FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended
Commission File
June 30, 1994 Number
1-1550
CHIQUITA BRANDS INTERNATIONAL, INC.
Incorporated under the IRS
Employer I.D.
Laws of New Jersey No. 04-
1923360
250 East Fifth Street, Cincinnati, Ohio 45202
(513) 784-8011
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
As of August 1, 1994, there were 48,781,075 shares of Common Stock
outstanding.
Page 1 of 14 Pages
CHIQUITA BRANDS INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
PART I - Financial Information
Consolidated Statement of Income for the quarters and
six months ended June 30, 1994 and 1993 . . . . . . . . 3
Consolidated Balance Sheet as of
June 30, 1994, December 31, 1993 and
June 30, 1993 . . . . . . . . . . . . . . . . . . . . . 4-5
Consolidated Statement of Cash Flow for the six months
ended June 30, 1994 and 1993. . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . 7
Management's Analysis of Operations and
Financial Condition . . . . . . . . . . . . . . . . . . 8-9
PART II - Other Information
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . 10
Item 4 - Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . 10
Item 5 - Other Information . . . . . . . . . . . . . . . . 11
Item 6 - Exhibits and Reports on Form 8-K. . . . . . . . . 11
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Part I - Financial Information
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
Net sales $652,910 $682,352 $1,322,078 $1,413,461
Operating expenses
Cost of sales 469,519 535,555 954,614 1,082,616
Selling, general and administrative 86,409 78,457 162,888
168,769
Depreciation 26,849 26,355 53,260 49,749
582,777 640,367 1,170,762 1,301,134
Operating income 70,133 41,985 151,316 112,327
Interest income 5,566 5,891 10,727 12,291
Interest expense (40,940) (42,017) (84,398) (84,396)
Other income, net 1,686 3,914 2,334 4,381
Income from continuing
operations before income taxes 36,445 9,773 79,979
44,603
Income taxes (5,500) (2,100) (13,500) (9,400)
Income from continuing operations 30,945 7,673 66,479
35,203
Discontinued operations -- -- -- --
Income before extraordinary item 30,945 7,673 66,479
35,203
Extraordinary loss from prepayment
of debt -- -- (22,840) --
Net income $30,945 $ 7,673 $ 43,639 $35,203
Weighted average number of common
shares outstanding (see Exhibit 11) 53,011 51,551 53,094
51,729
Earnings (loss) per common share:
Primary - Continuing operations $ .54 $ .15 $ 1.19 $
.68
- Extraordinary loss -- -- (.43) --
- Net income $ .54 $ .15 $ .76 $ .68
Fully diluted - Continuing operations $ .51 $
.15 $ 1.13 $ .68
- Extraordinary loss -- -- (.39) --
- Net income $ .51 $ .15 $ .74 $ .68
Cash dividends declared
per common share $ .05 $ .17 $ .10 $ .34
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
ASSETS
June 30, December 31,June 30,
1994 1993 1993
Current assets
Cash and equivalents $269,159 $151,226 $244,855
Trade receivables, less allowances
of $11,076, $11,051 and
$9,921, respectively 228,913
187,936 233,742
Other receivables, net 93,703 85,170 73,534
Inventories 287,670 307,073 319,318
Other current assets 29,135 39,054 37,174
Total current assets 908,580
770,459 908,623
Restricted cash 52,520 51,020 44,520
Net assets of discontinued operations 38,410 42,410
42,410
Property, plant and equipment, net 1,439,717 1,427,191
1,451,603
Investments and other assets 297,722 282,914 238,367
Intangibles, net 164,516 166,759 184,700
$ 2,901,465 $2,740,753$
2,870,223
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET (continued)
(In thousands, except share amounts)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31,June 30,
1994 1993 1993
Current liabilities
Notes and loans payable $122,910 $112,796 $107,571
Long-term debt due within one year 83,863 79,411
84,657
Accounts payable 214,047 202,923 223,654
Accrued liabilities 106,083 108,536 139,042
Total current liabilities 526,903
503,666 554,924
Long-term debt of parent company 840,125 881,124 880,359
Long-term debt of subsidiaries 550,031 557,254 556,038
Accrued pension and other employee benefits 76,122 74,588
73,759
Other liabilities 128,754 122,123 113,958
Total liabilities 2,121,935
2,138,755 2,179,038
Shareholders' equity
Preferred stock, Series A (2,875,000
shares outstanding) 138,369 -- --
Preference stock, Series C
(648,310 shares outstanding)
52,270 52,270 52,270
Capital stock, $.33 par value (48,779,465,
48,510,353 and 48,137,780 shares
outstanding, respectively) 16,260
16,170 16,046
Capital surplus 499,225 494,240 490,309
Retained earnings 73,406 39,318 132,560
Total shareholders' equity 779,530
601,998 691,185
$ 2,901,465 $2,740,753$
2,870,223
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1994 1993
Cash provided (used) by:
Operations
Income from continuing operations $66,479 $35,203
Depreciation and amortization 56,503 53,330
Changes in current assets and liabilities
Receivables (44,483) (43,812)
Inventories 18,073 31,650
Accounts payable and accrued liabilities 8,472 4,590
Other current assets and liabilities 9,805 (2,700)
Other (3,443) (7,045)
Cash flow from operations 111,406 71,216
Investing
Capital expenditures (66,977) (153,834)
Restricted cash deposits (1,500) (44,520)
Acquisitions and long-term investments (353) (16,306)
Decrease in marketable securities -- 25,212
Proceeds from sale of ships and equipment -- 22,000
Other (2,602) (917)
Cash flow from investing (71,432) (168,365)
Financing
Debt transactions
Issuances of long-term debt 212,662 99,531
Repayments of long-term debt (284,564) (78,802)
Increase (decrease) in notes and loans payable 11,968
(31,054)
Stock transactions
Issuance of preferred stock 138,369 --
Dividends (7,419) (18,511)
Net issuances (repurchases) of capital stock 2,943 (394)
Cash flow from financing 73,959 (29,230)
Discontinued operations 4,000 (16,735)
Increase (decrease) in cash and equivalents 117,933 (143,114)
Balance at beginning of period 151,226 387,969
Balance at end of period $269,159 $244,855
See Notes to Consolidated Financial Statements.
CHIQUITA BRANDS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Interim results are subject to significant seasonal variations and
are not necessarily indicative of the results of operations for a full
fiscal year. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary for a fair
statement of the results of the interim periods shown have been made.
See Notes to Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1993 for
additional information relating to the Company's financial statements.
Inventories consisted of the following (in thousands):
June 30, December 31, June 30,
1994 1993 1993
Bananas and other fresh produce $ 43,374 $42,918$
44,447
Other food products 40,296 56,043 58,613
Growing crops 120,002 117,839 112,539
Materials and supplies 71,077 75,206 87,737
Other 12,921 15,067
15,982
$287,670 $307,073 $319,318
In February 1994, the Company completed the sale of $175 million
principal amount of 9-1/8% Senior Notes due 2004 and 2,875,000 shares
of $2.875 Non-Voting Cumulative Preferred Stock, Series A. The net
proceeds from the offerings totaled approximately $310 million. In
March, most of these proceeds were used to prepay all of the outstanding
principal amount of the Company's 11-7/8% Subordinated Debentures ($125
million), 10-1/4% Subordinated Debentures ($42 million), 9-1/8%
Subordinated Debentures ($18 million) and a portion ($45 million
principal amount) of its 10-1/2% Subordinated Debentures. These
prepayments resulted in an extraordinary loss of $22.8 million,
consisting primarily of write-offs of unamortized discounts and $5
million of call premiums.
