FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): September 15, 1997
CHIQUITA BRANDS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-1550 04-1923360
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
250 East Fifth Street, Cincinnati, Ohio 45202
(Address of principal executive offices)
Registrant's telephone number, including area code:
(513) 784-8000<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 3, 4, 6 and 8 are not applicable and are omitted from this
Report.
Item 2. Acquisition or Disposition of Assets.
On September 24, 1997 Chiquita Brands International, Inc.
("Chiquita" or the "Company") acquired by merger four privately-held
companies engaged primarily in the vegetable canning business. The four
companies (collectively, the "Owatonna Companies"), each of which is
headquartered in Owatonna, Minnesota, are Owatonna Canning Company
("Owatonna"), Olivia Canning Company ("Olivia"), Midwest Foods, Inc.
("Midwest") and Goodhue Canning Company ("Goodhue"). The acquisition,
structured as a tax-free reorganization, was effected pursuant to a Merger
Agreement dated as of August 22, 1997, which is attached hereto as Exhibit
2.1.
The merger consideration payable to the shareholders of the Owatonna
Companies (principally individuals who are descendants of the founders and
members of their families) was agreed to based on arm's length
negotiations. The total merger consideration was $50 million, consisting
of (i) approximately 3.3 million shares of Chiquita capital stock, par
value $.33 per share ("Common Stock"), valued for purposes of the merger
at approximately $46 million and (ii) approximately 87,000 shares of a new
series of Chiquita $2.50 Convertible Preference Stock, Series C ("Series C
Preference Stock") having an aggregate liquidation value of approximately
$4 million. The Chiquita Common Stock was valued at $13.91 per share,
which represents the agreed market value of the Common Stock on March 17,
1997, the date of the letter of intent relating to the merger. Up to
500,000 of the shares of Common Stock issued in the transaction may be
registered for resale under the Securities Act of 1933 prior to September
23, 1998 pursuant to a Registration Rights Agreement, a copy of which is
attached hereto as Exhibit 3.3. The total merger consideration is subject
to post-closing adjustment based on an audit of the Owatonna Companies'
June 30, 1997 financial statements.
The Owatonna Companies produce canned peas, corn, green and wax
beans, pumpkin, prepared salads and stew and spaghetti products, marketed
under private and branded labels in both the retail and food service
trades at six plants located in Owatonna, Bricelyn, Dodge Center, Olivia
and Kenyon, Minnesota and Princeville, Illinois. Chiquita presently plans
to continue operating the Owatonna Companies' canning business.
Item 5. Other Events.
On September 17, 1997, Chiquita entered into a definitive agreement
with Stokely USA, Inc., a Wisconsin corporation ("Stokely"), for the
acquisition of Stokely by Chiquita by means of a merger. The total
2<PAGE>
consideration payable to the Stokely shareholders would be approximately
$11 million, consisting entirely of shares of Chiquita Common Stock. In
addition, approximately $32 million of Stokely's long-term debt would be
exchanged for Chiquita Common Stock having a value equal to the principal
amount of such debt. The Common Stock issued to the Stokely shareholders
and debtholders would be valued at the average of the closing prices of
Chiquita Common Stock on the New York Stock Exchange Composite Tape for
the fifteen trading days prior to the closing of the merger transaction.
Headquartered in Oconomowoc, Wisconsin, Stokely operates seven vegetable
canning facilities in the Midwest. Although the acquisition is subject to
Stokely shareholder approval and other conditions, and is not expected to
be consummated until January 1998, this acquisition is reflected in the
pro forma financial statements included in Item 7 as a probable
acquisition.
