SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Chiquita Brands International, Inc.
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________
_________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________________
___________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________________
___________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
_________________________________________________________________
___________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
___________
* Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
_________________________________________________________________
___________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________________
___________
3) Filing Party:
_________________________________________________________________
___________
4) Date Filed:
_________________________________________________________________
___________
Notes:
Registration Name and Address PRELIMINARY PROXY
MATERIAL
DATED: MARCH 28,
1994
P
R
O
X
Y
This proxy when properly executed will be voted in the manner
dictated herein by the above signed shareholder(s). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2 AND 3.
To vote your shares, please mark, sign, date and return this proxy
card using the enclosed envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PRELIMINARY PROXY
MATERIAL
DATED: MARCH
28, 1994
CHIQUITA BRANDS INTERNATIONAL, INC.
Chiquita Center
250 E. Fifth Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 11, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of Chiquita Brands International, Inc. ("Chiquita" or
the "Company"). The meeting will be held in the Continental Room
of the Omni Netherland Plaza, 35 West 5th Street, Cincinnati, Ohio
at 10:00 a.m. on Wednesday, May 11, 1994. The purposes of this
meeting are:
<TABLE>
<S> <C>
1. To elect nine directors;
2. To adopt a Second Restated Certificate of Incorporation
of the Company;
3. To approve amendments to the Company's 1986 Stock Option
and Incentive Plan; and
</TABLE>
to consider any other matters that may properly come before the
meeting or any adjournment of the meeting.
Carl H. Lindner
Chairman of the Board
and
Chief Executive
Officer
April 11, 1994
TO ENSURE THAT YOUR SHARES ARE VOTED AT THE MEETING, PLEASE VOTE,
SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
ENVELOPE PROVIDED. PROXIES MAY BE REVOKED AT ANY TIME PRIOR TO THE
MEETING BY GIVING WRITTEN NOTICE OF REVOCATION TO THE COMPANY'S
SECRETARY, BY GIVING A LATER DATED PROXY, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON.<PAGE>
PRELIMINARY PROXY
MATERIAL
DATED: MARCH
28, 1994
PROXY STATEMENT
Chiquita Brands International, Inc.
Annual Meeting of Shareholders
May 11, 1994
INTRODUCTION
This Notice of Annual Meeting of Shareholders and Proxy
Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held at 10:00 a.m. on
Wednesday, May 11, 1994, and any adjournment of the meeting.
The approximate mailing date of this proxy statement and the
accompanying proxy card is April 11, 1994.
At the Annual Meeting, shareholders will be asked to elect nine
directors, to adopt a Restated Certificate of Incorporation of the
Company, to approve amendments to the Company's 1986 Stock Option
and Incentive Plan, and to transact any other business that may
properly come before the meeting and any adjournment of the
meeting.
VOTING AT THE MEETING
Voting Securities Outstanding
As of April 1, 1994, the record date for determining
shareholders entitled to vote at the meeting (the "Record Date"),
the Company had two classes of voting securities outstanding
consisting of __________ shares of Capital Stock, $.33 par value
("Common Stock"), and 648,310 shares of Mandatorily Exchangeable
Cumulative Preference Stock, Series C ("Series C Shares"). The
Series C Shares are represented by $1.32 Depositary Shares
("Depositary Shares"), each of which represents ownership of one-
fifth of a Series C Share. As of the Record Date, there were
3,241,546 Depositary Shares outstanding. Each share of Common
Stock and each Depositary Share is entitled to one vote on each
matter to be presented at the meeting.
Proxies and Voting
Shareholders may vote in person or by proxy at the meeting.
Proxies given may be revoked at any time before the meeting by
filing with the Company either a written revocation or a duly
executed proxy bearing a later date, or by appearing at the meeting
and voting in person.
Unless a contrary direction is indicated, a properly executed
proxy card will be voted "FOR" the election of the nominees
proposed by the Board of Directors and "FOR" the proposals to adopt
a Second Restated Certificate of Incorporation of the Company and
to amend the Company's 1986 Stock Option and Incentive Plan. The
management of Chiquita is not aware of any business to be acted
upon at this meeting other than as is described in this Proxy
Statement, but in the event any other business should properly come
before the meeting, the proxy holders (as indicated on the proxy
card) will vote the proxies according to their best judgment in the
interests of the Company.
Information concerning the vote required for approval of each
matter to be acted upon at the meeting, and the method by which
votes will be counted, is provided under the appropriate caption
for each matter voted upon.
Proxies, ballots and voting tabulations that identify individual
shareholders are kept private by the Company. These documents are
generally available for examination only by the inspectors of
election, by the trustees who are responsible for voting shares
held by various employee benefit plans, and by personnel of
Securities Transfer Company who process the proxy cards and
tabulate the vote. Securities Transfer Company is an affiliate of
the Company. The vote of any shareholder is not disclosed except
as may be necessary to meet legal requirements.
Voting of Depositary Shares and Shares Held by Trustees of Plans
Securities Transfer Company, which serves as Depositary for the
Series C Shares, will vote all Depositary Shares in accordance with
instructions received from the holders of such shares. Each holder
of Depositary Shares has received a proxy card for the purpose of
instructing the Depositary. No Depositary Shares may be voted by
the Depositary without such instruction. The votes of the
Depositary Shares are aggregated and voted by means of a vote of
the Series C Shares.
Shares held in the Chiquita Dividend Reinvestment Plan are voted
by the registered holders of such shares on a single proxy card
which includes the number of whole shares of Common Stock held in
the Plan account as well as the number of shares registered in the
shareholder's name.
If a shareholder participates in the Chiquita Savings and
Investment Plan, the John Morrell & Co. Salaried Incentive Savings
Plan (together referred to as the "Savings Plans"), the Chiquita
Associate Stock Purchase Plan (the "ASPP"), or the Friday Canning
Corporation Employee Stock Ownership Plan (the "Friday ESOP"), the
proxy card serves as the voting instruction to the respective
trustees of the plans. Shares held in these four plans are voted
by their respective trustees as directed by the plan participants.
The voting instructions of participants in the Friday ESOP are
tabulated by Star Bank, N.A., Cincinnati and forwarded to the
trustee in the aggregate to ensure the confidentiality of the
votes. Shares held in the ASPP or the Friday ESOP, will not be
voted unless a proxy card is signed and returned. However, if
participants in the Savings Plans do not vote their shares in the
Plans by returning their proxy cards, their shares will be voted by
the respective trustees in the same proportion as shares voted by
other participants in the Plans.
PRINCIPAL SHAREHOLDERS
As of April 1, 1994, the only persons known by the Company to be
the beneficial owners of more than five percent of any class of the
outstanding voting securities of the Company are:
[CAPTION]
Name and Address of Amount and
Percent
Beneficial Owner Title of Class Nature of
Ownership
of Class
<TABLE>
<S> <C> <C> <C>
American Financial Corporation andCommon Stock 22,887,662(1)
[47%]
its subsidiaries (collectively "AFC")
One East Fourth Street
Cincinnati, Ohio 45202
Great American Insurance CompanySeries C Shares
200,000(2) 31%
(a wholly-owned subsidiary of AFC)
580 Walnut Street
Cincinnati, Ohio 45202
<FN>
(1) Carl H. Lindner, the beneficial owner of 40.9% of AFC's Common
Stock and the Chairman of its Board of Directors and its Chief
Executive Officer, shares with AFC voting and investment power
with respect to the shares of Chiquita's Common Stock owned by
AFC. The remaining shares of AFC's common stock are owned by
other members of the Lindner family or by trusts for the
benefit of members of the Lindner family. AFC and Carl H.
Lindner may be deemed to be controlling persons of the
Company.
(2) Represents 1,000,000 Depositary Shares.
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of the
Company's Common Stock and Series C Shares beneficially owned by
each current director and nominee, by each executive officer named
in this Proxy Statement, and by all directors, nominees and
executive officers as a group as of April 1, 1994.
[CAPTION]
Common Stock Series C
Shares
Name Shares(1)(2)Percent of ClassShares
Percent of Class
<TABLE>
<S> <C> <C> <C> <C>
Hugh F. Culverhouse, Sr.22,215 *
Robert F. Kistinger 188,266 (4) *
Carl H. Lindner 22,924,984 (3)(4) [ ]% 200,000 (3) 31%
Keith E. Lindner 35,290 (3)(4) * 116 (4)
S. Craig Lindner 35,715 (3) *
Fred J. Runk 122,816 (4) *
Jean Head Sisco 20,715 *
Jos P. Stalenhoef 36,683 (4) *
William W. Verity -0-
Oliver W. Waddell 1,000 *
Ronald F. Walker 35,715 *
Steven G. Warshaw 75,440 (4) *
All directors, nominees and
executive officers as a
group (15 persons) 23,677,547 (4) % 200,116
_______________
*Less than 1%
<FN>
(1) Fractional shares are rounded down to the nearest whole share.
(2) Includes shares of Common Stock which the named director or
executive officer has the right to acquire within 60 days
after April 1, 1994, through the exercise of stock options, in
the following amounts: Hugh F. Culverhouse, 19,215 shares;
Robert F. Kistinger, 181,730 shares; Carl H. Lindner, 35,400
shares; Keith E. Lindner, 30,000 shares; S. Craig Lindner,
35,715 shares; Fred J. Runk, 110,400 shares; Jean Head Sisco,
5,715 shares; Jos P. Stalenhoef, 27,540 shares; William W.