In accordance with its long-standing policy to periodically hedge
transactions denominated in foreign currencies, at June 30, 1994, the
Company had approximately $180 million of foreign exchange forward
contracts with an average exchange rate of 1.71 Deutsche mark for each
U.S. dollar to ensure conversion rates on a like amount of foreign sales
commitments for the second half of 1994. The fair value of these
contracts, based on quoted market prices, was approximately $12 million
at June 30, 1994.
CHIQUITA BRANDS INTERNATIONAL, INC.
MANAGEMENT'S ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
OPERATIONS
Net sales for the six months ended June 30, 1994 declined $91 million
(6%) from the prior year level primarily as a result of reductions in
volume. The effect on revenue of lower volume was partially offset by
the effect on revenue (4%) of a higher average worldwide banana price.
The increases in operating earnings for the quarter and first half were
generated by the Company's banana division. The benefit on operating
income of a higher average worldwide price for bananas was in part
offset by the impact of lower banana volumes that followed the European
Union's imposition of quota restrictions in July 1993.
Total operating expenses for the quarter and first half reflect
reductions associated with lower banana volumes. However, selling,
general and administrative expenses for the quarter are higher due
primarily to the timing of first half advertising expenses, while
depreciation costs for the quarter and six months are higher as a result
of ship deliveries during 1993 and 1994 which replaced rented capacity.
Interest expense for the quarter decreased as a result of the Company's
recent refinancings (see "Notes to Consolidated Financial Statements").
These refinancings will also result in reduced interest expense in
future periods.
The effective tax rate is affected by the level and mix of income
between various domestic and foreign jurisdictions in which the Company
operates.
FINANCIAL CONDITION
The increase in cash of $118 million during the first half of 1994
resulted primarily from improved operating cash flow. Proceeds from new
financings were used primarily to retire higher cost debt. First half
1994 capital expenditures include $38 million for delivery of a new ship
and related equipment ordered in prior years, of which $31 million was
financed. In July 1994, Chiquita took delivery of the final ship under
its multi-year investment spending program at a cost of $30 million, of
which $25 million was financed.
DISCONTINUED OPERATIONS
In February 1994, the Company's Meat Division sold its specialty meat
operations for approximately $50 million in cash. The sale proceeds
were used primarily to reduce short-term borrowings under the Meat
Division's credit facility. In March 1994, the Meat Division made a
scheduled payment of $4 million on its secured debt held by Chiquita.
In April 1994, $12.5 million of the remaining $12.7 million of this
secured debt was retired in exchange for a new preferred equity interest
in the Meat Division. During the first half of 1994, the Meat Division
continued to produce improved operating profits (which are not included
in Chiquita's consolidated results of operations) on approximately $740
million in net sales. The Company is continuing to pursue, and expects
to complete, the divestiture of the remaining Meat Division operations
by the end of 1994.
OTHER
As previously disclosed, on July 1, 1993, the European Union ("EU")
implemented a new quota effectively restricting the volume of Latin
American bananas imported into the EU, which had the effect of
decreasing the Company's market share in Europe. The new EU regulation
and its underlying principles were ruled illegal under the General
Agreement on Tariffs and Trade ("GATT") by GATT dispute settlement
panels in May 1993 and January 1994. However, in late March, the EU
announced it had reached a settlement agreement ("Framework Agreement")
with four of the five Latin American banana producing countries that had
filed the GATT actions (Costa Rica, Colombia, Nicaragua and Venezuela).
In exchange for the withdrawal by these countries of their GATT
challenges, the Framework Agreement will (a) give these countries each
a guaranteed percentage of the EU quota and the right to establish an
export licensing system, (b) slightly increase the EU import quota and
(c) slightly lower import tariffs. The Framework Agreement is opposed
by numerous EU member states and Latin American countries, and
implementing regulations have not yet been enacted. However, the EU's
administrative commission is seeking to implement it later this year as
part of a larger package of GATT implementation regulations. If the
Framework Agreement and related regulations are implemented, it could
increase the Company's costs to export Latin American bananas to the EU.
These increases could take the form of (a) export taxes and other export
license procurement fees in the Latin American countries which are
parties to the Framework Agreement, and (b) increased costs that could
result from inefficient realignment of production and transportation
logistics to meet the export quota and license restrictions.
Other challenges to the quota and Framework Agreement continue. In
June 1994, the Advocate-General of the European Court of Justice ("ECJ")
issued an opinion in a lawsuit filed by Germany, the Netherlands and
Belgium that strongly criticized the EU quota and import licensing
system and its impact on suppliers of Latin American bananas.
Nevertheless, the Advocate-General declined to recommend overturning
that system in light of the broad authority granted by the EU to the
administrative commission which developed the system. A final ECJ
opinion has not yet been issued. In July, Germany commenced a second
ECJ action challenging the Framework Agreement.
The Company continues to address each new development in the EU
regulatory environment by adapting its operations to optimize results
while retaining flexibility in the evolving restrictive regulatory
environment.
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
Reference is made to Part I, Item 1 - "Business-Discontinued
Operations-Regulation" in the Company's 1993 Form 10-K and the
internal investigation and U.S. Environmental Protection Agency and
Department of Justice investigations concerning a wastewater
treatment facility at one of the Meat Division's plants. John
Morrell & Co. is now operating the wastewater facility under a new
five year permit.
Reference is made to Part I, Item 3 - "Legal Proceedings" in the
Company's 1993 Form 10-K and to Part II, Item 1 - "Legal Proceedings"
in the Company's Form 10-Q for the quarter ended March 31, 1994
concerning cases pending in Texas against manufacturers and banana
industry users of DBCP. In July 1994, the first two suits referred
to in the Form 10-Q (Delgado and Carcamo) were consolidated under the
style and cause number as Franklin Rodriguez Delgado, et al. v. Shell
Oil Company, et al., Del Monte Fresh Produce, N.A. v. Dead Sea
Bromine Co. Ltd., et al, Civil Action No. H-94-1337 (U.S. District
Court, Southern District of Texas, Houston Division).
Item 4 - Submission of Matters to a Vote of Security Holders
The matters indicated below were voted upon at the Company's
Annual Meeting of Shareholders held on May 11, 1994. Proxies were
solicited pursuant to Regulation 14 under the Securities Exchange Act
of 1934. Proxies representing 8,197,293 shares were not voted.
(a)Election of Nine Directors
Votes
Name For Withheld
Carl H. Lindner 43,250,437 435,137
Hugh F. Culverhouse, Sr. 42,227,901 1,457,673
Keith E. Lindner 43,243,832 441,742
S. Craig Lindner 43,242,929 442,645
Fred J. Runk 43,256,929 428,645
Jean Head Sisco 43,253,967 431,607
William W. Verity 43,236,919 448,655
Oliver W. Waddell 43,253,918 431,656
Ronald F. Walker 42,235,209 1,450,365
(b) Adoption of Second Restated Certificate of Incorporation
which, among other things, increased
the Company's number of authorized shares of capital stock from
100,000,000 shares to150,000,000 shares. The votes were: For - 37,121,024;
Against - 1,310,974; Abstain - 154,750; Broker Non-votes - 5,098,826.
(c) Amendments to the Company's 1986 Stock Option and Incentive
Plan. The votes were: For -31,705,860; Against -
6,680,478; Abstain - 186,270; Broker Non-votes - 5,112,966.