On September 15, 1997, Chiquita entered into a definitive agreement
for the acquisition of American Fine Foods, Inc., a privately-held
corporation ("AFF"). In the transaction, the AFF shareholders will
receive approximately $27 million of Chiquita Common Stock in payment for
all outstanding AFF capital stock. In addition, Chiquita will assume or
retire AFF's $2 million of long-term debt. Headquartered in Payette,
Idaho, AFF owns and operates four vegetable canning facilities and a can
manufacturing facility in the northwestern United States. Although the
acquisition is still subject to certain conditions, and is not expected to
be consummated until late October or November 1997, this acquisition is
reflected in the pro forma financial statements included in Item 7 as a
probable acquisition.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired. Page No.
Owatonna Canning Company:
Independent Auditors' Report 6
Balance Sheets at February 28, 1997 and February 29, 1996 7
Statements of Income and Retained Earnings for
the years ended February 28, 1997, February 29, 1996
and February 28, 1995 9
Statements of Cash Flows for the years ended
February 28, 1997, February 29, 1996 and
February 28, 1995 10
Notes to Financial Statements 12
Balance Sheets (unaudited) at June 30, 1997 and 1996 23
Statements of Income
(unaudited) for the four months ended June 30, 1997 and 25
1996
3<PAGE>
Statements of Cash Flows (unaudited) for
the four months ended June 30, 1997 and 1996 26
Notes to Financial Statements (unaudited) 27
Pursuant to Rule 3-05 (b) (2) (ii) of Regulation S-X
financial statements of Olivia, Midwest and Goodhue are not
required to be filed.
(b) Pro Forma Financial Information.
Chiquita Brands International, Inc.
Pro Forma Combined Balance Sheet (unaudited)
as of June 30, 1997 29
Pro Forma Combined Income Statement (unaudited)
for the year ended December 31, 1996 31
Pro Forma Combined Income Statement (unaudited)
for the six months ended June 30, 1997 32
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of August 22, 1997
by and among Owatonna, Olivia, Midwest, Goodhue and
Chiquita and Chadwick S. Lange, Karen E. Lange, Richard
Jackson and Ann Jackson, as Shareholders' Representatives.
3.1 Certificate of Amendment to the Company's Second Restated
Certificate of Incorporation, filed with the Secretary of
State of the State of New Jersey on September 23, 1997,
setting forth the terms of $2.50 Convertible Preference
Stock, Series C.
3.2 Certificate of Merger of Owatonna, Olivia, Midwest and
Goodhue into Chiquita filed with the Secretary of State of
the State of New Jersey on September 24, 1997.
3.3 Registration Rights Agreement dated as of September 24,
1997 between Chiquita and Ann and Richard Jackson, as
Shareholders' Representatives.
23.1Consent of Independent Auditors (Hutton, Nelson & McDonald
LLP)
4<PAGE>
OWATONNA CANNING COMPANY
REPORT ON EXAMINATION
YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996
AND FEBRUARY 28, 1995
5<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Owatonna Canning Company
We have audited the accompanying balance sheets of Owatonna Canning
Company as of February 28, 1997 and February 29, 1996, and the related
statements of income and retained earnings, and cash flows for the years
ended February 28, 1997, February 29, 1996 and February 28, 1995. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Owatonna
Canning Company as of February 28, 1997 and February 29, 1996, and the
results of its operations and its cash flows for the years ended February
28, 1997, February 29, 1996 and February 28, 1995 in conformity with
generally accepted accounting principles.
As discussed in the note to the financial statements regarding
inventories, the Company changed its method of accounting for certain
inventories in 1996 and, as discussed in the Summary of Accounting
Policies note to the financial statements, the Company changed its method
of accounting for debt and equity securities in 1995.
