the provision for loss on discontinued operations recorded in 1992
and believes it is adequate to provide for any losses on disposition.
The net assets of discontinued operations consist principally of
property, plant and equipment and trademarks, and at December 31,
1993 include $26.1 million of short-term borrowings under an $80
million credit facility secured by Meat Division working capital.
These net assets also include liabilities under Meat Division defined
benefit pension plans. The fair value of plan assets, the total
benefit obligation and the net liability recorded for these plans at
December 31, 1993 were $113 million, $162 million and $49 million,
respectively.
Note 4 - Acquisitions
The Company paid $10.5 million, $9.8 million and $38.6 million in
1993, 1992 and 1991, respectively, for the purchase of majority and
minority interests in several food-related businesses. The results
of operations from these acquisitions are included in the
Consolidated Statement of Income from the dates of acquisition and
did not materially affect consolidated results of operations in the
years acquired.
In March 1992, the Company exchanged 2,694,136 shares of its
capital stock for all of the outstanding common shares of Friday
Canning Corporation ("Friday"), one of the largest U.S. private-label
vegetable processors. The net assets of Friday at the time of the
merger were $52 million and included inventories (primarily "Other
food products") of approximately $67 million and notes and loans
payable of approximately $19 million. In November 1991, the Company
exchanged 197,531 shares of its capital stock for all of the
outstanding common shares of a manufacturer and distributor of fresh
fruit and vegetable juices. Both of these transactions have been
accounted for as poolings of interests. Prior years' financial
statements have not been restated because the effects of these
transactions were not material.
16
<PAGE>
<TABLE>
<CAPTION>
Note 5 -- Inventories
Inventories consist of the following:
December 31,
(In thousands) 1993 1992
<S> <C> <C>
Bananas and other fresh produce $42,918 $40,348
Other food products 56,043 84,982
Growing crops 117,839 112,124
Materials and supplies 75,206 95,465
Other 15,067 17,659
$307,073 $350,578
</TABLE>
The carrying value of inventories valued by the LIFO method was
$129.1 million at December 31, 1993 and $119.6 million at December
31, 1992. If inventories were stated at current costs, total
inventory values would not be materially different.
The Company periodically enters into futures contracts to hedge the
cost of anticipated purchases of oil for its shipping operations.
These futures contracts are accounted for as hedges and, accordingly,
gains and losses are deferred until the corresponding oil purchases
are used in operations.
<TABLE>
<CAPTION>
Note 6 -- Property, Plant and Equipment, Net
Property, plant and equipment consist of the following:
December 31,
(In thousands) 1993 1992
<S> <C> <C>
Land $103,987 $101,131
Buildings and improvements 198,434 186,038
Machinery and equipment 411,693 403,480
Ships and containers 790,817 692,375
Cultivations 305,546 292,843
Other 79,333 85,106
1,889,810 1,760,973
Less accumulated depreciation (462,619) (386,060)
Property, plant and equipment, net $1,427,191 $1,374,913
</TABLE>
Property, plant and equipment are stated at cost and, except for
land and certain improvements, are depreciated on a straight-line
basis over their estimated useful lives. The Company capitalized
interest costs of $8 million in 1993, $21 million in 1992 and $23
million in 1991 as part of the cost of major production and shipping
asset construction projects.
At December 31, 1993, the Company had commitments for shipping-
related capital expenditures of approximately $65 million and has
secured financing for approximately three-fourths of these
commitments. Capital expenditures presented in the Consolidated
Statement of Cash Flow for 1992 and 1991 exclude $62.5 million and
$55.5 million, respectively, of purchases which were directly
financed.
<TABLE>
<CAPTION>
Note 7 -- Leases
Total rental expense consists of the following:
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Gross rentals - ships $ 142,969 $222,916
$177,829
- other 32,528 34,513 44,382
175,497 257,429 222,211
Less sublease rentals (7,189) (20,775) (5,864)
$168,308 $236,654 $216,347
</TABLE>
Future minimum rental payments required under operating leases
having initial or remaining non-cancelable lease terms in excess of
one year at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
(In thousands) Gross Rentals
Ships Other Total
<S> <C> <C> <C>
1994 $ 81,494 $ 20,464 $101,958
1995 65,669 15,083 80,752
1996 11,688 14,931 26,619
1997 6,722 12,600 19,322
1998 8,517 7,966 16,483
Later years 63,139 7,644 70,783
</TABLE>
Portions of the minimum rental payments for ships constitute
reimbursement for ship operating costs paid for by the lessor.