Item 5 - Other Information
Reference is made to Part I, Item I - "Sourcing" in the Company's
1993 Form 10-K and the discussion of the individual supplier in the
Philippines which provided approximately 10% of the bananas sold by
Chiquita in 1993 and substantially all the bananas marketed by the
Company in the Far and Middle East. In July 1994, this supplier
ceased the supply of bananas to the Company. The Company has secured
alternate Latin American sources of bananas to continue to supply its
core customers in Japan and the Middle East and has otherwise reduced
the volume of bananas being sold in these markets while it evaluates
and pursues additional alternatives. The Company does not expect
this development to have a material impact on the Company.
Item 6 - Exhibits and Reports on Form 8-K
Page
Numbers
(a) Exhibit 3(a) - The Company's Second Restated
Certificate of Incorporation. . . . . . . . . . **
Exhibit 10(c) - 1986 Stock Option and Incentive Plan, as
amended . . . . . . . . . . . . . . . . . . . . . . . **
Exhibit 11 - Computation of Earnings Per Common Share. . 13-14
Exhibit 99(c) - First Supplemental Indenture between the Company
and
The Fifth Third Bank, as Trustee, dated as of June 15, 1994 which
amends
the definition of "Permitted Indebtedness" relating to the
Company's
9-1/8% Senior Notes due 2004 . . . . . . . . . . . . . . **
** Copy omitted from this Quarterly Report on Form 10-Q. Copy
included in report
filed electronically with the Securities and Exchange
Commission.
(b) There were no reports on Form 8-K filed by the Company during
the quarter ended
June 30, 1994.
SIGNATURE
Pursuant to the requirements 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.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
William A. Tsacalis
Vice President and Controller
(Chief Accounting Officer)
August 15, 1994
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
CHIQUITA BRANDS INTERNATIONAL, INC.
CHIQUITA BRANDS INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of New
Jersey, amends, restates and integrates its Certificate
of Incorporation to read in full as herein set forth.
SECTION I
The name of the Corporation is:
CHIQUITA BRANDS INTERNATIONAL, INC.
SECTION II
The location of its registered office in the State
of New Jersey is 820 Bear Tavern Road, West Trenton, County of
Mercer, New Jersey 08628, 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.
SECTION IV
The aggregate number of shares which the Corporation
is authorized to issue is 164,000,000 shares divided
into:
(i) 150,000,000 shares of Capital Stock, par value
$.33 per share ("Capital Stock"),
(ii) 4,000,000 shares of Cumulative Preference
Stock, issuable in series, without nominal or par value
("Series Preference Stock"), and
(iii) 10,000,000 shares of Non-Voting Cumulative
Preferred Stock, issuable in series, par value $1 per
share ("Non-Voting Preferred 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 and Non-Voting Preferred Stock are set
forth in this Section IV.
SUBSECTION A. 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 C Preference Stock shall be
as specified herein and in Subsection C 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 A 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 in 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. 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 having
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 B. SPECIAL PROVISIONS APPLICABLE TO ALL
SERIES OF NON-VOTING PREFERRED STOCK
Shares of Non-Voting Preferred Stock may be issued
from time to time in one or more series, with the Board
of Directors of the Corporation determining all terms,
designations, preferences, rights and restrictions of
each series without further action by the shareholders
(including, without limitation, the voting powers
thereof, if any; provided, however, that no series of
Non-Voting Preferred Stock shall have the right to vote
unconditionally in the election of Directors).
SUBSECTION C. 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.
SUBSECTION D. 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 D(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 D(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 D(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 D(c) or at the
option of the holder pursuant to clause (iii) of this
Subsection D(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 D(c) or at the option of
the holder pursuant to clause (iii) of this Subsection
D(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
D(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 D(c)(viii)) of the
Capital Stock for 20 Trading Dates (as defined in
Subsection D(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 D(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 D(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 D(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 D(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 D(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 D(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 D(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 D(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 D(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 D(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 D(c)(ii) or
at the option of the holder pursuant to
Subsection D(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
D(c)(ii) or at the option of the holder pursuant to
Subsection D(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 D(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 D(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
D(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 D(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 D(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 D(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 D:
(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 D(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 D(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 D(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 D(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 D(c)(ii)(B)(3), if applicable, on
the shares to be converted as required by this Subsection
D(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 D(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 D(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 D(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 D(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
D(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 D(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 D(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 D(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 D(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 D(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 D(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.
SUBSECTION E. 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 A 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 Series A
Preferred Stock and 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
E(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 any 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 E(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 E(c)(iv)) determined as of the Final
Conversion Date, and (y) the Appreciation
Adjustment Factor (determined as provided in
Subsection E(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 E(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 E(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 E(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
E(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 E(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 E(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 E(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 E(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 E(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 E(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 E(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 E(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 E(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
E(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 E(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 E(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 E(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 E(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
E,
(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 E(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
E(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 E(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 E(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 E(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 E(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 E(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
E(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
E(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 E(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 E(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 E(c) hereof.
SECTION V
The number of directors constituting the
Corporation's current Board of Directors is nine (9). The
names and business office addresses of the persons
currently serving as said directors are set forth below:
[CAPTION]
Name Address
<TABLE>
<S> <C>
Hugh F. Culverhouse, Culverhouse, Story & Botts
1408 North Westshore Blvd.
Tampa, Florida
Carl H. Lindner 250 East Fifth Street
Cincinnati, Ohio
Keith E. Lindner 250 East Fifth Street
Cincinnati, Ohio
S. Craig Lindner 250 East Fifth Street
Cincinnati, Ohio
Fred J. Runk 250 East Fifth Street
Cincinnati, Ohio
Jean H. Sisco Sisco Associates
1250 24th Street, N.W.
Washington, D.C.
William W. Verity Compression Engineering
5623 West 74th Street
Indianapolis, Indiana
Oliver W. Waddell Star Bank Center
425 Walnut Street
Cincinnati, Ohio
Ronald L. Walker 250 East Fifth Street
Cincinnati, Ohio
</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 hereafter 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. 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 shareholders
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, 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.
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 or 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,
executor and administrators of such a person.
IN WITNESS WHEREOF, CHIQUITA BRANDS INTERNATIONAL,
INC. has made this Certificate under the signature of its President
this 11th day of 1994.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ Keith E. Lindner
Title: President
CHIQUITA BRANDS INTERNATIONAL, INC.
1986 STOCK OPTION AND INCENTIVE PLAN
(as amended and restated March 25, 1992 and further amended by the
Board of Directors on February 9, 1994)
<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
1986 STOCK OPTION AND INCENTIVE PLAN
T A B L E O F C O N T E N T S
I. OBJECTIVES 1
II. DEFINITIONS 1
III. ADMINISTRATION 3
3.1 The Committee 3
3.2 Awards 3
3.3 Guidelines 4
3.4 Delegation of Authority 4
3.5 Decisions Final 4
IV. SHARES SUBJECT TO PLAN 4
4.1 Shares 4
4.2 Adjustment Provisions 4
4.3 Dissolution or Liquidation 5
V. EFFECTIVE DATE OF AMENDED PLAN 5
VI. STOCK OPTIONS 5
6.1 Grants 5
6.2 Incentive Stock Options 5
6.3 Replacement Options 5
6.4 Terms of Options 6
6.5 Award of Options to Non-Employee Directors 7
VII. STOCK APPRECIATION RIGHTS 8
7.1 Grant 8
7.2 Term 8
7.3 Exercise 8
7.4 Payment 8
7.5 Non-Transferability and Termination 8
VIII.RESTRICTED AND UNRESTRICTED STOCK AWARDS 9
8.1 Grants of Restricted Stock Awards 9
8.2 Terms and Conditions of Restricted Awards 9
8.3 Unrestricted Stock Awards 9
IX. PERFORMANCE AWARDS 9
9.1 Performance Awards 9
9.2 Terms and Conditions of Performance Awards 10
X. NON-TRANSFERABILITY OF AWARDS 10
XI. TERMINATION OF AWARDS 10
11.1 Termination of Awards 10
11.2 Acceleration of Vesting and Extension of
Exercise Period Upon Termination 11
XII. TERMINATION OR AMENDMENT OF THIS PLAN 11
XIII.GENERAL PROVISIONS 11
13.1 No Right to Continued Employment 11
13.2 Other Plans 11
13.3 Withholding of Taxes 11
13.4 Reimbursement of Taxes 12
13.5 Governing Law 12
13.6 Liability 12
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CHIQUITA BRANDS INTERNATIONAL, INC.