Verity, none; Oliver W. Waddell, none; Ronald F. Walker,
35,715 shares; Steven G. Warshaw, 72,600 shares; and all
directors, nominees and executive officers as a group, 660,473
shares.
(3) Includes as to Carl H. Lindner, but not as to Keith E. Lindner
or S. Craig Lindner, 22,887,662 shares of Common Stock and
200,000 Series C Shares, representing 1,000,000 Depositary
Shares, held by AFC and its subsidiaries. Carl H. Lindner,
Keith E. Lindner and S. Craig Lindner beneficially own shares
of AFC common stock as follows: 7,749,210 (40.9%), 4,065,958
(21.4%), and 2,701,460 (14.2%), respectively. See "Principal
Shareholders."
(4) Does not include shares acquired in the Company's Savings and
Investment Plan after December 31, 1993, as to which
information is not yet available.
</TABLE>
In addition to the AFC Common Stock owned by Carl H. Lindner,
Keith E. Lindner and S. Craig Lindner (described in footnote 3
above), as of April 1, 1994, Fred J. Runk owned 1,439 shares of
AFC's Series E Preferred Stock and 10,144 shares of AFC's Series F
Preferred Stock. All of such shares are non-voting and are not
convertible into AFC voting securities. The foregoing represents
less than 1% of the outstanding shares of AFC Series E and Series
F Preferred Stock.
ELECTION OF DIRECTORS
By resolution of the Board of Directors and in accordance with
the Company's By-laws, the number of directors on the Board will
increase from seven to nine effective at the Annual Meeting on May
11, 1994. The Board has nominated nine directors for election to
hold office until the next Annual Meeting and until their
successors are elected and qualified. If any nominee should become
unable to serve as a director, the proxies will be voted for any
substitute nominee designated by the Board of Directors. No proxy
may be voted for more than nine nominees.
Nominees for Director
The nominees for election as a director are HUGH F.
CULVERHOUSE, SR., CARL H. LINDNER, KEITH E. LINDNER, S. CRAIG
LINDNER, FRED J. RUNK, JEAN HEAD SISCO, WILLIAM W. VERITY, OLIVER
W. WADDELL and RONALD F. WALKER. All of the nominees are
continuing directors who were elected at the Company's Annual
Meeting of Shareholders held May 12, 1993, except Messrs. Verity
and Waddell who have been nominated by the Board to fill the two
newly created positions on the Board.
The following biographical information has been furnished by
the nominees.
Hugh F. Culverhouse, Sr., a director since 1990, has been a
senior partner of Culverhouse, Botts & Story, a Tampa, Florida law
firm, for more than five years. He is also a director of American
Premier Underwriters, Inc. and Time Warner, Inc. Age 75.
Carl H. Lindner, a director since 1976, has been Chairman of
the Board of Directors and Chief Executive Officer of the Company
since August 1984 and Chairman of the Board and Chief Executive
Officer of AFC since AFC was founded over 30 years ago. AFC is a
holding company operating through wholly-owned and majority-owned
subsidiaries and other companies in which it holds significant
minority ownership interests. These companies operate in a variety
of financial businesses, including property and casualty insurance,
annuities, and portfolio investing. In nonfinancial areas, AFC has
substantial operations in the food products industry through its
ownership in Chiquita, and in television and radio station
operations and industrial manufacturing. Mr. Lindner also serves
as Chairman of the Board of Directors of the following publicly
traded companies: American Annuity Group, Inc., American Financial
Enterprises, Inc., American Premier Underwriters, Inc., General
Cable Corporation, and Great American Communications Company. AFC
owns a substantial beneficial interest (at least 20%) in all of
these companies. Age 74.
Keith E. Lindner, a director since 1984, has been President
and Chief Operating Officer of the Company since June 1989 and has
been President of its Chiquita Brands, Inc. subsidiary since 1986.
He was Senior Executive Vice President of the Company from 1986
until 1989. Age 34.
S. Craig Lindner, a director since 1984, has been President
and a director of American Annuity Group, Inc. ("AAG") since March
1993. AAG, throught its subsidiaries, is engaged in the sale of
annuities. He has also been Senior Executive Vice President of
American Money Management Corporation, a subsidiary of AFC which
provides investment services to AFC and its subsidiaries, for more
than five years. He is also a director of American Premier
Underwriters, Inc., General Cable Corporation, Great American
Communications Company and Spelling Entertainment Group Inc. Age
39.
Fred J. Runk, a director since 1984, has been a Vice President
of the Company since September 1984. From September 1984 to March
1994, he was the Company's Chief Financial Officer and from
February 1985 until June 1988, he was also Treasurer of the
Company. Mr. Runk has served as Vice President and Treasurer of
AFC for over five years. He is also a director of American
Financial Enterprises, Inc. Age 51.
Jean Head Sisco, a director since 1976, has been a Partner in
Sisco Associates, management consultants, for more than five years.
She is also a director of K-Tron International, Inc., McArthur Glen
Realty Corp., The Neiman Marcus Group, Inc., Santa Fe Pacific
Corporation, Textron Inc., and Washington Mutual Investors Fund.
Age 68.
William W. Verity, a nominee for director, has served as
Chairman and Chief Executive Officer of ENCOR Technologies, Inc.
("ENCOR") since 1991. ENCOR, a subsidiary of Leaver Corp.,
develops and manufactures plastic molded components. In 1994, Mr.
Verity was also elected Chairman of Leaver Corp., an investment
holding company operating through majority-owned subsidiaries in
the plastic molded component industry. He served as President of
Leaver Corp. from 1987 through 1993. Age: 35.
Oliver W. Waddell, a nominee for director, retired in 1993 as
Chairman, President and Chief Executive Officer of Star Banc
Corporation, a multi-state bank holding company. Prior to his
retirement, Mr. Waddell had served in an executive capacity with
Star Banc Corporation for more than five years. He is a director
of Star Banc Corporation and The Cincinnati Gas & Electric Company.
Age: 63.
Ronald F. Walker, a director since 1984, has served as
President, Chief Operating Officer and a director of AFC for more
than five years. He served as President and Chief Operating
Officer of Chiquita from August 1984 until June 1989. He is also
a director of American Annuity Group, Inc., American Financial
Enterprises, Inc., General Cable Corporation and Tejas Gas Company.
Age 55.
Keith E. Lindner and S. Craig Lindner are sons of Carl H.
Lindner. Carl H. Lindner, certain members of his family, and
trusts for their benefit, are the sole owners of AFC's outstanding
common stock.
Carl H. Lindner and Fred J. Runk provide broad policy
determination and guidance to operating management, which is headed
by Keith E. Lindner, but devote substantial portions of their time
to the affairs of AFC and its other subsidiaries.
In December 1993, Great American Communications Company
("GACC") completed a comprehensive financial restructuring which
included a prepackaged plan of reorganization filed in November of
that year under Chapter 11 of the Bankruptcy Code. Carl H. Lindner
and Fred J. Runk were executive officers of GACC within two years
before GACC's bankruptcy reorganization.
Required Vote
Directors of the Company are elected by a plurality of the
votes cast in the election. Abstentions (including instructions to
withhold authority to vote for one or more nominees) and broker
non-votes are counted for purposes of determining a quorum but will
not be counted as votes cast in the election of directors. There
is no provision for cumulative voting in the election of directors.
Chiquita has been informed that AFC intends to vote its shares
"FOR" all of the nominees.
THE BOARD OF DIRECTORS
During 1993, Chiquita's Board of Directors held four meetings
and took action by unanimous written consent on one occasion. Each
director except Hugh F. Culverhouse, Sr. and Ronald F. Walker
attended at least 75% of the aggregate of the total number of
meetings of the Board and of the committees on which that director
served during 1993.
Committees of the Board
Chiquita's Board of Directors has three standing committees:
an Executive Committee, an Audit Committee and a Compensation
Committee. The Board does not have a Nominating Committee.
Executive Committee The Board has appointed Carl H. Lindner,
Keith E. Lindner and Ronald F. Walker as members of the Company's
Executive Committee. The Executive Committee is permitted under
New Jersey law and the Company's By-laws to perform substantially
all of the functions of the Board of Directors, except By-law
changes, changes in directors, removal of officers, submission of
matters requiring shareholder action, and changes in resolutions
adopted by the Board which by their terms may be changed only by
the Board. During 1993, the Executive Committee held no meetings
but took action by unanimous written consent nine times.
Audit Committee During 1993, the Audit Committee was composed
of Jean Head Sisco and Hugh F. Culverhouse, Sr. The functions of
the Audit Committee include reviewing Chiquita's financial and
accounting policies and annual and quarterly financial statements;
meeting with the Company's internal and independent auditors to
review the scope of the annual audit, reviewing the progress and
results of the audit, and considering any recommendations as a
result of the audit and any management response to such
recommendations; and recommending to the Board of Directors the
selection of Chiquita's independent auditors. During 1993, the
Audit Committee held five meetings with members of the Company's
management and internal audit staff and met with the Company's
independent auditors at three of those meetings.
Compensation Committee During 1993, the Compensation
Committee was composed of Jean Head Sisco and Hugh F. Culverhouse,
Sr. The Compensation Committee evaluates the performance, and
reviews and approves all compensation, of the Company's executive
officers and certain other designated senior executives;
establishes general compensation policies and standards for
evaluation of all other senior management; and evaluates and
monitors long-range planning for executive development and
succession. Additionally, the Compensation Committee administers
the Company's 1986 Stock Option and Incentive Plan. The
Compensation Committee held five meetings and took action by
unanimous written consent twice during 1993.