Future minimum rental payments to be received from non-cancelable
subleases at December 31, 1993, principally for office space, are
$38.7 million.
17
<PAGE>
<TABLE>
<CAPTION>
Note 8 -- Debt
Long-term debt consists of the following:
(In thousands) December 31,
Parent Company 1993
1992
<S> <C> <C>
9 5/8% senior notes, due 2004, less unamortized discount
of $2,805 and $2,963 (imputed interest rate of 9.8%) $247,195$
247,037
7% subordinated debentures, due 2001, convertible
into capital stock at $43 per share 138,000 138,000
9 1/8% subordinated debentures, due 1998, less
unamortized discount of $1,776 and $2,335
(imputed interest rate of 13.2%) 15,900 15,341
10 1/4% subordinated debentures, due 2005, less
unamortized discount of $7,538 and $7,831
(imputed interest rate of 13.7%) 34,554 34,261
10 1/2% subordinated debentures, due 2004, less
unamortized discount of $10,391 and $10,887
(imputed interest rate of 12.1%) 100,429 99,933
11 1/2% subordinated notes, due 2001 220,000 220,000
11 7/8% subordinated debentures, due 2003 125,000 125,000
Other notes and loans 62 4,780
Less current maturities (16) (416)
Long-term debt of parent company $881,124 $883,936
Subsidiary Companies
Loans payable secured by ships and containers, due
in installments from 1994 to 2005, bearing interest
at effective rates averaging 8.1% $376,492 $367,784
Carribbean Basin Projects Financing Authority (CBI
Industrial Revenue Bonds 1993 Series A) loan, due
1998, bearing interest at a variable rate (2.7% at
December 31, 1993) 38,000 --
Overseas Private Investment Corporation loans,
due in installments from 1994 through 2002,
bearing interest at rates averaging 9% 25,275 32,411
Note payable, due in installments from 1994
through 1998, bearing interest at 1% below
prime 19,200 19,700
Loans and notes payable in foreign currencies maturing
1994 to 2006, bearing interest at rates averaging 23% 81,902
97,556
Other loans and notes payable maturing 1994 to 2012,
bearing interest at rates averaging 8% 95,780 102,037
Less current maturities (79,395) (92,105)
Long-term debt of subsidiaries $557,254 $527,383
</TABLE>
Certain of the subordinated debentures have sinking fund
requirements and are callable at the Company's option at prices
ranging from par to premiums of 1% to 5.7% over par at various dates
through 1998.
At December 31, 1993, $81.8 million of the carrying amount of loans
secured by ships bear interest at fixed rates averaging approximately
7% and the remaining ship and container loans carry variable interest
rates ranging from LIBOR plus .75% to LIBOR plus 1.5%. All of the
ship and container loans outstanding at December 31, 1992 had similar
variable interest rate terms. Of the variable interest rate
obligations, $67 million have been converted to U.S. dollar loans
pursuant to foreign currency swap agreements. Chiquita has interest
rate swap agreements with aggregate contract amounts of $122 million
at December 31, 1993 ($142 million at December 31, 1992) that fix the
rate of interest on certain of the variable rate ship and container
loans at an average rate of 9.1%. The overall effective interest
rate on ship and container loans includes the amortization of
deferred hedging gains and losses from interest rate futures
contracts. No such contracts were outstanding at December 31, 1993.
The estimated fair value of the Company's total outstanding debt
and associated interest rate swap agreements at December 31, 1993
exceeded carrying value by approximately $70 million and, at
December 31, 1992, approximated carrying value. Fair value for
publicly traded debt is based on quoted market prices. Fair value
for other debt is estimated based on the current rates offered to the
Company for debt of similar maturities. The fair values of interest
rate swap agreements are estimated based on the cost to terminate the
agreements.
In February 1994, the Company issued $175 million principal amount
of 9 1/8% senior notes due 2004. The unsecured notes rank equally
with existing and future senior unsecured indebtedness of the
Company. The proceeds from this issuance, together with the proceeds
from Chiquita's sale of preferred stock in February 1994 (see Note
11), are expected to be used to redeem the Company's 11 7/8%
Subordinated Debentures, other subordinated debt and/or to repay
portions of the outstanding debt of the Company's subsidiaries.