/s/ Hutton, Nelson & McDonald LLP
Oakbrook Terrace, Illinois
March 26, 1997
6<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
BALANCE SHEETS
FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
ASSETS
1997 1996
<S> <C> <C>
Current assets
Cash $ 3,233,615 $ 2,524,740
Marketable securities 3,556,335 5,005,881
Accounts receivable
Trade 4,481,744 4,091,416
Affiliates and others 159,258 198,672
Inventories 20,546,801 15,668,372
Refundable income taxes -- 1,674,043
Prepaid expensess 278,008 275,402
Deferred income tax 237,000 171,000
---------- ----------
Total current assets 32,492,761 29,609,526
---------- ----------
Property, plant and equipment, at cost
Land 1,061,323 3,875,690
Buildings and improvements 10,183,260 11,327,075
Machinery and equipment 28,733,358 28,561,855
Assets under construction 766,401 272,922
---------- ----------
40,744,342 44,037,542
Accumulated depreciation 27,926,491 27,742,069
---------- ----------
12,817,851 16,295,473
---------- ----------
Other assets
Investment in affiliates 2,001,090 1,912,521
Cash surrender value of life insurance 175,303 600,004
Notes and contracts receivable - noncurrent portion 13,350 15,635
Excess of cost over fair value of net assets acquired 39,220 40,470
Prepaid pension cost 1,181,261 1,069,162
Other 1 1
---------- ----------
3,410,225 3,637,793
---------- ----------
$ 48,720,837 $ 49,542,792
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
7<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
BALANCE SHEETS
(Continued)
FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current liabilities
Current maturities of long-term debt $ 761,150 $ 787,293
Accounts payable
Trade 1,366,210 1,016,773
Affiliates 3,127,996 1,325,836
Accrued income taxes 505,423 --
Accrued liabilities 1,365,265 1,422,128
---------- ----------
Total current liabilities 7,126,044 4,552,030
---------- ----------
Long-term debt
Real estate purchase contracts and mortgage -- 187,709
Term loans 750,000 1,500,000
---------- ----------
750,000 1,687,709
---------- ----------
Deferred income taxes 1,037,000 1,058,000
---------- ----------
Stockholders' equity
Capital stock
Class A common stock, par value $100 per share;
450 shares authorized, issued and outstanding 45,000 45,000
Class B common stock, par value $100 per share;
9,000 shares authorized; 4,050 shares issued
and outstanding 405,000 405,000
Net unrealized losses on marketable securities (220,088) (314,640)
Retained earnings 39,577,881 42,109,693
---------- ----------
39,807,793 42,245,053
---------- ----------
$ 48,720,837 $ 49,542,792
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
8<PAGE>
<TABLE>
<CAPTION> OWATONNA CANNING COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
1997 1996 1995
<S> <C> <C> <C>
Sales $ 53,712,410 $ 52,925,667 $ 49,588,708
Cost of sales 31,000,180 32,328,841 27,880,278
---------- ---------- ----------
Gross profit 22,712,230 20,596,826 21,708,430
Selling and distribution expense 14,124,070 15,592,065 13,212,673
Administrative expense 2,141,800 1,831,249 1,844,849
---------- ---------- ----------
16,265,870 17,423,314 15,057,522
---------- ---------- ----------
Operating income - seasonal pack 6,446,360 3,173,512 6,650,908
Nonseasonal pack income, less allocated
expenses of $147,691 188,226 168,825 210,967
Operating income 6,634,586 3,342,337 6,861,875
Other income (expense)
Equity in net income of affiliates 120,569 144,333 180,125
Interest income 462,767 662,541 820,316
Interest expense (360,356) (590,964) (576,527)
Miscellaneous 11,776 10,514 28,957
Gain (loss) on disposition of property and equipment 1,585,050 (324,744) 8,750
Realized gain (loss) on sale of marketable securities (98,893) 5,401 (916,449)
Amortization of excess cost of net assets acquired (1,250) (1,250) (1,250)
---------- -------- ---------
Income before income taxes 8,354,249 3,248,168 6,405,797
Income taxes
Current 2,665,470 1,254,743 2,721,428
Deferred (87,000) (129,000) (38,000)
2,578,470 1,125,743 2,683,428
----------- ----------- ----------
Net income 5,775,779 2,122,425 3,722,369
----------- ---------- ----------
Retained earnings
Beginning of year 42,109,693 40,556,084 37,240,077
---------- ---------- ----------
Preferred stock retired -- 454 --
Cash dividends
Preferred stock ($6 per share) -- 1,362 1,362
Class A common stock ($100, $126 and $90 per share) 45,000 56,700 40,500
Class B common stock ($100, $126 and $90 per share) 405,000 510,300 364,500
450,000 568,362 406,362
---------- ---------- ----------
Net assets distributed to Festal Farms Co. 7,857,591 -- --
----------- ---------- ----------
End of year $ 39,577,881 $ 42,109,693 $ 40,556,084
=========== ========== ==========
</TABLE> The accompanying notes are an integral
part of these financial statements.