1986 STOCK OPTION AND INCENTIVE PLAN
(as amended and restated February 9, 1994)
SECTION I.
OBJECTIVES
The objectives of this 1986 Stock Option and
Incentive Plan (the "Plan"), as amended and restated, are
to enable Chiquita Brands International, Inc. (the
"Company") to compete successfully in retaining and
attracting key employees of outstanding ability, to
stimulate the efforts of such employees toward the
Company's objectives and to encourage the identification
of their interests with those of the Company's
shareholders.
SECTION II.
DEFINITIONS
For purposes of this Plan, the following terms shall
have the following meanings:
2.1 "Award" means any form of Stock Option, Stock
Appreciation Right, Restricted Stock Award, Unrestricted
Stock Award or Performance Award granted under this Plan.
2.2 "Award Agreement" means a written agreement
setting forth the terms of an Award.
2.3 "Award Date" or "Grant Date" means the date
designated by the Committee as the date upon which an
Award is granted.
2.4 "Award Period" or "Term" means the period
beginning on an Award Date and ending on the expiration
date of such Award.
2.5 "Board" means the Board of Directors of the
Company.
2.6 "Code" means the Internal Revenue Code of 1986,
as amended, or any successor legislation. Reference to
any particular section of the Code includes any successor
amendments or replacements of such section.
2.7 "Committee" means the committee appointed by
the Board and consisting of two or more Directors, none
of whom shall be eligible to receive any Award pursuant
to this Plan except as provided in Subsection 6.5.
Members of the Committee must qualify as Disinterested
Persons within the meaning of Rule 16b-3.
2.8 "Common Stock" means the Company's Capital
Stock, $.33 par value.
2.9 "Disability" means a "permanent and total
disability" within the meaning of Section 22(e)(3) of the
Code.
2.10 "Disinterested Person" means a member of
the Board who was not, during the year prior to being
appointed to the Committee, or during the period of
service as an administrator of this Plan, granted or
awarded equity securities pursuant to the Plan or
pursuant to any other plan of the Company, except to the
extent consistent with the disinterested plan
administration requirements under Rule 16b-3.
2.11 "Eligible Employee" means any person
(other than one who receives retirement benefits,
consulting fees, honorariums, and the like from the
Company) (i) who performs services for the Company or a
Subsidiary, including any individual who is an officer or
director of the Company or a Subsidiary; and (ii) is
compensated on a regular basis by the Company or a
Subsidiary. Directors who are not full-time employees of
the Company or a Subsidiary are not eligible to receive
Awards under this Plan, except as set forth in Subsection
6.5. Eligibility under this Plan shall be determined by
the Committee.
2.12 "Fair Market Value" means, as of any date,
the average of the highest and lowest quoted selling
prices of a Share as reported on the New York Stock
Exchange Composite Transactions list (or such other
consolidated transaction reporting system on which the
Shares are primarily traded), or if the Shares were not
traded on such day, then the next preceding day on which
the Shares were traded, all as reported by such source as
the Committee may select. If the Shares are not traded
on a national securities exchange or other market system,
Fair Market Value shall be set under procedures
established by the Committee.
2.13 "Incentive Stock Option" means any Stock
Option awarded under Section VI of this Plan intended to
be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code or any successor
provision.
2.14 "Non-Qualified Stock Option" means any
Stock Option awarded under Section VI of this Plan that
is not an Incentive Stock Option.
2.15 "Officer" means a person who is considered
to be an officer of the Company under Rule 16a-1(f).
2.16 "Option Price" or "Exercise Price" means
the price per share at which Common Stock may be
purchased upon the exercise of an Option or an Award.
2.17 "Participant" means an Eligible Employee
to whom an Award has been made pursuant to this Plan.
2.18 "Replacement Option" means a Non-Qualified
Stock Option granted pursuant to Subsection 6.3, upon the
exercise of a Stock Option granted pursuant to this Plan
where the Option Price is paid with previously owned
shares of Common Stock.
2.19 "Restricted Stock" means those shares of
Common Stock issued pursuant to a Restricted Stock Award
which are subject to the restrictions set forth in the
related Award Agreement.
2.20 "Restricted Stock Award" means an award
of a fixed number of Shares to a Participant which is
subject to forfeiture provisions and other conditions set
forth in the Award Agreement.
2.21 "Retirement" means any termination of
employment or service on the Board (other than by death
or Disability) by an employee or a director who is at
least 65 years of age or 55 years of age with at least
10 years of employment with or service on the Board of
the Company or a Subsidiary.
2.22 "Rule 16b-3" and "Rule 16a-1(f)" mean
Securities and Exchange Commission Regulations Section 240.16b-3
and Section 240.16a-1(f) or any corresponding successor
regulations.
2.23 "Share" means one share of the Company's
Common Stock.
2.24 "Stock Appreciation Right" or "SAR" means
the right to receive, for each unit of the SAR, cash
and/or shares of Common Stock equal in value to the
excess of the Fair Market Value of one Share on the date
of exercise of the SAR over the reference price per share
of Common Stock established on the date the SAR was
granted.
2.25 "Stock Option" or "Option" means the right
to purchase shares of Common Stock (including a
Replacement Option) granted pursuant to Section VI of
this Plan.
2.26 "Subsidiary" means any corporation,
partnership, joint venture, or other entity (i) of which
the Company owns or controls, directly or indirectly, 25%
or more of the outstanding voting stock (or comparable
equity participation and voting power) or (ii) which the
Company otherwise controls (by contract or any other
means); except that when the term "Subsidiary" is used in
the context of an award of an Incentive Stock Option, the
term shall have the same meaning given to it in the Code.
"Control" means the power to direct or cause the
direction of the management and policies of a corporation
or other entity.
2.27 "Transfer" means alienation, attachment,
sale, assignment, pledge, encumbrance, charge or other
disposition; and the terms "Transferred" or
"Transferable" have corresponding meanings.
SECTION III.
ADMINISTRATION
3.1 The Committee. This Plan shall be administered
and interpreted by the Committee.