18
<PAGE>
Maturities and sinking fund requirements on long-term debt during
the next five years, after application of reacquired debentures to
meet sinking fund requirements, are:
<TABLE>
<CAPTION>
Parent Subsidiary
(In thousands) Company Companies Total
<S> <C> <C> <C>
1994 $ 16 $79,395 $79,411
1995 4,209 103,668 107,877
1996 4,515 83,940 88,455
1997 4,504 86,701 91,205
1998 4,495 116,588 121,083
</TABLE>
Cash payments relating to interest expense were $159.4 million,
$139.3 million and $71.7 million in 1993, 1992 and 1991,
respectively.
Certain of the Company's debt agreements contain restrictions on
the payment of cash dividends. At December 31, 1993, approximately
$25 million was available for dividend payments under the most
restrictive of these agreements. In early 1994, the Company called
the debt outstanding under this agreement for redemption. Under the
next most restrictive agreement, approximately $50 million was
available for dividends at December 31, 1993, and an additional $139
million is available after giving effect to the February 1994
preferred stock proceeds.
The Company maintains lines of credit with various domestic and
foreign banks for borrowing funds on a short-term basis and has
short-term working capital loans with domestic and foreign banks.
Note 9 -- Pension and Severance Benefits
The Company and its subsidiaries have several defined benefit and
contribution pension plans covering approximately 7,000 domestic and
foreign employees. Approximately 39,000 employees are covered by
Central and South American severance plans. Pension plans covering
eligible salaried employees and Central and South American severance
plans for all employees call for benefits to be based upon years of
service and compensation rates.
The following table presents a summary of pension and severance
expense:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Defined benefit and severance plans:
Service cost -- benefits earned during the period $5,885 $5,126$4,932
Interest cost on projected benefit obligation 8,423 7,784 7,692
Actual return on plan assets (2,215) (1,868) (2,226)
Net amortization and deferral (521) (566) 1,649
11,572 10,476 12,047
Defined contribution plans 3,669 4,304 3,064
Total pension and severance expense $15,241 $14,780 $15,111
</TABLE>
Pensions are funded in accordance with the requirements of the
Employee Retirement Income Security Act or equivalent foreign
regulations. Essentially all of the balance sheet liability
presented in the table below relates to Central and South American
pension and severance benefits which are generally not required to be
funded until benefits are paid.
<TABLE>
<CAPTION>
Plans for which Plans for which
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets at
at December 31, December 31,
(In thousands) 1993 1992 1993 1992
<S> <C> <C> <C> <C>
Plan assets at fair market value $ 29,195 $24,049 $9,400 $
12,254
Present value of benefit obligations:
Vested 26,504 21,597 54,523 48,945
Nonvested 392 49 3,353 3,249
Accumulated benefit obligation26,896 21,646 57,876 52,194
Additional amounts related to projected
pay increases 3,980 3,411 17,227 14,714
Projected benefit obligation 30,876 25,057 75,103 66,908
Projected benefit obligation in excess
of plan assets (1,681) (1,008) (65,703) (54,654)
Unrecognized net (gain) loss (7) (1,921) 7,363 (4,342)
Unrecognized prior service cost (490) (426) 3,174 3,803
Unrecognized obligation at
transition, net of amortization 982 1,069 6,771 6,568
Net balance sheet liability $(1,196) $(2,286) $(48,395) $(48,625)
</TABLE>
19
<PAGE>
The projected benefit obligations were determined using assumed
discount rates of approximately 9% for unfunded Central and South
American pension and severance benefits and approximately 7% for all
other plan benefits. The assumed long-term rate of compensation
increase was between 5% and 6% and the assumed long-term rate of
return on plan assets was approximately 9% (10% in 1992). Plan
assets consist primarily of corporate debt, U.S. government and
agency obligations and collective trust funds.
Note 10 -- Stock Options
Under a non-qualified stock option plan, the Company may grant
options to purchase up to an aggregate of 10,000,000 shares of
capital stock. Under this plan and other formal stock option and
incentive plans, options have been granted to directors, officers and
other key employees to purchase shares of the Company's capital stock
at the fair market value at the date of grant. The options may be
exercised over a period not in excess of 20 years.