Board Compensation
Effective January 1, 1994, directors who are not employees of
the Company (Hugh F. Culverhouse, Sr., S. Craig Lindner, Jean Head
Sisco, Ronald F. Walker and, if elected at the Annual Meeting,
William W. Verity, and Oliver W. Waddell) each receive an annual
fee of $40,000 plus $1,500 for each Board meeting attended.
Additionally, Carl H. Lindner receives $15,000 per year as Chairman
of the Executive Committee; Jean Head Sisco receives $15,000 per
year as Chairman of the Audit Committee and $7,500 per year as a
member of the Compensation Committee; and Hugh F. Culverhouse, Sr.
receives $7,500 per year as a member of the Audit Committee and
$7,500 per year as a member of the Compensation Committee.
Pursuant to the Company's 1986 Stock Option and Incentive Plan
(the "Plan"), each non-employee director receives a non-qualified
stock option award for 3,500 shares of the Company's Common Stock
on the date first elected to the Board and receives an additional
stock option award for 3,500 shares each year thereafter in
December. If the proposed amendments to the Plan are adopted by
the shareholders at the Annual Meeting, the non-employee directors'
initial stock option award and annual stock option award will
increase to 10,000 shares. All options awarded to non-employee
directors have an exercise price equal to the fair market value of
the Common Stock on the date of award. The options have a 20 year
term and vest over a ten year period, with 9% of the shares
exercisable on the date of grant and an additional 9% exercisable
on each anniversary of the grant date except in the tenth year when
the remaining 10% become exercisable.
ADOPTION OF SECOND RESTATED
CERTIFICATE OF INCORPORATION
General
The Board of Directors has approved, and recommends that the
shareholders adopt, a Second Restated Certificate of Incorporation
of the Company in the form attached as Appendix "A" hereto (the
"New Restated Certificate of Incorporation"). The proposed New
Restated Certificate of Incorporation incorporates into a single
document the various amendments made to the Company's 1970 Restated
Certificate of Incorporation (the "Old Restated Certificate of
Incorporation"), and deletes certain provisions of the Old Restated
Certificate of Incorporation which have been made unnecessary or
ineffective by subsequent events, including subsequent revisions to
New Jersey law. Additionally, the New Restated Certificate of
Incorporation increases the number of shares of Common Stock which
the Company is authorized to issue from 100,000,000 to 150,000,000
shares, and clarifies the voting rights of certain Preferred Stock.
These proposed changes are explained below.
Increase in Number of Authorized Shares of Common Stock
The Board of Directors believes that additional shares of
Common Stock should be available for issuance by the Board of
Directors from time to time for proper corporate purposes. As of
April 1, 1994, of the currently-authorized 100,000,000 shares of
Common Stock, _______ shares were outstanding and 28,893,629 shares
were reserved for issuance upon exercise of outstanding warrants,
conversion of outstanding convertible debentures and convertible
preferred stock or in connection with the Company's employee
benefit and dividend reinvestment plans. As stated above, the New
Restated Certificate of Amendment increases the number of
authorized shares of Common Stock to 150,000,000 shares.
The newly authorized shares of Common Stock will be issuable
from time to time by action of the Board of Directors for any
proper corporate purpose, without shareholder approval unless
required by applicable law or rules of the New York Stock Exchange.
These purposes could include financings, payment of stock
dividends, subdivision of outstanding shares through stock splits,
employee stock options and bonuses, and corporate acquisitions.
The additional shares also could be issued in a private placement
transaction to a third party favored by the Board of Directors in
the event of a takeover attempt directed at the Company which could
give the favored party an advantage over a competing party in a
contest to acquire control of the Company.
Clarifying the Possible Voting Rights of Certain Preferred Stock
The Company has authorized 10,000,000 shares of Non-Voting
Cumulative Preferred Stock, par value $1.00 per share (the "Non-
Voting Preferred Stock"), which may be issued in series established
from time to time by the Board of Directors. At present, one
series of Non-Voting Preferred Stock, the $2.875 Non-Voting
Cumulative Preferred Stock, Series A (the "Series A Preferred
Stock"), consisting of 2,875,000 shares, is outstanding. The Board
of Directors has broad discretion to determine the terms of any
series of Non-voting Preferred Stock without further shareholder
approval, including, without limitation, the dividend rate,
liquidation preference, redemption provisions, conversion
provisions and sinking fund provisions, if any.
At the Company's 1987 Annual Meeting, shareholders approved an
amendment to the Company's Certificate of Incorporation which
created the Non-Voting Preferred Stock. The proxy statement mailed
to shareholders for that meeting explained that the Board of
Directors may determine the specific terms of each series including
any voting powers of such series. Subsequently, as explained
above, the Board has issued the Series A Preferred Stock, the
holders of which have certain limited voting rights. For example,
such holders have the right to elect two members of the Board of
Directors when dividends on the Series A Preferred Stock have not
been paid in an aggregate amount equivalent to at least six
quarterly dividends on such shares.
The New Restated Certificate of Incorporation clarifies that
the Board of Directors may determine the voting rights of any
series of Non-Voting Preferred Stock, subject to the limitation
that no such series shall be entitled to vote unconditionally in
the election of directors. The inclusion of the term
"unconditionally" is intended to ensure that the Board of Directors
may determine that any series shall have the right to vote in the
election of directors upon the occurrence of certain events, such
as missed dividend payments, as is the case with the Series A
Preferred Stock. In the view of the Board of Directors, this
amendment merely clarifies, rather than expands the Board's powers
in this regard. This amendment would not require the Board of
Directors to give any particular voting rights to any series of
Non-Voting Preferred Stock, nor would it expand or otherwise affect
the voting rights of holders of Series A Preferred Stock. It is
intended to avoid any uncertainty in this regard in the case of
future issuances of additional series of Non-Voting Preferred
Stock.
Certain Other Amendments
In addition to the amendments set forth above, the New
Restated Certificate of Incorporation deletes a number of other
provisions which have been made unnecessary or ineffective by
subsequent events, including subsequent revisions to New Jersey
law. Each such amendment is described below.
Simplifying the Description of the Company's Purposes. At
present, the New Jersey Business Corporation Act (the "Act")
provides that a corporation may state in its certificate of
incorporation that it may engage in any activity within the
purposes for which corporations may be organized under the Act,
without the need to list specific activities. Thus, the lengthy
description of specific activities in which the Company may engage
which appears in the Old Restated Certificate of Incorporation is
unnecessary and is being deleted in favor of the "general purpose"
clause provided by the Act.
Deleting the Designations of Certain Classes and Series of
Retired Preferred and Preference Stock. Among the classes and
series of capital stock authorized by the Old Restated Certificate
of Incorporation were 46,028 shares of $3.00 Cumulative Preferred
Stock (the "$3.00 Stock"), 2,568,096 shares of $1.20 Cumulative
Convertible Preference Stock, Series A (the "$1.20 Stock"), and
75,813 shares of $3.20 Cumulative Convertible Preference Stock,
Series B (the "$3.20 Stock"). Each series was created in
connection with a 1970 acquisition transaction, and all issued
shares of each have since been redeemed and retired. The new
Restated Certificate of Incorporation eliminates the $3.00 Stock as
an authorized security of the Company and deletes the designations
of the $1.20 Stock and the $3.20 Stock. Deletion of the
designations of the $1.20 Stock and the $3.20 Stock, each of which
constitute series of the Company's Cumulative Preference Stock, has
the effect of returning 2,643,909 shares to the status of
authorized and unissued shares of Cumulative Preference Stock.
These shares could be reissued by the Board of Directors without
shareholder approval and could be utilized, under certain
circumstances, as a method of preventing a takeover of the Company.
Deleting Certain References to the Indemnification Rights of
Persons Who Formerly Served as Directors of AMK Corporation.
Pursuant to a 1970 agreement whereby the former AMK Corporation was
merged with and into the Company, the Company agreed to provide
certain indemnification rights to persons who formerly served as
directors of AMK Corporation, and to amend its certificate of
incorporation to refer specifically to these rights. However, the
listing of such rights was merely intended to be illustrative of
the rights afforded to those persons under the agreement and under
applicable law. In view of this fact, and in view of the passage
of time since 1970, the New Restated Certificate of Incorporation
deletes these references.
Deleting Certain Provision With Respect to Shareholders'
Rights of Inspection of the Company's Books and Records. The Old
Restated Certificate of Incorporation provides that the Board of
Directors shall have the power to determine whether and to what
extent, at what time and places, and under what conditions and
regulations the accounts and books of the Company shall be open for
inspection by the shareholders. The New Restated Certificate of
Incorporation deletes this provision because it is unnecessary, as
the Act presently provides shareholders with certain minimum rights
with respect to the inspection of the Company's books and records
which may not otherwise be limited by the Board of Directors. The
Board would continue to have the right to provide to shareholders
greater rights of inspection than are required by the Act even in
the absence of this provision.
Deleting Provision Stating that Shareholders May Act by
Written Consent in Lieu of Holding a Meeting of Shareholders.