3.2 Awards. The Committee shall have full
authority to grant, pursuant to the terms of this Plan,
to Eligible Employees: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv)
Unrestricted Stock and (v) Performance Awards. In
particular, the Committee shall have the authority:
(a) to select the Eligible Employees to whom Awards
may be granted;
(b) to determine the types and combinations of
Awards to be granted to Eligible Employees;
(c) to determine the number of Shares or monetary
units which may be subject to each Award;
(d) to determine the terms and conditions, not
inconsistent with the terms of this Plan, of any Award
(including, but not limited to, any restriction or
limitation on transfer, any vesting schedule or
acceleration, or any forfeiture provisions or waiver,
regarding any Award) and the related Shares, based on
such factors as the Committee shall determine; and
(e) to modify or waive any restrictions or
limitations contained in, and grant extensions to the
terms of or accelerate the vestings of, any outstanding
Awards as long as such modifications, waivers, extensions
or accelerations are not inconsistent with the terms of
this Plan, but no such changes shall impair the rights of
any Participant without his or her consent.
3.3 Guidelines. The Committee shall have the
authority to adopt, alter and repeal administrative
rules, guidelines and practices governing this Plan and
perform all acts, including the delegation of its
administrative responsibilities, as it deems advisable;
to construe and interpret the terms and provisions of
this Plan and any Award issued under this Plan; and to
otherwise supervise the administration of this Plan. The
Committee may correct any defect, supply any omission or
reconcile any inconsistency in this Plan or in any
related Award Agreement in the manner and to the extent
it deems necessary to carry this Plan into effect.
3.4 Delegation of Authority. The Committee may
delegate to one or more Officers of the Company the
authority of the Committee under Section 3.2 (except in
respect of Awards to Officers) and may delegate its
administrative duties to one or more individuals who are
Officers or employees of the Company.
3.5 Decisions Final. Any action, decision,
interpretation or determination by or at the direction of
the Committee concerning the application or
administration of this Plan shall be final and binding
upon all persons and need not be uniform with respect to
its determination of recipients, amount, timing, form,
terms or provisions of Awards.
SECTION IV.
SHARES SUBJECT TO PLAN
4.1 Shares. Subject to adjustment as provided in
Subsection 4.2, the aggregate number of Shares which may
be issued under this Plan shall not exceed fifteen
million (15,000,000) Shares. If any Award granted under
this Plan shall expire, terminate or be canceled for any
reason without having been exercised in full, the number
of unacquired Shares subject to such Award shall again be
available for future grants; provided, however, that the
reuse of such Shares is not prohibited under Rule 16b-3.
4.2 Adjustment Provisions.
(a) If the Company shall at any time change the
number of issued Shares without new consideration to the
Company (such as by stock dividend, stock split,
recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate
structure affecting the Shares) or make a distribution of
cash or property which has a substantial impact on the
value of issued Shares, the total number of Shares
reserved for issuance under the Plan shall be
appropriately adjusted and the number of Shares covered
by each outstanding Award and the reference price or Fair
Market Value for each outstanding Award shall be adjusted
so that the aggregate consideration payable to the
Company and the value of each such Award shall not be
changed.
(b) Notwithstanding any other provision of the
Plan, and without affecting the number of Shares reserved
or available hereunder, the Committee may authorize the
issuance, continuation or assumption of Awards or provide
for other equitable adjustments after changes in the
Shares resulting from any merger, consolidation, sale of
assets, acquisition of property or stock,
recapitalization, reorganization or similar occurrence in
which the Company is the continuing or surviving
corporation, upon such terms and conditions as it may
deem equitable and appropriate.
4.3 Dissolution or Liquidation. In the event of
the dissolution or liquidation of the Company or any
merger, consolidation or combination in which the Company
is not the surviving corporation or in which the
outstanding Shares of the Company are converted into
cash, other securities or other property, each
outstanding Award shall terminate as of a date fixed by
the Committee, provided that not less than 20 days'
written notice of the date of expiration shall be given
to each holder of an Award and each such holder shall
have the right during such period following notice to
exercise the Award as to all or any part of the Shares
for which it is exercisable at the time of such notice.
SECTION V.
EFFECTIVE DATE OF AMENDED PLAN
This Plan was amended and restated by the Board on
March 25, 1992 and shall become effective, as amended,
upon its approval by the holders of a majority of the
shares of Common Stock represented, in person or by
proxy, at the Company's Annual Meeting of Shareholders on
May 14, 1992. This Plan shall continue in effect until
December 31, 2015 unless terminated sooner by the Board
pursuant to Section XII.
SECTION VI.
STOCK OPTIONS
6.1 Grants. Stock options may be granted alone or
in addition to other Awards granted under this Plan.
Each Option granted shall be designated as either a Non-
Qualified Stock Option or an Incentive Stock Option and
in each case such Option may or may not include Stock
Appreciation Rights. One or more Stock Options and/or
Stock Appreciation Rights may be granted to any Eligible
Employee, except that no person shall receive during any
twelve month period Stock Options and Stock Appreciation
Rights covering more than 300,000 shares of Common Stock.
6.2 Incentive Stock Options.
(a) Award Agreement. Any Award Agreement relating
to an Incentive Stock Option shall contain such terms and
conditions as are required for the Option to be an
"incentive stock option" as that term is defined in
Section 422 of the Code.
(b) Ten Percent Shareholder. An Incentive Stock
Option shall not be awarded to any person who, at the
time of the Award, owns Shares possessing more than 10%
of the total combined voting power of all classes of
stock of the Company or its Subsidiaries.
(c) Qualification under the Code. Notwithstanding
anything in this Plan to the contrary, no term of this
Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion
or authority granted under this Plan be exercised, so as
to disqualify this Plan under Section 422 of the Code,
or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under Section 422
of the Code.
6.3 Replacement Options. The Committee may provide
either at the time of grant or subsequently that an
Option shall include the right to acquire a Replacement
Option upon the exercise of such Option (in whole or in
part) prior to Participant's termination of employment if
the payment of the Option Price is paid in Shares. In
addition to any other terms and conditions the Committee
deems appropriate, the Replacement Option shall be
subject to the following terms:
(i) the number of Shares subject to the
Replacement Option shall not exceed the number of
whole Shares used to satisfy the Option Price of
the original Option and the number of whole Shares,
if any, withheld by the Company as payment for
withholding taxes in accordance with
Subsection 13.3;
(ii) the Replacement Option Grant Date will be
the date of the exercise of the original Option;
(iii) the Option Price per share shall be
the Fair Market Value of a Share on the Replacement
Option Grant Date;
(iv) the Replacement Option shall be
exercisable no earlier than one year after the
Replacement Option Grant Date;
(v) the Term of the Replacement Option will
not extend beyond the Term of the original Option;
and
(vi) the Replacement Option shall be a
Non-Qualified Stock Option and shall otherwise meet
all conditions of this Subsection 6.3.
The Committee may without the consent of the
Participant rescind the right to receive a Replacement
Option at any time prior to an Option being exercised.
6.4 Terms of Options. Except as otherwise required
by Subsections 6.2, 6.3 and 6.5, Options granted under
this Plan shall be subject to the following terms and
conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem
desirable:
(a) Option Price. The Option Price per share of
Common Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant, except
that no Incentive Stock Option may be granted for an
Option Price less than 100% of Fair Market Value on the
Grant Date.
(b) Option Term. The Term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock
Option shall be exercisable more than ten years after its
Award Date, and no Non-Qualified Stock Option shall be
exercisable more than 20 years after its Award Date.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such
terms and conditions as shall be determined by the
Committee; provided, however, that Options may not be
exercised as to less than 100 Shares at any time unless
the number exercised is the total number available for
exercise at that time under the terms of the Option.
(d) Method of Exercise. Stock Options may be
exercised in whole or in part at any time during the
Option Term, by giving written notice of exercise to the
Company specifying the number of Shares to be purchased.