<TABLE>
<CAPTION>
1993 1992
Option Option
Shares Price Shares Price
<S> <C> <C> <C> <C>
Under option at beginning
of year 5,969,996 $5.75 - 49.635,007,310 $5.75 - 49.63
Options granted 3,282,76510.19 - 14.25 1,448,52515.75 - 39.56
Options exercised (17,120)8.67 - 16.13 (297,573)5.75 - 34.44
Options canceled or expired(3,783,873)8.67 - 49.63 (188,266)13.00 - 47.75
Under option at end of year5,451,768 $ 5.75 - 47.755,969,996 $5.75 - 49.63
Options exercisable at end of year1,517,236 1,799,975
Shares available for future grant2,852,598 2,348,490
</TABLE>
In December 1993, in connection with a voluntary exchange offer,
the Company canceled options for 2,298,186 shares at prices ranging
from $15.81 to $49.63 issued in 1988 through 1992 and, in exchange,
reissued options for 1,451,430 shares at a price equal to the
exchange date market value. Existing options were canceled at rates
ranging from 1.5 to 2.0 outstanding option shares for each new option
share granted pursuant to the offer. The new options vest over
periods of up to nine years.
Stock options for 758,846 shares were exercised during 1991 at
prices ranging from $4.00 to $30.00 per share.
Note 11 -- Shareholders' Equity
At December 31, 1993, there were 100,000,000 authorized shares of
capital stock. Of the shares authorized but unissued at December 31,
1993, approximately 22,000,000 shares were reserved for conversion of
subordinated debentures and preference stock, exercise of stock
options and warrants, dividend reinvestments and issuances under
employee benefit plans.
In February 1994, the Company sold 2,875,000 shares of $2.875 Non-
Voting Cumulative Preferred Stock, Series A, par value $1.00 per
share (the "Series A Shares") for aggregate net proceeds of $139
million. The Series A Shares have a liquidation preference of $50.00
per share; pay an annual cash dividend of $2.875 per share; and are
convertible into 2.6316 shares of capital stock at each holder's
option at any time after April 16, 1994. The Company may convert the
Series A Shares at its option, under certain circumstances, after
February 14, 1997.
In October 1992, Chiquita issued 648,310 shares of Mandatorily
Exchangeable Cumulative Preference Stock, Series C (the "Series C
Shares"), represented by 3,241,546 $1.32 depositary shares (the
"Depositary Shares"), in exchange for 3,241,546 shares of the
Company's capital stock. The Depositary Shares have one vote per
share, voting with the capital stock; have a liquidation preference
of $18.00 per share; pay annual dividends in cash or capital stock at
the Company's option of $1.32 per share and will convert back into
capital stock on September 7, 1995, or earlier at the Company's
option or upon the occurrence of certain events at a rate of one-for-
one (except that the rate will be proportionately less than one-for-
one if the market value of the capital stock exceeds $24.00 per share
at the time of the conversion). In the third quarter of 1993, the
Company began paying Series C dividends in capital stock.
20
<PAGE>
Holders of Series A and Depositary Shares have the right to elect
additional directors in addition to the directors ordinarily elected
by holders of capital stock and Depositary Shares in certain
circumstances where the Company fails to pay quarterly dividends on
the preferred and preference stock.
At December 31, 1993, 46,028 shares of $3.00 Cumulative Preferred
Stock, 2,568,096 shares of $1.20 Series A Cumulative Preference
Stock, 75,813 shares of $3.20 Series B Cumulative Preference Stock
and
1,000,000 Series C Shares were authorized. The Board of Directors
also has the authority to fix the terms of 356,091 additional shares
of authorized but unissued Cumulative Preference Stock and 7,125,000
shares of Non-Voting Cumulative Preferred Stock.
Note 12 - Income Taxes
Effective January 1, 1992, the Company adopted a new standard for
income tax accounting, the effect of which was not material. Income
taxes consist of the following:
<TABLE>
<CAPTION>
United States
(In thousands) Federal State Foreign Total
<S> <C> <C> <C> <C>
1993
Current tax expense $ -- $1,944 $13,247 $15,191
Deferred tax benefit -- -- (3,191) (3,191)
$ -- $1,944 $10,056 $12,000
1992
Current tax expense $ -- $ 468 $4,532 $5,000
Deferred tax expense -- -- -- --
$ -- $ 468 $4,532 $5,000
1991
Current tax expense $2,609 $3,206 $34,112 $39,927
Deferred tax expense (benefit) (40) -- 9,213 9,173
$2,569 $3,206 $43,325 $49,100
</TABLE>
Income (loss) from continuing operations before income taxes
consists of the following:
<TABLE>
<CAPTION>
(In thousands)
Subject to tax in: 1993 1992 1991
<S> <C> <C> <C>
United States $(71,173) $(95,569) $ 2,555
Foreign jurisdictions 32,092 (121,139) 157,454
$(39,081) $(216,708) $160,009
</TABLE>
Income tax expense differs from income taxes computed at the U.S.