Because the Act presently permits shareholders to act by written
consent in lieu of holding a meeting of shareholders, unless
otherwise provided in the certificate of incorporation, this
provision is unnecessary and is being deleted.
Deleting Provision Stating that the Corporation May Loan Money
to Employees Under Certain Conditions. The Old Restated
Certificate of Incorporation provides that the Board of Directors
shall have the power to loan money to, or guarantee an obligation
of, or otherwise assist any officer or other employee of the
Company or any subsidiary whenever in their judgment such loan,
guarantee or assistance may reasonably be expected to benefit the
Company. As the Act presently contains a provision to the same
effect, this provision is unnecessary and is being deleted.
Deleting Certain Provisions Providing that All Corporate
Powers May be Exercised by the Board of Directors, and Specifying
Certain Powers. The Old Restated Certificate of Incorporation
provides that, except as otherwise provided by statute, the
Certificate of Incorporation or the By-laws, all corporate powers
may be exercised by the Board of Directors. Two particular types
of powers, those related to the acquisition and sale of property
and those related to the borrowing of money, are specifically
described as being included within such powers. As these sections
merely restate current New Jersey law, they
are unnecessary and are being deleted.
Other Miscellaneous Changes
In addition, certain miscellaneous changes, such as updating
the address of the Company's registered agent in New Jersey and the
renumbering of certain subsections and cross-references, are made
in the New Restated Certificate of Incorporation.
Vote Required
The affirmative vote of two-thirds of the votes cast by the
holders of shares entitled to vote on the proposal at the Annual
Meeting is required to approve the New Restated Certificate of
Incorporation. Abstentions and broker non-votes will not be
counted as votes cast on this matter. No outstanding class or
series of the Company's preferred or preference stock has a class
vote on the proposal.
The Company has been informed that AFC intends to vote its
shares "FOR" adoption of the New Restated Certificate of
Incorporation.
APPROVAL OF AMENDMENTS TO THE 1986 STOCK
OPTION AND INCENTIVE PLAN
General
On February 9, 1994, the Board of Directors adopted amendments
to the Company's 1986 Stock Option and Incentive Plan (the "Plan"),
subject to the approval of the shareholders of the Company at the
Annual Meeting. The amendments are as follows: (1) to increase the
number of shares of the Company's Common Stock which may be issued
under the Plan from 10,000,000 to 15,000,000 shares; (2) to
increase the amount of the automatic stock option award granted to
non-employee directors of the Company at the time of their initial
election to the Board and annually thereafter from 3,500 to 10,000
shares of Common Stock; and (3) to limit to no more than 300,000
the number of shares of Common Stock which may be the subject of
stock options and Stock Appreciation Rights ("SARs") granted to
any participant in the Plan during a twelve-month period. Each of
these amendments is described below. The Board recommends that the
shareholders approve the Plan as so amended.
Increase in Authorized Plan Shares.
The Plan currently authorizes the issuance of 10,000,000
shares of Common Stock in connection with awards granted under the
Plan. As of February 28, 1994, 2,080,824 shares have already
been issued under the Plan and another 5,036,967 shares are
reserved for issuance pursuant to outstanding stock options. This
leaves only 2,882,209 shares available for future grants under
the Plan. Because it was necessary to request shareholder approval
of other Plan amendments this year, the Board decided that this is
an appropriate time to also request an increase in the number of
shares authorized for issuance under the Plan to 15,000,000. The
Board believes the increased authorization should provide
sufficient shares for Plan awards for several years and make
unlikely the need to request additional shares in the near future.
Option Grants to Non-Employee Directors.
The Plan currently provides that each non-employee director
who is elected or appointed to the Board automatically receives, on
the date he or she first becomes a director of the Company, a stock
option grant to purchase 3,500 shares of Common Stock. Thereafter,
on an annual basis, each non-employee director who has served on
the Board for at least six months receives an additional option
grant covering 3,500 shares of Common Stock.
As amended, the Plan provides for automatic initial and annual
grants to non-employee directors of stock options for 10,000 shares
of Common Stock. The options are priced at fair market value on
the date of grant, have a 20 year term and vest over ten years. In
deciding to increase the size of these grants, the Board of
Directors concluded that the grants are of great importance in
stimulating and rewarding the services provided to the Company by
the Company's non-employee directors. Additionally, the increase
in the size of the automatic grants should assist the Company in
continuing to attract and retain new non-employee directors.
Assuming the election of all nominees, the Company will have six
non-employee directors after the Annual Meeting: Hugh F.
Culverhouse, Sr., S. Craig Lindner, Jean Head Sisco, Ronald F.
Walker, William W. Verity and Oliver W. Waddell.
Limitation on Shares Subject to Option Grants.
During 1993, Congress amended the Internal Revenue Code by
adding new Section 162(m) which denies a federal income tax
deduction to any publicly held corporation for compensation paid to
specified executives to the extent that a specified executive's
compensation in any year exceeds $1,000,000. However, compensation
which is "performance-based" is not counted against the $1,000,000
limitation.
Section 162(m) provides that stock options and SARs granted at
fair
market value will qualify as "performance based" compensation if
they are granted pursuant to a plan which contains a specific
shareholder approved limit on the number of options and SARs which
may be granted during a specified period to any particular
executive. In order to satisfy this requirement, the Board has
amended the Plan to provide that no more than 300,000 shares of
Common Stock may be the subject of options and SARs granted to any
Plan participant in any twelve-month period.
Summary of the Plan
A summary description of the Plan, as amended, follows.
Shares Available. As amended, the maximum aggregate number of
shares of Common Stock which may be issued under the Plan will be
15,000,000 shares, subject to adjustment in the event of stock
splits or other similar changes, including shares issued pursuant
to the Plan prior to its amendment.
Administration. The Plan is administered by a committee (the
"Committee"), comprised of two or more directors who are not
eligible to participate in the Plan except through the automatic
grant of stock options described below under "Stock Options."
Among the powers granted to the Committee are the authority to
administer and interpret the Plan, to establish rules and
regulations for its operation, to select participants in the Plan,
to determine the types and combinations of awards to be granted,
and to determine the amount and other terms and conditions of an
award. The Committee also has the power to modify or waive
restrictions on awards, and to accelerate and grant extensions to
awards. Currently, the Committee is composed of Jean Head Sisco
and Hugh F. Culverhouse, Sr. The Committee may delegate its
authority to one or more officers of the Company; however, only the
Committee may grant awards to executive officers and employee-
directors of the Company and determine the terms and conditions of
those awards.
Eligibility for Participation. Employees (including officers
and directors) of the Company and any of its subsidiaries (as
defined in the Plan) are eligible to be selected to participate in
the Plan. Currently, over 900 persons participate in the Plan.
The Plan contains no limitation on the number of participants.
Types of Awards. The Plan provides for the grant of any and
all of the following types of awards: (1) stock options, including
Incentive Stock Options, Non-Qualified Stock Options, and
Replacement Options; (2) Stock Appreciation Rights, in tandem with
stock options or freestanding; (3) stock awards, including
restricted and unrestricted awards of stock; and (4) Performance
Awards. Awards may be granted singly, in combination, or in
tandem, as determined by the Committee. Except to the extent
provided by law, awards are nontransferable.
Stock Options. The Committee may grant awards in the form of
options to purchase shares of the Company's Common Stock. With
regard to each stock option, the Committee determines the number of
shares subject to the option, the term of the option (which shall
not exceed ten years for Incentive Stock Options or 20 years for
Non-Qualified Stock Options), the manner and time of the option's
exercise, and the exercise price per share of stock subject to the
option. As amended, the Plan provides that no more than 300,000
shares of Common Stock may be the subject of options and SARs
granted to any Plan participant in any twelve-month period. Any
option granted in the form of an Incentive Stock Option must
satisfy the applicable requirements of Section 422 of the Internal
Revenue Code of 1986, as amended.
The option price upon exercise may, to the extent determined
by the Committee, be paid in cash, in shares of Common Stock owned
by the participant for at least six months, or by a reduction in
the number of shares of Common Stock issuable upon exercise. The
Committee may at any time offer to buy an option previously granted
on such terms and conditions as the Committee shall establish, or
may in its discretion substitute options with lower exercise prices
for outstanding options.
The Committee may grant a Replacement Option to any employee
who exercises an option granted under the Plan using then-owned
Common Stock as payment for the purchase price. A Replacement
Option grants the employee the right to purchase, at the fair
market value as of the date of exercise of the original option, a
number of shares of Common Stock not to exceed the number of shares
used by the employee (i) in payment of the exercise price and (ii)
in satisfaction of applicable withholding taxes on the transaction.
A Replacement Option may not be exercised for one year following
the date of grant, and its term may not extend beyond the term of
the original option. The Committee may rescind any Replacement
Option prior to exercise.
Stock Option Awards to Non-Employee Directors. As amended,
the Plan provides that each non-employee director who is elected or
appointed to the Board will automatically receive a grant of Non-
Qualified Stock Options for 10,000 shares of Common Stock on the
date he or she first becomes a director of the Company.
Additionally, at the same time that the Committee decides the total
number of stock options to be granted to employees in connection
with the Company's annual compensation review conducted each year
in December, each then-serving non-employee director of the
Company, who has served on the Board at least six months, will
automatically receive a grant of Non-Qualified Stock Options for
10,000 shares of Common Stock.