Such notice shall be accompanied by payment in full of
the Option Price in such form as the Committee may
accept. If and to the extent determined by the Committee
at or after grant, payment in full or in part may also be
made in the form of Common Stock owned by the Participant
for at least six months prior to exercise or by reduction
in the number of Shares issuable upon exercise based, in
each case, on the Fair Market Value of the Common Stock
on the payment date.
(e) Non-Transferability of Options. Stock Options
shall be Transferable only to the extent provided in
Section X of this Plan.
(f) Termination. Stock Options shall terminate in
accordance with Section XI of this Plan.
(g) Buyout and Settlement Provisions. The
Committee may at any time offer to buy out an Option
previously granted, based on such terms and conditions as
the Committee shall establish. The Committee may also
substitute new Stock Options for previously granted Stock
Options having higher Option Prices than the new Stock
Options being substituted therefor.
6.5 Award of Options to Non-Employee Directors.
(a) Grants. The Company shall make the following
grants of Stock Options to non-employee directors under
this Plan:
(i) On the date on which a person who is not
a full-time employee of the Company or a Subsidiary
first becomes a director of the Company (a "non-
employee director"), whether by election or
appointment, that non-employee director shall
automatically be granted Non-Qualified Stock
Options for 10,000 Shares.
(ii) Beginning in December of 1994 and
each year thereafter, each then-serving non-
employee director who has served on the Board
at least six months shall automatically
receive a grant of Non-Qualified Stock Options
for 10,000 Shares. The award shall be made on
the same date in December on which the
Committee decides the total number of stock
options to be granted to employees in
connection with the Company's annual total
compensation review which is conducted each
year in December.
(b) Terms and Conditions of Options Granted to Non-
Employee Directors.
(i) Term. The Term of all Options shall be
20 years from the Award Date of the Option.
(ii) Option Price. The Option Price of all
Options shall be the Fair Market Value of a Share
on the Award Date.
(iii) Vesting. All Options shall vest
over a ten year period with 9% of the Option Shares
immediately exercisable on the Award Date and an
additional 9% exercisable on each anniversary of
the Award Date thereafter until the tenth
anniversary when the remaining 10% of the Option
Shares shall be exercisable.
(iv) Method of Exercise. All Options shall be
exercisable in the manner provided in
Subsection 6.4(d) except that, without further
action by the Committee, non-employee directors may
make payment of the Option Price by the delivery of
Shares owned by the director for at least six
months prior to exercise or by a reduction in the
number of Shares issuable upon such exercise, and
such directors may also use the provisions of
Subsection 13.3.
(v) Non-transferability and Termination. All
Options shall be Transferable only to the extent
provided in Section X of this Plan and shall
terminate in accordance with Section XI of this
Plan, except that the timing provisions of
Subsections 11.1(b) and 11.1(c) may not be varied
by Committee determination.
(c) Amendment. Notwithstanding any other provision
of this Plan, the provisions of this Subsection 6.5 may
not be amended by the Board more frequently than once
every six months other than to comply with changes in the
Code or the rules thereunder.
SECTION VII.
STOCK APPRECIATION RIGHTS
7.1 Grant. A Stock Appreciation Right may be
granted either with or without reference to all or any
part of a Stock Option. A "Tandem SAR" means an SAR
granted with reference to a Stock Option (the "Reference
Option"). A "Non-Tandem SAR" means an SAR granted
without reference to a Stock Option. If the Reference
Option is a Non-Qualified Stock Option, a Tandem SAR may
be granted at or after the date of the Reference Option;
if the Reference Option is an Incentive Stock Option, the
Grant Date of a Tandem SAR must be the same as the Grant
Date of the Reference Option. Any SAR shall have such
terms and conditions, not inconsistent with this Plan, as
are established by the Committee in connection with the
Award.
7.2 Term. A Tandem SAR shall terminate and no
longer be exercisable upon the termination of its
Reference Option. A Non-Tandem SAR may have a term no
longer than 20 years from its Grant Date.
7.3 Exercise. A Tandem SAR may only be exercisable
at the times and, in whole or in part, to the extent that
its Reference Option is exercisable. The exercise of a
Tandem SAR shall automatically result in the surrender of
the applicable portion of its Reference Option. A Non-
Tandem SAR shall be exercisable in whole or in part as
provided in its Award Agreement. Written notice of any
exercise must be given in the form prescribed by the
Committee.
7.4 Payment. For purposes of payment of an SAR,
the reference price per Share shall be the Option Price
of the Reference Option in the case of a Tandem SAR and
shall be the Fair Market Value of a Share on the Grant
Date in the case of a Non-Tandem SAR. The Committee
shall determine the form of payment.
7.5 Non-Transferability and Termination. Stock
Appreciation Rights shall be Transferable only to the
extent provided in Section X of this Plan and shall
terminate in accordance with Section XI of this Plan.
SECTION VIII.
RESTRICTED AND UNRESTRICTED STOCK AWARDS
8.1 Grants of Restricted Stock Awards. The
Committee may, in its discretion, grant one or more
Restricted Stock Awards to any Eligible Employee. Each
Restricted Stock Award shall specify the number of Shares
to be issued to the Participant, the date of such
issuance, the price, if any, to be paid for such Shares
by the Participant and the restrictions imposed on such
Shares. The Committee may grant Awards of Restricted
Stock subject to the attainment of specified performance
goals, continued employment or such other limitations or
restrictions as the Committee may determine.
8.2 Terms and Conditions of Restricted Awards.
Restricted Stock Awards shall be subject to the following
provisions:
(a) Issuance of Shares. Shares of Restricted Stock
may be issued immediately upon grant or upon vesting as
determined by the Committee.
(b) Stock Powers and Custody. If shares of
Restricted Stock are issued immediately upon grant, the
Committee may require the Participant to deliver a duly
signed stock power, endorsed in blank, relating to the
Restricted Stock covered by such an Award. The
Committee may also require that the stock certificates
evidencing such shares be held in custody by the Company
until the restrictions on them shall have lapsed.
(c) Shareholder Rights. Unless otherwise
determined by the Committee at the time of grant,
Participants receiving Restricted Stock Awards shall not
be entitled to dividend or voting rights for the
Restricted Shares until they are fully vested.
8.3 Unrestricted Stock Awards. The Committee may
make awards of unrestricted Common Stock to key Eligible
Employees in recognition of outstanding achievements by
such employees. Unrestricted Shares issued on a bonus
basis under this Subsection 8.3 may be issued for no cash
consideration. Each certificate for unrestricted Common
Stock shall be registered in the name of the Participant
and delivered immediately to the Participant.
SECTION IX
PERFORMANCE AWARDS
9.1 Performance Awards.
(a) Grant. The Committee may, in its discretion,
grant Performance Awards to Eligible Employees. A
Performance Award shall consist of the right to receive
either (i) Common Stock or cash of an equivalent value,
or a combination of both, at the end of a specified
Performance Period (defined below) or (ii) a fixed dollar
amount payable in cash or Shares, or a combination of
both, at the end of a specified Performance Period. The
Committee shall determine the Eligible Employees to whom
and the time or times at which Performance Awards shall
be granted, the number of Shares or the amount of cash to
be awarded to any person, the duration of the period (the
"Performance Period") during which, and the conditions
under which, a Participant's Performance Award will vest,
and the other terms and conditions of the Performance
Award in addition to those set forth in Subsection 9.2.