federal statutory rate for the following reasons:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Income taxes (benefit) computed at
U.S. federal statutory rate $(13,678) $(73,681) $54,403
State income taxes, net of federal benefit 1,264 309
2,116
U.S. losses for which no tax benefit has
been recognized 19,694 34,310 --
Foreign losses for which no tax benefit
has been recognized 13,166 44,347 6,642
Taxes on foreign operations at other than
U.S. rates (12,005) (1,482) (14,080)
Other 3,559 1,197 19
Income tax expense $12,000 $5,000 $49,100
</TABLE>
The components of deferred income taxes included on the balance
sheet at December 31, 1993 and 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Deferred tax benefits
Employee benefits $45,114 $41,123
Accrued expenses 27,043 37,298
Other 22,464 24,891
94,621 103,312
Valuation allowance (9,631) (18,854)
84,990 84,458
Deferred tax liabilities
Depreciation and amortization (28,936) (17,788)
Growing crops (22,454) (21,812)
Long-term debt (19,281) (17,461)
Other (16,318) (32,349)
(86,989) (89,410)
Net deferred tax liability $ (1,999) $(4,952)
</TABLE>
Net deferred taxes do not reflect the benefit that would be
available to the Company from the use of its U.S. operating loss
carryforwards of $107 million, alternative minimum tax credits of $5
million and foreign tax credit carryforwards of $73 million. The
loss carryforwards expire in 2008 and the foreign tax credit
carryforwards expire between now and 1998. The 1992 net operating
loss was carried back, resulting in a refund due for prior years'
taxes and $40 million of the $73 million of foreign tax credit
carryforwards.
21
<PAGE>
Undistributed earnings of foreign subsidiaries which have been, or
are intended to be, permanently reinvested in operating assets, if
remitted, are expected to result in little or no tax by operation of
relevant statutes and the carryforward attributes described above.
Deferred tax expense for 1991 resulted principally from accrued
expenses and deferred charges.
Cash payments for income taxes, net of refunds, were $17.0 million
in 1993, $3.6 million in 1992 and $51.3 million in 1991.
Note 13 - Litigation
A number of legal actions are pending against the Company. Based on
evaluation of facts which have been ascertained, and on opinions of
counsel, management does not believe such litigation will,
individually or in the aggregate, have a material adverse effect on
the financial statements of the Company.
Note 14 -- Geographic Area Information
The Company is one of the world's leading marketers, producers and
processors of quality fresh and processed food products. The
Company's products are sold throughout the world and its principal
production and processing operations are conducted in North, Central
and South America. With the decision to sell its remaining Meat
Division operations, the Company's continuing operations constitute a
single business segment.
The Company's earnings are heavily dependent upon products grown
and purchased in Central and South America. These activities, a
significant factor in the economies of the countries where Chiquita
produces bananas and other agricultural and consumer products, are
subject to the risks that are inherent in operating in such foreign
countries, including government regulation, currency restrictions and
other restraints, risk of expropriation and burdensome taxes.
Certain of these operations are substantially dependent upon leases
and other agreements with these governments.
The Company is also subject to a variety of governmental
regulations in certain countries where it markets bananas, including
import quotas and tariffs, currency exchange controls and taxes.