All options granted to non-employee directors vest over a ten
year period, with 9% of the shares exercisable on the date of grant
and an additional 9% exercisable on each anniversary of the date of
grant except in the tenth year when the remaining 10% become
exercisable. The exercise price for all options granted to non-
employee directors is the fair market value of the Common Stock on
the date of grant.
Stock Appreciation Rights (SARs). The Plan authorizes the
Committee to grant SARs either with a stock option ("Tandem SARs")
or independent of a stock option ("Non-tandem SARs"). An SAR is a
right to receive a payment equal in value to the excess of the fair
market value of a share of Common Stock on the date of exercise
over the reference price per share of Common Stock established in
connection with the grant of the SAR. The reference price per
share covered by an SAR will be the per share exercise price of the
related option in the case of a Tandem SAR and will be the per
share fair market value on the date of grant in the case of a Non-
tandem SAR.
A Tandem SAR may be granted either at the time of the grant of
the related stock option or at any time thereafter during the term
of the stock option. A Tandem SAR may be exercised only at the
times and to the extent the related stock option is exercisable.
The exercise of a Tandem SAR will automatically result in the
surrender of the same portion of the related option. A Non-tandem
SAR will be exercisable as provided by the Committee. A Tandem SAR
expires upon the termination of the related stock option. A Non-
tandem SAR may have a term no longer than 20 years from its date of
grant.
As amended, the Plan provides that no more than 300,000 shares
of Common Stock may be the subject of options and SARs granted to
any Plan participant in any twelve-month period.
Stock Awards. The Plan authorizes the Committee to grant
awards in the form of restricted or unrestricted shares of Common
Stock. These awards may be in such amounts and subject to such
terms (including the price to be paid, if any, for restricted
awards) and conditions, if any, as the Committee may determine
including, but not limited to, contingencies related to the
attainment of specified performance goals or continued employment.
Performance Awards. The Plan permits the grant of
"Performance Awards" consisting of the right to receive either
Common Stock or cash of an equivalent value, or a fixed dollar
amount payable in cash, shares, or both, at the end of a specified
performance period established by the Committee. Performance
Awards may be conditioned or based upon the attainment of specified
performance goals, upon the appreciation in fair market value, book
value, or some other measure of value of the Common Stock, upon the
Company's performance based on earnings or cash, or upon other
factors or criteria set by the Committee. Additionally, the
vesting of Performance Awards may be conditioned upon continued
employment.
Other Terms of Awards. Awards may be paid in cash, Common
Stock, or a combination of both, as determined by the Committee.
If an award is granted in the form of a Restricted Stock Award or
Performance Award, the Committee may include as part of the award
an entitlement to dividend or voting rights.
Unless the Committee determines otherwise, the Plan provides
for the forfeiture of awards in the event of termination of
employment for a reason other than death, disability or retirement,
such forfeiture to occur no later than 90 days following
termination of employment. In the event of death, disability, or
retirement, awards automatically vest and are exercisable for one
year (or such longer period as the Committee may specify), or until
the expiration of the original term of the award, whichever period
is shorter.
Upon the grant of any award, the Committee may, by means of an
award notice or otherwise, establish such other terms, conditions,
restrictions and/or limitations covering the grant of the award as
are not inconsistent with the Plan.
Merger or Sale. In the event of a merger, consolidation, sale
of assets, or similar reorganization in which the Company is the
continuing or surviving entity, the Committee may provide for the
continuation or assumption of awards, or other equitable
adjustments to awards to reflect the change in Company stock. If
the Company is not the surviving entity in such a reorganization,
or the Company is otherwise liquidated or dissolved, holders of
awards which are then exercisable shall have the right to exercise
the awards prior to the event.
Federal Tax Treatment. Under current U.S. federal tax law,
the following are the U.S. federal income tax consequences
generally arising with respect to awards under the Plan.
A participant who is granted a Non-Qualified Stock Option does
not have taxable income at the time of grant, but does have taxable
income at the time of exercise equal to the difference between the
exercise price of the shares and the market value of the shares on
the date of exercise. The Company is entitled to a corresponding
tax deduction for the same amount.
A participant who is granted an Incentive Stock Option does
not realize any taxable income at the time of the grant or exercise
of the option. Similarly, the Company is not entitled to any tax
deduction at the time of the grant or exercise of the option. If
the participant makes no disposition of the shares acquired
pursuant to an Incentive Stock Option before the later of (i) two
years from the date of grant, and (ii) one year from the transfer
of the shares to the participant, any gain or loss realized on a
subsequent disposition of the shares will be treated as a long-term
capital gain or loss. Under such circumstances, the Company will
not be entitled to any deduction for federal income tax purposes.
On the other hand, if the participant disposes of the shares before
the lapse of the required holding period, then the participant will
have taxable income at the time of exercise equal to the difference
between the exercise price of the shares and the market value of
the shares on the date of exercise, and the Company will be
entitled to a corresponding tax deduction.
The grant of an SAR produces no U.S. federal tax consequences
for the participant or the Company. The exercise of an SAR results
in taxable income to the participant, equal to the difference
between the reference price of the shares and the market price of
the shares on the date of exercise, and a corresponding tax
deduction to the Company.
A participant who has been granted a Performance Award will
not realize taxable income at the time of the grant, and the
Company will not be entitled to a tax deduction at such time. A
participant will realize ordinary income at the time the award is
paid equal to the amount of cash paid or the value of shares
delivered, and the Company will have a corresponding tax deduction.
A participant who has been granted an award of restricted
shares of Common Stock will not realize taxable income at the time
of the grant, and the Company will not be entitled to a tax
deduction at the time of the grant, unless the participant makes an
election to be taxed at the time of the award. When the
restrictions lapse, the participant will receive taxable income in
an amount equal to the excess of the market value of the shares at
such time over the amount, if any, paid for such shares. The
Company will be entitled to a corresponding tax deduction. The
grant of an award of unrestricted Common Stock will produce
immediate tax consequences for both the participant and the
Company. The participant will be treated as having received
taxable compensation in an amount equal to the then fair market
value of the Common Stock awarded. The Company will receive a
corresponding tax deduction.
Reimbursement of Taxes. In its discretion, the Committee may
provide 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.
Amendment and Termination. The Board of Directors may amend
the Plan at any time but may not adopt any amendment which would
cause the Plan to lose its exemption under Securities and Exchange
Commission Regulation Section 240.16b-3 or which would impair the
rights of a participant with respect to awards granted prior to the
amendment without his or her consent. The Plan will continue in
effect until December 31, 2015 unless terminated sooner by the
Board at any time. Termination of the Plan will not impair the
status of any awards outstanding at the date of termination.
Other Information. As of February 28, 1994, options for the
following numbers of shares of Common Stock have been granted to
the following individuals and groups and are outstanding under the
Plan: (i) each named executive officer: Carl H. Lindner, 50,000
shares; Keith E. Lindner, 30,000 shares; Steven G. Warshaw, 235,000
shares; Robert F. Kistinger, 170,000 shares; and Jos P. Stalenhoef,
156,150 shares; (ii) all current executive officers as a group,
995,050 shares; (iii) all current directors who are not executive
officers as a group, 184,000 shares; (iv) each nominee for election
as director (not otherwise named): Hugh F. Culverhouse, Sr.,
53,500 shares; S. Craig Lindner, 53,500 shares; Fred J. Runk,
125,000 shares; Jean Head Sisco, 23,500 shares; William W. Verity,
none; Oliver W. Waddell, none; and Ronald F. Walker, 53,500 shares;
and (v) all current employees as a group (including all current
officers who
are not executive officers), 3,857,917 shares. The
recipients of, and numbers of shares subject to, future grants
under the Plan are not determinable at this time. In addition, the
following options have been granted under the Company's Individual
Stock Option Plan and are currently outstanding: (i) Robert F.
Kistinger, 150,000 shares; (ii) all current executive officers as
a group, 165,000 shares; and (iii) all current employees as a
group, 342,840 shares. The closing
price of the Company's Common Stock as reported on the New York
Stock Exchange on March 23, 1994 was $18.625 per share.
The number of outstanding options reported above for all
current employees as a group gives effect to the Company's 1993
exchange of certain stock options with an exercise price 50% or
more above the market price of the Common Stock for a reduced
number of options at then-current fair market value. The offer to
exchange, which is more fully described below under "Report of
Compensation Committee on Executive Compensation," was not
extended to directors and executive officers of the Company.
Required Vote
The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy, and
entitled to vote at the meeting, is required to approve the
amendments to the Plan. As to this proposal, abstentions will have
the same effect as votes against the proposal whereas broker non-
vote shares will be deemed to be absent from the meeting.
Chiquita has been informed that AFC intends to vote its shares
"FOR" approval of the amendments to the 1986 Stock Option and
Incentive Plan.
EXECUTIVE COMPENSATION
Summary Information
The following table summarizes the annual and long-term
compensation of the Chairman of the Board and Chief Executive
Officer and the four other most highly paid executive officers of
the Company for the fiscal years 1993, 1992 and 1991. A report on
executive compensation by the Compensation Committee of the Board
of Directors appears on page 19 of this Proxy Statement.