(b) Criteria for Award. The Committee may
condition the grant or vesting of a Performance Award
upon the attainment of specified performance goals; the
appreciation in the Fair Market Value, book value or
other measure of value of the Common Stock; the
performance of the Company based on earnings or cash
flow; or such other factors or criteria as the Committee
shall determine.
9.2 Terms and Conditions of Performance Awards.
Performance Awards granted pursuant to this Section IX
shall be subject to the following terms and conditions:
(a) Dividends. Unless otherwise determined by the
Committee at the time of the grant of the Award, amounts
equal to any dividends declared during the Performance
Period with respect to any Shares covered by a
Performance Award will not be paid to the Participant.
(b) Payment. Subject to the provisions of the
Award Agreement and this Plan, at the expiration of the
Performance Period, share certificates, cash or both (as
the Committee may determine) shall be delivered to the
Participant, or his or her legal representative or
guardian, in a number or an amount equal to the vested
portion of the Performance Award.
(c) Non-Transferability. Performance Awards shall
not be Transferable except in accordance with the
provisions of Section X of this Plan.
(d) Termination of Employment. Subject to the
applicable provisions of the Award Agreement and this
Plan, upon termination of a Participant's employment with
the Company or a Subsidiary for any reason during the
Performance Period for a given Award, the Performance
Award in question will vest or be forfeited in accordance
with the terms and conditions established by the
Committee.
SECTION X
NON-TRANSFERABILITY OF AWARDS
No Award or benefit payable under this Plan shall
be Transferable by the Participant during his or her
lifetime and may not be assigned, exchanged, pledged,
transferred or otherwise encumbered or disposed of except
by a domestic relations order pursuant to Section
414(p)(1)(B) of the Code, or by will or the laws of
descent and distribution. Awards shall be exercisable
during a Participant's lifetime only by the Participant
or by the Participant's guardian or legal representative.
SECTION XI.
TERMINATION OF AWARDS
11.1 All Awards issued under this Plan shall
terminate as follows:
(a) Termination at Expiration of Term. During any
period of continuous employment with the Company or a
Subsidiary, an Award will be terminated only if it is
fully exercised or if it has expired by its terms. For
purposes of this Plan, any leave of absence approved by
the Company shall not be deemed to be a termination of
employment.
(b) Termination by Death, Disability or Retirement.
If a Participant's employment by the Company or a
Subsidiary terminates by reason of death, Disability or
Retirement, any Award held by such Participant, unless
otherwise determined by the Committee at grant, shall be
fully vested and may thereafter be exercised by the
Participant or by the Participant's beneficiary or legal
representative, for a period of one year (or such longer
period as the Committee may specify at or after grant)
from the date of such death, Disability or Retirement or
until the expiration of the stated term of such Award,
whichever period is shorter.
(c) Other Termination. Unless otherwise determined
by the Committee at or after grant, if a Participant's
employment by the Company or a Subsidiary terminates for
any reason other than death, Disability or Retirement,
the Award will terminate on the earlier to occur of the
stated expiration date or 90 calendar days after
termination of employment. If a Participant dies during
the 90 day period following termination of employment,
any unexercised Award held by the Participant shall be
exercisable, to the full extent that such Award was
exercisable at the time of death, for a period of 90
calendar days from the date of death or until the
expiration of the stated term of the Award, whichever
occurs first.
11.2 Acceleration of Vesting and Extension of
Exercise Period Upon Termination.
(a) Notwithstanding anything contained in this
Section XI, upon the termination of employment of a
Participant who is not an Officer or Director of the
Company, for reasons other than death, Disability or
Retirement, either the Committee or the President of the
Company may, in its or his sole discretion, accelerate
the vesting of all or part of any Awards held by such
terminated Participant so that such Awards are fully or
partially exercisable as of the date of termination, and
may also extend the permitted exercise period of such
Awards for up to five years from the date of termination,
but in no event longer than the original expiration date
of such Award. In the case of a terminated Participant
who is an Officer, such discretion shall be exercised, if
at all, only by the Committee.
(b) Except as provided in Subsection 4.2, in no
event will the continuation of the exercisability of an
Award beyond the date of termination of employment allow
the Eligible Employee, or his or her beneficiaries or
heirs, to accrue additional rights under the Plan, or to
purchase more Shares through the exercise of an Award
than could have been purchased on the date that
employment was terminated.
SECTION XII
TERMINATION OR AMENDMENT OF THIS PLAN
12.1 Termination or Amendment. The Board may
at any time, amend, in whole or in part, any or all of
the provisions of this Plan, or suspend or terminate it
entirely; provided, however, that, unless otherwise
required by law, the rights of a Participant with respect
to any Awards granted prior to such amendment, suspension
or termination may not be impaired without the consent of
such Participant; and, provided further, no amendment may
be made, with or without shareholder approval, which
would cause this Plan to lose its exemption under Rule
16b-3 and no amendment may be made without shareholder
approval which would increase the number of shares
available under this Plan.
SECTION XIII
GENERAL PROVISIONS
13.1 No Right to Continued Employment.
Neither the establishment of the Plan nor the granting of
any Award hereunder shall confer upon any Participant any
right to continue in the employ of the Company or any
Subsidiary or interfere in any way with the right of the
Company or any Subsidiary to terminate such employment at
any time.
13.2 Other Plans. In no event shall the value
of, or income arising from, any Awards issued under this
Plan be treated as compensation for purposes of any
pension, profit sharing, life insurance, disability or
other retirement or welfare benefit plan now maintained
or hereafter adopted by the Company or any Subsidiary,
unless such plan specifically provides to the contrary.
13.3 Withholding of Taxes. The Company shall
have the right to deduct from any payment to be made
pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any Shares or the payment of
any cash to a Participant, payment by the Participant of
any Federal, state, local or foreign taxes required by
law to be withheld. The Committee may permit any such
withholding obligation to be satisfied by reducing the
number of Shares otherwise deliverable or by accepting
the delivery of previously owned Shares. Any fraction of
a Share required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in
cash by the Participant.
13.4 Reimbursement of Taxes. The Committee may
provide in its discretion that the Company may reimburse
a Participant for federal, state, local and foreign tax
obligations incurred as a result of the grant or exercise
of an Award issued under this Plan.
13.5 Governing Law. This Plan and actions
taken in connection with it shall be governed by the laws
of the State of New Jersey, without regard to the
principles of conflict of laws.
13.6 Liability. No employee of the Company nor
member of the Committee or the Board shall be liable for
any action or determination taken or made in good faith
with respect to the Plan or any Award granted hereunder
and, to the fullest extent permitted by law, all
employees and members shall be indemnified by the Company
for any liability and expenses which may occur through
any claim or cause of action arising under or in
connection with this Plan or any Awards granted under
this Plan.