Financial information with respect to the Company's operations by
geographic area is shown below:
<TABLE>
<CAPTION>
Year Ended December 31,
(In thousands) 1993 1992 1991
<S> <C> <C> <C>
Net sales to unaffiliated customers
North America $1,238,678 $1,192,613 $1,072,343
Central and South America 184,060 187,753 182,673
Europe and other international 1,110,187 1,342,884
1,349,112
Consolidated net sales $2,532,925 $2,723,250 $2,604,128
Operating income (loss) *
North America $ 20,469 $(47,584) $20,340
Central and South America 17,607 16,906 18,495
Europe and other international 78,691 (52,541)
172,070
Unallocated expenses (12,919) (13,369) (13,087)
Consolidated operating income (loss) $ 103,848 $(96,588)$
197,818
Identifiable assets
North America $509,760 $538,165 $421,615
Central and South America 912,321 918,230 806,400
Europe and other international 339,374 306,131
316,082
Shipping operations 656,816 586,960 383,982
Corporate assets 322,482 531,138 1,009,265
Consolidated assets $2,740,753 $2,880,624 $2,937,344
* Amounts for 1992 include $61.3 million of restructuring and reorganization
charges reflected in the geographic areas as follows: North America, $6.8
million; Europe and other international, $54.5 million.
</TABLE>
Net sales exclude intercompany sales of bananas from Central and
South America to different geographic areas. These sales, which are
eliminated in consolidation and are measured at cost under the method
used for internal management financial reporting purposes, were $493
million in 1993, $494 million in 1992 and $413 million in 1991. There
are no banana sales to unaffiliated customers in Central and South
America. Other intergeographic sales are not significant.
Cash and equivalents, marketable securities, trademarks and the net
assets of discontinued operations are included in corporate assets.
Minority equity investments are included in the geographic area where
their operations are located.
22
<PAGE>
Note 15 -- Quarterly Financial Data (Unaudited)
The following quarterly financial data are unaudited, but in the
opinion of management include all necessary adjustments for a fair
presentation of the interim results, which are subject to significant
seasonal variations.
<TABLE>
<CAPTION>
1993
(In thousands, except
per share amounts) March 31 June 30 Sept.30 Dec. 31
<S> <C> <C> <C> <C>
Net sales $731,109 $682,352 $552,329 $567,135
Cost of sales (547,061) (535,555) (438,102) (472,834)
Operating income (loss) 70,342 41,985 11,139 (19,618)
Net income (loss) 27,530 7,673 (25,868) (60,416)
Fully diluted earnings (loss) per share .53 .15 (.50)
(1.17)
Dividends per common share .17 .17 .05 .05
Capital stock market price
High 17.50 15.63 14.00 11.88
Low 13.25 10.50 10.25 10.13
</TABLE>
1992
<TABLE>
<CAPTION>
(In thousands, except
per share amounts) March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C>
Net sales $708,053 $781,785
$612,451 $620,961
Cost of sales (569,175) (642,189 ) (525,604 ) (572,457)
Operating income (loss) 33,663 23,381
(28,334) (125,298)
Income (loss) from continuing operations 9,316 (6,730)(71,854)(152,440)
Discontinued operations (3,811) (10,006 ) (7,538 ) (40,977)
Net income (loss) 5,505 (16,736 ) (79,392)(193,417)
Fully diluted earnings (loss) per share
- Continuing operations .17 (.13 ) (1.40)(2.97)
- Discontinued operations (.07) (.19 ) (.15 ) (.80)
- Net income (loss) .10 (.32 ) (1.55)(3.77)
Dividends per common share .15 .17 .17
.17
Capital stock market price
High 40.13 29.13 18.50
18.00
Low 29.13 16.63 15.75
15.75
</TABLE>
The operating loss for the quarter ended December 31, 1992 includes
restructuring and reorganization charges of $61.3 million (see Note
2).
A separate computation of earnings per share is made for each
quarter presented. The dilutive effect on earnings per share
resulting from the assumed conversion of convertible debt and
exercise of stock options and warrants is included in each quarter in
which dilution occurs. The earnings per share computation for the
year is a separate annual calculation. Accordingly, the sum of the
quarterly earnings per share amounts will not necessarily equal the
earnings per share for the year.
23
<PAGE>
Investor Information
Chiquita Brands International, Inc.
Stock Exchange Listings
New York, Boston & Pacific
Stock Symbol
CQB
Shareholders of Record
At March 1, 1994, there were
7,684
common shareholders of record
Transfer Agent and Registrar -
Capital Stock, $2.875 Non-
Voting
Cumulative Preferred Stock,
Series A and Mandatorily
Exchangeable Cumulative
Preference
Stock, Series C ($1.32
Depositary
Shares)
Chiquita Brands International, Inc.
c/o Securities Transfer Company
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2414
(800) 368-3417
Dividend Reinvestment
Shareholders who hold at least 100
common
shares may increase their investment
in Chiquita shares through the
Dividend Reinvestment Plan without
payment of any brokerage commission
or service charge.