[CAPTION]
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal PositionYear Salary($)(1)Bonus($)(1)
_________________________________________________________________
______________
____________________
<TABLE>
<S> <C> <C> <C>
Carl H. Lindner 1993 $410,000 $-0-
Chairman of the Board and1992$410,000 -0-
Chief Executive Officer1991 400,000 -0-
_________________________________________________________________
__________________________________
Keith E. Lindner 1993 $1,030,000$837,000
President and Chief 19921,030,000 -0-
Operating Officer 1991 963,4621,181,865
_________________________________________________________________
__________________________________
Steven G. Warshaw 1993 $300,385 $360,000
Executive Vice President,1992200,000 225,000
Chief Administrative Officer1991200,000370,000
and Chief Financial Officer
_________________________________________________________________
__________________________________
Robert F. Kistinger(4) 1993 $300,385 $325,000
Senior Executive Vice President,
Chiquita Banana Group (Worldwide)
_________________________________________________________________
__________________________________
Jos P. Stalenhoef(4) 1993 $250,192 $
President,
Chiquita Banana,
North American Division
</TABLE>
[CAPTION]
Long-Term
Compensation
Securities
Underlying All Other
Stock Option Compensation
Name and Principal Position Grants(#) ($)(2)
_________________________________________________________________
____________
______________________
<TABLE>
<S> <C> <C>
Carl H. Lindner $-0- $8,102
Chairman of the Board and-0- 8,963
Chief Executive Officer20,000 ---
_________________________________________________________________
__________________________________
Keith E. Lindner -0- $18,141
President and Chief -0- 14,471
Operating Officer975,000 (3) ---
_________________________________________________________________
__________________________________
Steven G. Warshaw $80,000 $16,538
Executive Vice President &40,000 16,544
Chief Administrative Officer15,000 ---
_________________________________________________________________
__________________________________
Robert F. Kistinger(4)60,000 $52,966
Senior Executive Vice President,
Chiquita Banana Group
_________________________________________________________________
__________________________________
Jos P. Stalenhoef(4) 60,000 $24,214
President, Chiquita
Banana, North America
_________________________________________________________________
__________________________________
<FN>
(1) Includes amounts deferred under the Company's Deferred
Compensation Plan.
(2) In accordance with Securities and Exchange Commission
transition rules, information for 1991 is not required. Amounts
disclosed for 1993 are comprised of the following:
(a) Company contributions to the Savings and Investment
Plan:
Carl H. Lindner, $6,200; Keith E. Lindner, $13,941;
Steven G. Warshaw, $10,343; Robert F. Kistinger,
$10,343;
and Jos P. Stalenhoef, $10,343.
(b) Company matching contributions on excess deferrals from
the Savings and Investment Plan to the Deferred
Compensation Plan as a result of IRS limitations on the
amount which can be deferred under a 401(k) savings
plan:
Robert F. Kistinger, $10,357; and Jos P. Stalenhoef,
$5,182.
(c) Above market interest (assuming the highest rate payable
under the Company's Deferred Compensation Plan, which
provides a graduated interest schedule conditioned upon
continuation of service) calculated (but not paid or
payable) on deferred compensation: Keith E. Lindner,
$4,152; Steven G. Warshaw, $2,165; Robert F. Kistinger,
$30,217; and Jos P. Stalenhoef, $3,992.
(d) Term life insurance premiums paid by the Company: Carl
H.
Lindner, $1,902; Keith E. Lindner, $48; Steven G.
Warshaw, $874; Robert F. Kistinger, $2,049; and Jos P.
Stalenhoef, $4,697.
(3) In March 1993, Keith E. Lindner surrendered to the Company for
cancellation the 975,000 share stock option granted to him in 1991.
(4) Robert F. Kistinger and Jos P. Stalenhoef are executive
officers of a division of one of the Company's wholly-owned
subsidiaries and were first named executive officers of the Company
in 1993. Accordingly, information for years prior to 1993 is not
presented.
</TABLE>
Stock Option Grants
The following table contains information concerning grants of
stock options to the named executive officers under the Company's
1986 Stock Option and Incentive Plan during the year ended December
31, 1993.
[CAPTION]
OPTION GRANTS IN 1993
Individual Grants
Number of % of Total
Securities OptionsExercise
Underlying Granted toor Base
Options Employees inPrice(2)Expiration Grant
Date
Name Granted(1) 1993 ($/Sh) Date Present
Value(3)
<TABLE>
<S> <C> <C> <C> <C> <C>
Carl H. Lindner -0- - - - -
Keith E. Lindner -0- - - - -
Steven G. Warshaw 80,000 2.4% $10.3112/21/13
$433,600
Robert F. Kistinger 60,000 1.8% $10.3112/21/13
$325,200
Jos P. Stalenhoef 60,000 1.8% $10.3112/21/13
$325,200
</TABLE>
[CAPTION]
Expiration Grant Date
Name Date Present Value(3)
<TABLE>
<S> <C> <C>
Carl H. Lindner -0- -
Keith E. Lindner -0- -
Steven G. Warshaw 12/21/13 $303,200
Robert F. Kistinger12/21/13 $227,400
Jos P. Stalenhoef 12/21/13 $227,400
<FN>
(1) Options vest over a ten year period with 9% immediately
exercisable on the date of the grant and an additional 9%
exercisable on each anniversary of the grant date thereafter
until 12/21/03 when the remaining 10% will be exercisable.
(2) Exercise price is equal to the fair market value (average of
the high and low trading prices in the NYSE) of shares of
Chiquita's Common Stock on the date of grant.
(3) The grant date present value was calculated using a variation
of the Black-Scholes option pricing model. The assumptions
used in the model included (a) an expected Chiquita stock
price volatility of .43; (b) a risk-free interest rate of
6.9%; and (c) a dividend yield of 1.7%. In addition, the
Black-Scholes model output was modified by (a) a 10% discount
to reflect the non-transferability of the options and (b) a
25% discount to reflect the risk of forfeiture (5% per year
probability) due to restrictions on exercise of the option in
accordance with the ten year vesting provisions. Whether the
assumptions used will prove accurate cannot be known at the
date of grant. The actual value, if any, will depend on the
market price of the Company's Common Stock on the date of
exercise.
(/TABLE>
Option Exercises, Holdings and Year-End Values
The following table summarizes the value of all outstanding
options for the named executive officers as of December 31, 1993.
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1993
AND 1993 YEAR-END OPTION VALUE
<PAGE>
Shares
Acquired
on
Exercise<PAGE>
Value
Realized<PAGE>
Number of Securities
Underlying
Unexercised Options
at December 31, 1993
Exercisable Unexercisable<PAGE>
</TABLE>
<TABLE>
<S>
Carl H. Lindner<PAGE>
<C>
-0-<PAGE>
<C>
-0-<PAGE>
<C>
35,400<PAGE>
<C>
14,600<PAGE>
Keith E. Lindner -0- -0- 30,000 -0- Steven G. Warshaw -0- -0-
70,725 <PAGE>
164,275 Robert F. Kistinger -0- -0- 160,430 159,
</TABLE>
[CAPTION]
<PAGE>
Value of Unexercised In-the-Money
Options at December 31, 1993(1)<PAGE>
Name Exercisable Unexercisable <TABLE>
<S>
Carl H. Lindner<PAGE>
<C>
$75,630 <PAGE>
<C>
$ -0- <PAGE>
Keith E. Lindner $75,630 $ -0- Steven G. Warshaw $44,118
<PAGE>
$63,736 Robert F. Kistinger $ 9,769 $47,802 <PAGE>
(1) Value is calculated as the difference between the fair market
value of the Common Stock on December 31, 1993 ($11.19 per
share) and the exercise price of the options. Fair market
value is defined as the average of the highest and lowest
selling prices of the Company's Common Stock as reported on
the
New York Stock Exchange.
</TABLE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee") is composed of Jean Head Sisco and Hugh F.
Culverhouse, Sr. who are independent outside directors. The
Committee is charged with responsibility for reviewing the
performance and approving the compensation of key executives and
for establishing general compensation policies and standards for
reviewing management performance. In carrying out this function,
the Committee ensures that the Company's compensation philosophy is
appropriate to its business and is implemented effectively through
its various policies and programs. The Committee also reviews both
Company and key executive performance in light of established
criteria and objectives, and approves individual compensation for
all Named Executive Officers (NEOs) listed in the Summary
Compensation Table and for other key executives.
The Company's compensation philosophy is designed to motivate
and reward achievement of long-term growth in shareholder value.
To further that objective, the Company has adopted a "Total
Compensation" philosophy which emphasizes: rewards based on
individual and Company performance; a shareholder's perspective on
Company performance; and a commitment to the Company's long-term
success. The Company administers its Total Compensation philosophy
under a plan called the Total Compensation System (TCS). TCS
applies to managers at all management levels, including NEOs,
except for the Chief Executive Officer (CEO). CEO compensation is
not administered under TCS and is discussed under Chief Executive
Officer 1993 Compensation, following the description of TCS for
other NEOs.
TOTAL COMPENSATION SYSTEM FOR NAMED EXECUTIVE OFFICERS OTHER THAN
CEO
TCS is designed to establish the appropriate total annual cash
compensation (TACC) for each management position; to ensure that
bonus awards under the Company's Management Incentive Plan (MIP),
an annual cash bonus incentive plan, are based on performance; and
to award stock options as long-term incentives and rewards tied
directly to shareholder interests.
Total Annual Cash Compensation (TACC) is annual base salary
plus MIP bonus award. The primary factors considered in setting
the TACC for each NEO are: position and responsibilities, potential
impact on annual financial and longer term strategic results, and
performance. TACC is established by setting base salary and an MIP
bonus target and calculating the actual MIP bonus award based on
performance.