9<PAGE>
<TABLE>
<CAPTION> OWATONNA CANNING COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 52,666,464 $ 51,944,159 $ 48,489,448
Cash paid to suppliers and employees (49,964,892) (47,444,765) (47,176,937)
Interest received 447,858 517,938 601,167
Interest paid (364,137) (595,801) (585,506)
Income taxes paid (1,823,116) (4,045,505) (1,552,000)
Income tax refund 1,337,112 -- 542,566
Dividend and distribution received 32,000 35,000 32,000
Miscellaneous income received 11,776 10,514 28,957
---------- ---------- ----------
Net cash provided by operating activities 2,343,065 421,540 379,695
---------- ---------- ----------
Cash flows from investing activities:
Proceeds from sale of property and equipment 1,852,125 2,050 8,750
Capital expenditures (3,644,318) (3,385,664) (2,310,265)
Proceeds from contract receivables 2,090 3,012 3,320
Proceeds from employee note receivable -- 70 730
Purchase of marketable securities (4,573,883) (6,365,219) (20,563,482)
Proceeds from disposition of marketable securities 6,010,397 8,325,706 22,791,022
Premiums paid for officers' life insurance (43,308) (47,460) (8,675)
---------- ----------- -----------
Net cash used in investing activities (396,897) (1,467,505) (78,600)
---------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt (787,293) (811,588) (2,030,851)
Preferred stock acquired and retired -- (23,154) --
Dividends paid (450,000) (569,724) (406,362)
---------- ---------- -----------
Net cash used in financing activities (1,237,293) (1,404,466) (2,437,213)
---------- ---------- ----------
Net increase/(decrease) in cash 708,875 (2,450,431) (2,136,118)
Cash at beginning of year 2,524,740 4,975,171 7,111,289
---------- ---------- ----------
Cash at end of year $ 3,233,615 $ 2,524,740 $ 4,975,171
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
10<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
STATEMENTS OF CASH FLOWS
(Continued)
YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 5,775,779 $ 2,122,425 $ 3,722,369
---------- ---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,345,029 2,402,724 2,375,500
Discount accretion, net of premium amortization 8,691 (144,603) (145,716)
Amortization of excess cost of net assets acquired 1,250 1,250 1,250
(Gain) loss on disposition of property and equipment (1,585,050) 324,744 (8,750)
Realized (gain) loss on sale of marketable securities 98,893 (5,401) 916,449
Deferred income taxes (87,000) (129,000) (38,000)
Increase in cash surrender value of life insurance (22,455) (28,195)
Equity in net income of affiliates - net of
distributions received of $32,000, $35,000 and $32,000 (88,569) (109,333) (148,125)
Change in assets (increase) decrease:
Accounts receivable (350,719) (306,246) (465,542)
Refundable income taxes 1,674,043 (1,674,043) 595,275
Inventories (4,878,429) (152,118) (5,893,629)
Prepaid expenses (2,606) 145,553 (118,707)
Prepaid pension cost (112,099) (115,840) (174,701)
Change in liabilities increase (decrease):
Accounts payable (1,004,689) (889,446) (1,373,666)
Accrued income taxes 505,423 (1,116,719) 1,116,719
Accrued liabilities 65,573 95,788 18,969
---------- ---------- ----------
Total adjustments (3,432,714) (1,700,885) (3,342,674)
---------- ---------- ----------
Net cash provided by operating activities $ 2,343,065 $ 421,540 $ 379,695
========== ========== =========
Supplemental schedule of noncash investing
and financing activities:
Net unrealized gains (losses) on marketable securities $ 94,552 $ 482,145 $ (796,785)
========== ========== =========
Distribution of net assets to Festal Farms Co. $ 7,857,591 $ -- --
========== ========== $ =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
11<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
Nature of Operations - The Company, whose products are distributed
worldwide, processes and cans food products at its plants in Minnesota and
Illinois.