Full details concerning the Plan may
be obtained from Corporate
Affairs
or the Transfer Agent.
Annual Meeting
May 11, 1994
10 a.m. Eastern Daylight Time
Omni Netherland Plaza
35 West Fifth Street
Cincinnati, Ohio 45202
Investor Inquiries
For other questions concerning
your
investment in Chiquita, contact
Vice
President, Corporate Affairs at
(513) 784-6366<PAGE>
Trustees and Transfer Agents -
Debentures/Notes
7% Convertible Subordinated
Debentures due
March 28, 2001
Trustee-
Chemical Bank
450 West 33rd Street
New York, New York 10001
Transfer, Paying and Conversion
Agents
Chemical Bank - London, England
Banque Paribas Luxembourg-
Luxembourg
Banque Bruxelles Lambert S.A.-
Brussels, Belgium
Bank Leu, Ltd.-Zurich,
Switzerland
9 1/8% Subordinated Debentures due
February 1, 1998
Trustee and Transfer Agent-
The Bank of New York
101 Barclay Street
New York, New York 10286
9 1/8% Senior Notes due March 1, 2004
*
9 5/8% Senior Notes due January 15,
2004 *
Trustee-
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
10 1/4% Subordinated Debentures due
August 1, 2005*
10 1/2% Subordinated Debentures due
August 1, 2004*
11 1/2% Subordinated Notes due June
1, 2001*
11 7/8% Subordinated Debentures due
May 1, 2003*
Trustee-
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
* Chiquita Brands
International, Inc.,
c/o Securities Transfer
Company is transfer
agent for these
EXHIBIT 21
CHIQUITA BRANDS INTERNATIONAL, INC.
SUBSIDIARIES
As of March 1, 1994, the major subsidiaries of the Company, the
jurisdiction in which organized and the percent of voting securities
owned by the immediate parent corporation were as follows:
Percent of
Voting
Securities
Organized Owned by
Under Laws of Immediate
Parent
Chiquita Brands, Inc. Delaware 100%
American Produce Company Delaware 100%
Banana Supply Co., Inc. Florida 100%
California Day-Fresh Foods, Inc. California 100%
Caribbean Enterprises, Inc. Delaware 100%
Great White Fleet, Ltd. Bermuda 100%
BVS Ltd. Bermuda 100%
CDV, Ltd. Bermuda 100%
CDY, Ltd. Bermuda 100%
CKQ, Ltd. Cayman Islands 100%
CRH Shipping, Ltd. Bermuda 100%
Danfund Ltd. Bermuda 100%
Danop, Ltd. Bermuda 100%
DSF, Ltd. Bermuda 100%
Elke Shipping Limited Bermuda 100%
GPH, Ltd. Bermuda 100%
NCV, Ltd. Bermuda 100%
Norvel, Ltd. Bermuda 100%
Surrey Shipping Company, Ltd. Bermuda 100%
Telegraph Shipping Company, Ltd. Bermuda 100%
Chiquita Brands Company, North America Delaware 100%
CB Containers, Inc. Delaware 100%
OV Containers, Inc. Delaware 100%
Chiquita Citrus Packers, Inc. Delaware 80%
Chiquita Europe, B.V. Netherlands 100%
Chiquita Banana Company, B.V. Netherlands 100%
Chiquita Packaged Foods, B.V. Netherlands 100%
Chiquita Processed Foods, B.V. Netherlands 100%
Chiquita Tropical Fruit Company, B.V.
Netherlands 100%
Chiquita Frupac, Inc. Delaware 100%
EXHIBIT 21 (Cont.)
Percent of
Voting
Securities
Organized Owned by
Under Laws of Immediate
Parent
Chiquita Holding Company, Inc. Delaware 100%
Chiquita Italia, S.p.A. Italy 100%
Chiquita International Trading Company Delaware 100%
Chiquita International Limited Bermuda 100%
Chiquita Brands (South Pacific) Pty Ltd.