Base salary is established according to each NEO's position,
responsibilities and long-term contribution. Base salaries are not
adjusted annually but are adjusted when the Committee, in
consultation with the CEO and the President and Chief Operating
Officer (COO), judges that an NEO's responsibilities and/or long-
term contribution have changed sufficiently to warrant a change in
base salary.
The MIP bonus target defines the MIP bonus award to be paid if
annual performance objectives, described below, are achieved. The
MIP bonus target is expressed as a percentage of base salary and is
determined according to the position's potential impact on Company
results. Base salary and MIP bonus target are coordinated so that
the sum provides a TACC level which, in the Committee's judgment,
is appropriate for the position and individual.
For NEOs other than the COO, the base salaries and MIP bonus
targets are also evaluated with reference to competitive market
compensation practices. The competitive market is defined as
consumer products companies with total sales volume similar to the
Company and is measured using two objective compensation surveys
from a nationally recognized compensation consulting firm.
Companies surveyed are not limited to companies shown in the
industry group index in the Cumulative Total Return graphs because
the Company's market for executive talent extends well beyond this
industry group. The performance of surveyed companies is not
considered because base salary and bonus targets are influenced
primarily by the overall competitive market, not simply by
companies with performance similar to the Company in any given
year.
MIP bonus awards are determined by measuring performance
against annual objectives in three categories, with the indicated
weights assigned to each category: Team Profit Achievement
Objectives (40%), which include return on investment or similar
objectives for the relevant operating unit(s); Individual Profit
Achievement Objectives (40%), which include cost, revenue, volume,
and quality objectives appropriate to the individual; Management
Achievement and Strategy and Organization Development Objectives
(20%), which include development and implementation of business
strategies and organizational effectiveness programs.
Accomplishment of each objective is rated quantitatively and
a weighted average overall performance rating is calculated. The
overall performance rating determines the percentage of the MIP
bonus target to be paid, subject to Compensation Committee Review.
TCS provides for MIP bonus awards of 100 percent of MIP bonus
target for overall performance which meets objectives. Actual MIP
bonus awards may range from zero percent of MIP bonus target (for
overall performance which does not meet objectives) to 200 percent
of MIP bonus target (for overall performance which far exceeds
objectives).
Stock options are used to reward past performance and to
motivate future performance, especially long-term performance.
Option grants vest over a ten year period with nine percent
exercisable immediately upon the grant date and an additional nine
percent exercisable on each anniversary of the grant until the
tenth anniversary when the final ten percent becomes exercisable.
The Company's options have a 20 year exercise period and are priced
at fair market value on the date of grant. The long vesting and
exercise periods and market pricing are specifically intended to
motivate management decisions which will be in the shareholders'
best long-term interests and to further retention of executive
talent.
Targets for stock option awards are established based on the
capital value of the grant (the number of stock options granted
multiplied by the price). Relating stock option award targets to
the capital investment required to purchase an equivalent number of
shares of stock emphasizes the Company's philosophy that stock
options should provide value to management when management is
successful in increasing the value of Company securities. Stock
option award targets increase as responsibility, base salary and
MIP bonus target increase. The Company believes that market
comparisons and specific competitive positioning are not meaningful
for the Company's stock option award targets because of the long
vesting and exercise periods.
Actual stock option awards may be larger or smaller than award
targets depending on a number of factors including individual
performance against annual objectives (described above), changes in
responsibility, future potential, management succession and the
stock options awarded to the executive in prior years.
CHIEF EXECUTIVE OFFICER 1993 COMPENSATION
Since 1988, Mr. Carl H. Lindner's, Chairman and Chief
Executive Officer (CEO), annual base compensation has been $400,000
with no cash bonus or stock option grants, other than stock option
grants awarded to Directors. In approving his compensation for
1993, the Committee considered the fact that Mr. Lindner had
significant responsibilities as an executive officer of AFC and its
subsidiaries and affiliates. Although Mr. Lindner devoted time to
matters more directly related to other enterprises, the Committee
believes his overall compensation from Chiquita Brands
International, Inc. for 1993 was appropriate and reasonable. This
judgment is based on the Committee's conclusion that Mr. Lindner
fully and effectively discharged the responsibilities of his
position with the Company to the Company's substantial benefit.
PRESIDENT AND CHIEF OPERATING OFFICER 1993 COMPENSATION
Mr. Keith E. Lindner has been President and Chief Operating
Officer of the Company since 1989. Prior to that, he was Senior
Executive Vice President and all senior operating executives and
corporate officers other than the President and Chairman reported
to him. Mr. Lindner's annual base salary was set at $1,030,000 for
1992 in consultation with the Board of Directors and has been
constant since then. Mr. Lindner's base salary was established in
recognition of his increased responsibility and significant
contributions, as reflected in the graph titled "Cumulative Total
Returns (1984 to 1993)". Mr. Lindner's 1993 MIP bonus target was
set at 100 percent of base salary in consideration of the impact
his performance has on achievement of the Company's objectives.
As a participant in TCS, Mr. Lindner was awarded an MIP bonus
of $837,000 for 1993 based on the Committee's assessment that he
met his Team Profit Achievement, Individual Profit Achievement and
Management Achievement and Strategy and Organization Development
objectives. His accomplishments include a substantial improvement
in operating income, restructuring the Company's European business
to reduce costs and convert to a new organization in response to
the European Community's new restrictions on the importation of
bananas; achieving the Company's long-term cost of capital and
effective tax rate objectives; optimizing the disposition of
discontinued operations and strengthening the Company's executive
succession.
The Committee, in consultation with members of the Board of
Directors, exercised its discretion in reducing Mr. Lindner's bonus
payment to 81 percent of his MIP bonus target in recognition of the
fact that, despite significant progress, the Company had not yet
returned to profitability. Mr. Lindner received no stock options
for 1993.
OTHER NAMED EXECUTIVE OFFICER 1993 COMPENSATION
Base salaries for these NEOs for 1993 were increased 25
percent to 50 percent over 1992 in recognition of significantly
increased responsibilities which resulted from the ongoing
alignment of the Company's management structure and
responsibilities with its long-term strategy. MIP bonus targets
for these executives ranged from 70 percent to 80 percent of base
compensation. Each of these executives met or exceeded his total
1993 objectives described above. In accordance with TCS
guidelines, MIP bonus awards for these executives ranged from
somewhat below to above target, and their 1993 TACC ranged between
the 50th and 75th survey percentile for each position. Stock
option grants for the same group in 1993 totaled 200,000 shares.
These above target stock option awards were based on a number of
considerations specific to each individual, including individual
contributions, increased responsibilities and previous awards.
TAX DEDUCTIBILITY OF NEO COMPENSATION OVER $1,000,000
The Committee believes that the Company's Total Compensation
System (TCS), which applies to managers at all levels starting with
the President and COO, is an effective means of delivering
performance based pay. However, TCS does not meet all the
requirements for "performance based compensation" as defined by the
proposed IRS regulations under Internal Revenue Code Section
162(m). Specifically, TCS allows for qualitative objectives in the
Management Achievement and Strategy and Organization Development
category which account for 20 percent of overall performance. TCS
also allows for discretion in determining the MIP bonus award as a
function of the overall performance rating.
As a result of current industry dynamics, the Committee
believes it would be detrimental to comply with the requirements of
Section 162(m) at this time, even though compensation in excess of
$1,000,000 to any NEO may not be deductible for 1994 federal
income tax purposes. The Committee will continue to apply the
existing TCS to manage NEO compensation for 1994 while continuing
to study the consequences of future compliance with Section 162(m).
The Chiquita Brands International, Inc. 1986 Stock Option and
Incentive Plan (as amended and restated March 25, 1992) meets the
requirements of Section 162(m) for performance based stock option
income except that the Plan does not specify an annual limit on
stock options awarded to any individual. The Company has submitted
for shareholder approval an amendment to the Plan which will bring
it into full compliance with Section 162(m), thus allowing for full
deductibility to the Company of all stock option compensation for
NEOs.
STOCK OPTION EXCHANGE OFFER
In December 1993, the Company offered to exchange outstanding
stock options with an exercise price 50 percent or more above the
current market price for a significantly reduced number of options
at the current market price. This offer was extended to
approximately 800 managers around the world, but was not extended
to executive officers and directors. In making the decision to
extend this offer, the Committee considered all relevant factors,
including:
o Increases to base pay which would normally have been granted
to most of this group early in 1993 had been canceled.
o During most of 1992 and 1993, the market price of the
Company's common stock was well below the price of stock
options granted since 1988.
o The Committee and management believe that stock option
recipients should participate in the consequences of stock
price declines.
The Committee concluded that, given these factors, there was
a need to ensure the continuity of this group's efforts and long-
term contributions. After review and discussion of the relevant
factors, including consultation with an independent, nationally
known compensation advisor, the Committee approved an exchange
offer effective December 21, 1993 with the following terms:
o Directors and executive officers were excluded from the offer,
because the purpose was to increase the retention and
motivational value of stock options held by the broad
management group, not executive management or directors.
o Only unexercised stock options with a price at least 50
percent above the current market price of Company stock on the
exchange date qualified for the exchange offer. Consequently,
over one-half million stock options priced above the current
market price were not eligible for exchange.
o The number of new stock options offered to each individual was
one-third to one-half lower than the number of stock options
to be canceled. The exact ratio was determined by the prices
of the canceled stock options so that the higher the price of
the canceled stock options, the lower the number of new stock
options offered in exchange. Participants were required to
choose between exchanging all or none of their eligible stock
options.
o New stock options were zero percent vested upon grant. On an
aggregate basis, eighteen percent of the new stock options are
scheduled to vest on June 30, 1994, and eighteen percent on
December 31, 1994. The balance is scheduled to vest at the
same rate as the canceled options, with all vesting completed
no later than December 31, 2002.
o The exercise period was reduced from twenty years for the
original stock options to fifteen years for the new stock
options.