Exhibit 11
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
A. Primary earnings (loss) per common share
Income from continuing operations $30,945 $7,673 $66,479 $35,203
Dividends on Series A Preferred Stock (2,066) -- (3,100)--
Income from continuing operations available
to common shares 28,879 7,673 63,379 35,203
Discontinued operations -- -- -- --
Income before extraordinary item 28,879 7,673 63,379 35,203
Extraordinary loss from prepayment of debt -- -- (22,840)--
Net income used to calculate primary
earnings (loss) per share $28,879 $7,673 $40,539 $35,203
Shares used in calculation of per share data:
Weighted average common and equivalent
Series C preference shares outstanding 51,956 51,380 51,882
51,388
Dilutive effect of assumed exercise of
certain stock options and warrants 1,055 171 1,212
341
Weighted average common shares used to
calculate primary earnings (loss) per share 53,011 51,551
53,094 51,729
Primary earnings (loss) per common share:
- Continuing operations $ .54 $ .15 $ 1.19 $ .68
- Discontinued operations -- -- -- --
- Extraordinary loss -- -- (.43) --
- Net income $ .54 $ .15 $ .76 $ .68
<PAGE>
Exhibit 11 (continued)
CHIQUITA BRANDS INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
B. Fully diluted earnings (loss) per common share
Income from continuing operations available to
common shares $28,879 $7,673 $63,379 $35,203
Add back dividends as a result of assumed
conversion of Series A Preferred Stock 2,066 -- 3,100 --
Additional income as a result of assumed
conversion of convertible debentures -- -- -- --
Income from continuing operations used to
calculate fully diluted earnings (loss) per share 30,945 7,673
66,479 35,203
Discontinued operations -- -- -- --
Income before extraordinary item 30,945 7,673 66,479 35,203
Extraordinary loss from prepayment of debt -- -- (22,840)--
Net income used to calculate fully
diluted earnings (loss) per share $30,945 $7,673 $43,639 $35,203
Shares used in calculation of per share data:
Weighted average common shares used to
calculate primary earnings (loss) per share 53,011 51,551
53,094 51,729
Additional shares resulting from assumed
exercise of options and assumed conversions
of Series A Preferred Stock and convertible
subordinated debentures 7,566 -- 5,845 --
Weighted average common shares used to
calculate fully diluted earnings (loss)
per share 60,577 51,551 58,939 51,729
Fully diluted earnings (loss) per common share:
- Continuing operations $ .51 $ .15 $ 1.13 $ .68
- Discontinued operations -- -- -- --
- Extraordinary loss -- -- (.39) --
- Net income $ .51 $ .15 $ .74 $ .68
Exhibit 99(c)
CHIQUITA BRANDS INTERNATIONAL, INC.
and
THE FIFTH THIRD BANK, Trustee
__________________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 15, 1994
To
INDENTURE
Dated as of February 15, 1994
__________________________________
Amending the Indenture, dated as of February 15, 1994, as
supplemented by a Board Resolution dated February 8, 1994,
between Chiquita Brands International, Inc. and
The Fifth Third Bank, as trustee, with respect to the 9-1/8%
Senior Notes due 2004 issued by Chiquita Brands
International, Inc. <PAGE>
FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental
Indenture") dated as of June 15, 1994 by and between
Chiquita Brands International, Inc., a New Jersey
corporation (the "Company"), and The Fifth Third Bank, an
Ohio banking corporation, as trustee (the "Trustee"), with
respect to the 9-1/8% Senior Notes due 2004 issued by the
Company (the "Senior Notes").
RECITALS
A. The Company and the Trustee are parties to an Indenture
dated as of February 15, 1994, as supplemented by a
Board Resolution dated February 8, 1994 (as so
supplemented, the "Indenture"), pursuant to which the
Company has issued the Senior Notes in the aggregate
principal amount of $175,000,000, all of which Senior
Notes are Outstanding as of the date hereof. The Board
Resolution sets forth the terms of the Senior Notes,
including certain definitions and covenants relating
thereto.
B. The Company has obtained the consent of certain Holders
of Senior Notes to an amendment (the "Amendment") to
the definition of "Permitted Indebtedness" contained in
the Indenture.
C. Section 902 of the Indenture provides that the Company
may, when authorized by a Board Resolution and with the
consent of Holders of more than 50% in aggregate
principal amount of Outstanding Debt Securities of any
series of Debt Securities then Outstanding affected
thereby, effect the Amendment.
D. The Senior Notes are the sole series of Debt Securities
affected by the Amendment.
E. All of the Senior Notes were Outstanding as of the
record date for determining Holders entitled to consent
to the Amendment. Consents to the Amendment have been
received by the Trustee from Holders of more than
$87,500,000 in aggregate principal amount of
Outstanding Senior Notes, which represents an amount in
excess of 50% in aggregate principal amount of
Outstanding Senior Notes.
F. The execution and delivery of this First Supplemental
Indenture have been duly authorized by a Company Board
Resolution.
G. The purpose of this First Supplemental Indenture is to
effect the Amendment with respect to the Senior Notes.
All conditions and requirements necessary to make this
First Supplemental Indenture, when duly executed and
delivered, a valid and binding agreement in accordance
with its terms and for the purposes herein expressed,
have been performed and fulfilled.
NOW, THEREFORE, it is agreed that the Indenture is amended with respect
to the Senior Notes as follows from and after the date hereof:
ARTICLE 1
AMENDMENT TO INDENTURE
Section 1. The definition of
"Permitted Indebtedness" is hereby amended to read as
follows:
"Permitted Indebtedness" means (i) Indebtedness of the
Company or any Subsidiary outstanding on the date of the
Indenture and, in the case of John Morrell & Co.,
additional Indebtedness incurred in an amount not in
excess of any commitment under its $80 million credit
facility which was unused on the date of the Indenture;
(ii) the Senior Notes; (iii) Indebtedness of the Company
not in excess of $250 million in principal amount
outstanding at any time under revolving credit or similar
bank facilities and any refinancings, replacements,
renewals, extensions, substitutions, refundings,
deferrals, restructurings, amendments, supplements or
modifications of such Indebtedness; provided, however,
that the proceeds of such Indebtedness referred to in this
clause (iii) shall be invested in, or used in connection
with, food-related businesses (other than the fresh or
processed meat business); (iv) Indebtedness of a
Subsidiary (including Acquired Indebtedness), which is
non-recourse to the Company, the proceeds of which are or
have been used for working capital purposes or for capital
expenditures in food-related businesses (other than the
fresh or processed meat business); (v) Indebtedness of (A)
a Subsidiary borrowed from a lender located in any country
producing tropical fruit and denominated in or measured by
the currency of such country other than U.S. dollars,
which Indebtedness is incurred for hedging purposes in the
ordinary course of business consistent with past practice
or (B) the Company or any other Subsidiary (in either
case, other than for borrowed money) incurred in
connection with Indebtedness of a Subsidiary referred to
in clause (A) above which is (y) a guarantee of such
Subsidiary Indebtedness, or (z) a reimbursement obligation
relating to a letter of credit supporting such Subsidiary
Indebtedness; (vi) Intercompany Debt Obligations;
provided, however, that the obligations of the Company
with respect to such Indebtedness shall be evidenced by an
intercompany note and shall be subordinated in right of
payment from and after such time as all Senior Notes
issued and outstanding shall become due and payable
(whether at Stated Maturity, by acceleration or otherwise)
to the payment and performance of the Company's
obligations under the Senior Notes; and (vii) additional
Indebtedness of the Company (including Acquired
Indebtedness) the aggregate principal amount of which
outstanding at any time does not exceed 5% of Adjusted
Consolidated Assets.<PAGE>
ARTICLE 2
MISCELLANEOUS
Section 2.1. Governing Law. This
First Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New
York.
Section 2.2 Defined Terms.
Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Indenture.
IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be signed and acknowledged by
their respective officers thereunto duly authorized as of
the day and year first above written.
CHIQUITA BRANDS INTERNATIONAL, INC.
[Seal]
BY: /s/ Steven G. Warshaw
Title: Executive Vice
President,
Chief Administrative
Officer
Attest: and Chief Financial
Officer
/s/ Donna K. Leonard
THE FIFTH THIRD BANK,
Trustee
[Seal]
BY: /s/ Kerry R. Byrne
Title: Vice President
Attest:
/s/ Brian J. Gardner