Australia 100%
Exportadora Frupac Limitada Chile 100%
Chiquita Tropical Products Company Delaware 100%
Chiquita Gulf Citrus, Inc. Delaware 100%
Chiquita Ventures, Inc. Delaware 100%
Chiriqui Land Company Delaware 100%
Compania Agricola del Guayas Delaware 100%
Compania Agricola de Rio Tinto Delaware 100%
Compania Frutera de Sevilla Delaware 100%
Compania Procesadora de Frutas Delaware 100%
Corpofinanzas, S.A. Costa Rica 100%
Friday Canning Corporation Wisconsin 100%
Frutas Dominicanas, CpA Dominican Republic 100%
Maritrop Trading Corporation Delaware 100%
Polymer United, Inc. Delaware 100%
Progressive Produce Corporation Ohio 100%
T&P Custom Marketing, Inc. Delaware 100%
Tela Railroad Company Delaware 100%
United Brands Japan, Ltd. Japan 95%
Compania Palma Tica Delaware 100%
Compania Bananera Atlantica Limitada Costa Rica 100%
Compania Mundimar, S.A. Costa Rica 100%
Compania Mundimar Delaware 100%
Compania Numar, S.A. Costa Rica 100%
Compania Numar de Honduras Delaware 100%
United Marketing, S.A. Delaware 100%
Polymer United G.C., Inc. Delaware 100%
John Morrell & Co. Delaware 100%
United Brands Food Ventures, Ltd. Delaware 100%
Solar Aquafarms, Inc. California 75%
The names of approximately 500 wholly-owned subsidiaries have been
omitted. In the aggregate these subsidiaries, after excluding
approximately 170 foreign subsidiaries whose immediate parents are
listed above and which are involved in fresh foods operations, do not
constitute a significant subsidiary. The consolidated financial
statements include the accounts of the Company and all majority-owned
subsidiaries.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Chiquita Brands International, Inc. and
subsidiary companies of our report dated February 28, 1994,
included in the 1993 Annual Report of Chiquita Brands
International, Inc. and subsidiary companies.
Our audits also included the financial statement schedules of
Chiquita Brands International, Inc. and subsidiary companies listed
in Item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We also consent to the incorporation by reference in the
following Registration Statements and related prospectuses of
Chiquita Brands International, Inc. and subsidiary companies of our
report dated February 28, 1994, with respect to the consolidated
financial statements and schedules of Chiquita Brands
International, Inc. and subsidiary companies incorporated by
reference in the Annual Report (Form 10-K) for year ended December
31, 1993.
Registration
Form No. Description
S-3 33-43333 Dividend Reinvestment Plan
33-58424
S-3 33-41057 Common Stock issuable upon
conversion
of Convertible Subordinated
Debentures
S-3 33-51995 Debt Securities, Preferred Stock and
Common Stock
S-3 33-51229 Secondary Sale of Common Stock by
Certain
Shareholders
S-8 33-2241 Chiquita Savings and Investment Plan
33-16801
33-42733
33-56572
S-8 33-14254 1986 Stock Option and Incentive Plan
33-38284
33-41069
S-8 33-25950 Individual Stock Option Plan
S-8 33-29147 John Morrell & Co. Salaried
33-56570 Employees Incentive Savings Plan
S-8 33-38147 Associate Stock Purchase Plan
Cincinnati, Ohio ERNST & YOUNG
March 30, 1994
POWER OF ATTORNEY
We, the undersigned officers and directors of Chiquita Brands
International, Inc. (the Company) hereby severally constitute and
appoint Fred J. Runk and William A. Tsacalis, and each of them
singly, our true and lawful attorneys and agents with full power
to them and each of them to do any and all acts and things in
connection with the preparation and filing of the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 (the
Report) pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in response
thereof, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the
name of the Company and the names of the undersigned directors and
officers in the capacities indicated below to the Report, and any
and all amendments and supplements thereto and any and all other
instruments and documents which said attorneys and agents or any
of them may deem necessary or advisable in connection therewith.
Signature Title Date
Director, Chairman of the March , 1994
(Carl H. Lindner) Board of Directors, Chief
Executive Officer and
Chairman of the Executive
Committee (Principal
Executive Officer)
Director, President and March , 1994
(Keith E. Lindner) Chief Operating Officer
Director March , 1994
(S. Craig Lindner)
/s/ Hugh F. Culverhouse Director March 28, 1994
(Hugh F. Culverhouse)
Director March , 1994
(Fred J. Runk)
/s/ Jean H. Sisco Director March 28, 1994
(Jean H. Sisco)
Director March , 1994
(Ronald F. Walker)