Approximately 88 percent of those eligible participated in the
stock option exchange offer, resulting in a net reduction of nearly
850,000 outstanding stock options.
Compensation Committee:
Hugh F. Culverhouse, Sr.
Jean Head Sisco
COMMON STOCK PERFORMANCE GRAPHS
The following performance graphs compare Chiquita's cumulative
total shareholder return over a five-year and nine-year period,
assuming $100 invested at December 31, 1988 and December 31, 1984,
respectively, in Chiquita Common Stock, in the Standard & Poors
Stock Index, and in an industry group index of eleven other fruit
and vegetable related companies. The nine-year graph compares
Chiquita's performance over the entire period since 1984 when the
current management assumed responsibility for managing the Company.
Total shareholder return is based on the increase in the price of
the stock and assumes the reinvestment of all dividends. The
industry group is composed of: Dole Food Co., Inc., Geest PLC,
Fyffes PLC, The Albert Fisher Group PLC, Perkins Foods, Stokely
USA, Inc., Curtice-Burns Foods Inc., Seneca Foods Corporation,
United Foods, Inc., Dean Foods Co. and Orange-Co., Inc. Total
return was weighted according to market capitalization of each
company at the beginning of each period.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Chiquita and its subsidiaries have had and expect to continue
to have transactions with Chiquita's directors, officers, principal
shareholders, their affiliates and members of their families.
Chiquita believes that the financial terms of these transactions
are comparable to those that would apply to unrelated parties and
are fair to Chiquita.
During 1987, a Chiquita subsidiary entered into a credit
agreement which provides for maximum borrowings of $26.5 million
from a U.S. government agency. Simultaneously, the agency assigned
its rights under the agreement to an AFC subsidiary. Borrowings
bear interest at a rate of 7.75% per annum to the AFC subsidiary
and are guaranteed by the government agency. The Chiquita
subsidiary must repay amounts borrowed in installments from 1991
through 1996. The highest amount outstanding during 1993 was $8.4
million and the balance at March 1, 1994 was $6.0 million.
During 1993, John Morrell & Co., a wholly-owned subsidiary of
the Company, sold meat products to Thriftway, Inc. and United Dairy
Farmers, Inc. Thriftway, Inc. paid an aggregate of $6,936,000 for
meat products and $94,400 for related cooperative advertising.
United Dairy Farmers, Inc. paid an aggregate of $331,000 for meat
products. Richard E. Lindner, a brother of Carl H. Lindner and a
director of AFC, is the principal owner of Thriftway, Inc. Robert
D. Lindner, a brother of Carl H. Lindner and a director of AFC,
together with members of his family, are the principal owners of
United Dairy Farmers, Inc.
In 1993, the Company paid approximately $156,000 to Frederick
Rauh & Company for insurance bond premiums. Frederick Rauh &
Company, a former subsidiary of AFC, was sold in September, 1993.
The Company estimates that its subsidiaries paid approximately
[$346,000] for advertising time on radio and television stations
owned by an AFC subsidiary during 1993.
In 1993, the Company paid approximately $208,000 to Provident
Travel Corporation for travel related services. Provident Travel
Corporation is a subsidiary of AFC.
In 1993, the Company entered into a sublease arrangement for
office space with American Annuity Group, Inc., a subsidiary of
AFC. This arrangement expires in April 1998 and requires annual
base rent of $297,126 plus operating expenses of approximately
$378,000. In 1993, the Company received a total of $256,000
pursuant to this sublease.
During 1993, the Company provided Robert F. Kistinger, a named
executive officer, with a loan in the principal amount of $200,000,
bearing interest at the rate of 7% per annum and secured by a
mortgage on Mr. Kistinger's principal residence. The loan was
repaid in full in January of 1994 with a payment of principal plus
accrued interest on the loan totalling $212,836.10.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young served as the Company's
independent auditors for 1993. Ernst & Young also serves as
independent auditors for AFC and many of its other subsidiaries.
One or more representatives of that firm will attend the Annual
Meeting and will be given the opportunity to comment, if they
desire, and to respond to appropriate questions that may be asked
by shareholders. No auditor has yet been selected for the current
year since it is Chiquita's practice not to select independent
auditors prior to the Annual Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF
1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors, and persons who
beneficially own more than ten percent of the Company's equity
securities, to file reports of security ownership and changes in
such ownership with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange. Officers, directors and
greater than ten-percent beneficial owners also are required by SEC
regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based upon a review of copies of such forms and written
representations from its executive officers and directors, the
Company believes that all Section 16(a) filing requirements were
complied with during 1993.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company.
In addition, the Company will reimburse brokers or other persons
holding stock in their names or in the names of their nominees for
charges and expenses in forwarding proxies and proxy material to
the beneficial owners. Solicitations may also be made by officers
and regular employees of the Company, without additional
compensation, by use of the mails, telephone, telegraph or by
personal calls. The Company has retained Kissel-Blake, Inc., New
York, New York, to assist in the solicitation of proxies at a cost
of $4,500 plus reasonable out-of-pocket expenses.
ANNUAL REPORT
The Company's annual report to shareholders, including
financial statements, for the fiscal year ended December 31, 1993
has previously been mailed to shareholders.
SHAREHOLDERS PROPOSALS FOR NEXT ANNUAL MEETING
Shareholder proposals for the 1995 Annual Meeting of
Shareholders must be received in writing by the Secretary of the
Company at the Company's executive offices by December 12, 1994 in
order to be considered for inclusion in the proxy materials.
MISCELLANEOUS
The Company will send, without charge, a copy of the Company's
current annual report on Form 10-K to any holder of Common Stock or
Depositary Shares who makes a request in writing to Joseph W. Hagin
II, Vice President, Corporate Affairs, Chiquita Brands
International, Inc., Chiquita Center, 250 East Fifth Street,
Cincinnati, Ohio 45202.
By order of the Board of
Directors,
Charles R. Morgan
Vice President, General
Counsel
and Secretary
Cincinnati, Ohio
April 11, 1994
APPENDIX A
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 28 West State Street, Trenton, County of Mercer, New
Jersey 08608, 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, Botts & Story
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
Ronald L. Walker 250 East Fifth Street
Cincinnati, Ohio
Oliver W. Waddell Star Bank Center
425 Walnut 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 May, 1994.
CHIQUITA BRANDS
INTERNATIONAL,
INC.
By: Keith E. Lindner
Title: President
NOTE: THIS DOCUMENT IS BEING FILED PURSUANT TO ITEM 10, INSTRUCTION 3 OF
SCHEDULE 14A. THIS DOCUMENT IS NOT A PART OF THE PROXY SOLICITING
MATERIAL AND WILL NOT BE SENT TO SHAREHOLDERS.
CHIQUITA BRANDS INTERNATIONAL, INC.
1986 STOCK OPTION AND INCENTIVE PLAN
(as amended by the Board of Directors on February 9,
1994)
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. OBJECTIVES1
II. DEFINITIONS1
III. ADMINISTRATION3
3.1 The Committee3
3.2 Awards3
3.3 Guidelines4
3.4 Delegation of Authority4
3.5 Decisions Final4
IV. SHARES SUBJECT TO PLAN4
4.1 Shares4
4.2 Adjustment Provisions4
4.3 Dissolution or Liquidation5
V. EFFECTIVE DATE OF AMENDED PLAN5
VI. STOCK OPTIONS5
6.1 Grants5
6.2 Incentive Stock Options5
6.3 Replacement Options5
6.4 Terms of Options6
6.5 Award of Options to Non-Employee Directors7
VII. STOCK APPRECIATION RIGHTS8
7.1 Grant8
7.2 Term8
7.3 Exercise8
7.4 Payment8
7.5 Non-Transferability and Termination8
VIII. RESTRICTED AND UNRESTRICTED STOCK AWARDS9
8.1 Grants of Restricted Stock Awards9
8.2 Terms and Conditions of Restricted Awards9
8.3 Unrestricted Stock Awards9
IX. PERFORMANCE AWARDS9
9.1 Performance Awards9
9.2 Terms and Conditions of Performance Awards10
X. NON-TRANSFERABILITY OF AWARDS10
XI. TERMINATION OF AWARDS10
11.1Termination of Awards10
11.2Acceleration of Vesting and Extension of
Exercise
Period Upon Termination11
XII. TERMINATION OR AMENDMENT OF THIS PLAN11
XIII. GENERAL PROVISIONS11
13.1No Right to Continued Employment11
13.2Other Plans11
13.3Withholding of Taxes11
13.4Reimbursement of Taxes12
13.5Governing Law12
13.6Liability12
CHIQUITA BRANDS INTERNATIONAL, INC.
1986 STOCK OPTION AND INCENTIVE PLAN
(as amended and restated March 25, 1992)
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.