Principles of Consolidation - The Company uses the equity method of
accounting for unconsolidated affiliates in which it does not have a majority
ownership interest.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Marketable Securities - On March 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115) which requires that investments in debt
securities and marketable equity securities be designated as trading, held-to-
maturity or available-for-sale. Securities available-for-sale are securities
that are intended to be held for indefinite periods of time, but which may not
be held to maturity.
Management determines the appropriate classifications of its investments
in debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. Marketable securities are
considered available-for-sale and are carried at market value. Unrealized
holding gains and losses for available-for-sale securities are reported net of
applicable income taxes as a separate component of stock-holders' equity. No
income tax benefit has been applied due to the uncertainty of the ability to
utilize available unrealized capital loss carryovers. The cumulative effect
reflecting the change in accounting method was shown as a separate component
of stockholders' equity in the balance sheet.
Receivables - Accounts receivable have been adjusted for all known
uncollectible accounts. No allowance for uncollectible accounts has been
provided since the amount of such allowance would not be significant.
Inventories - The Company's inventories of canned foods are priced at
cost, determined by the last-in, first-out method. Inventories of factory and
farm supplies are priced at the lower of cost, determined by the first-in,
first-out method, or market.
Property, Plant and Equipment - Property, plant and equipment are recorded
at cost. Expenditures for renewals and betterments which extend the life of
such assets are capitalized. Maintenance and repairs are charged to expense
as incurred. Differences between amounts received and net carrying value of
assets retired or disposed of are charged or credited to income.
12<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
Depreciation - For financial statement reporting, depreciation charged to
income is computed using the straight-line and declining-balance methods. For
income tax purposes, an accelerated method of depreciation is used for certain
assets. The income taxes applicable to the excess depreciation claimed for
tax purposes over depreciation charged to income in the financial statements
are included in income tax expense and deferred income taxes.
Amortization - The excess of cost over fair value of net assets acquired
is being amortized on a straight-line basis over 40 years.
Employees' Retirement Plans - The Company has a noncontributory defined
benefit pension plan covering all of its eligible employees. The Company
funds an amount equaling an actuarially determined amount meeting minimum
requirements under the ERISA Funding Standard Account. Contributions are
intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
The Company also has a trusteed defined contribution profit sharing plan
covering all eligible employees. Annual contributions to the trust are made
at the discretion of the Board of Directors, but are not to exceed the maximum
allowed as a deduction for federal income tax purposes.
Income Taxes - Deferred income taxes are provided for temporary
differences between financial accounting and tax accounting.
SPIN-OFF
Effective January 1, 1997, the Company declared a spin-off distribution of
100% of the Class A and Class B common shares of a newly formed wholly-owned
subsidiary, Festal Farms Co., to the Company's Class A and Class B common
shareholders on the basis of one share of Festal Farms Co. stock for each
share of the Company's stock. Prior to the spin-off, pursuant to a
contribution agreement dated December 31, 1996 and effective as of January 1,
1997, the Company contributed to Festal Farms Co. all of its farming related
assets and liabilities and appropriate working capital. Following the
distribution, Festal Farms Co. became an independent company.
13<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
In connection with the spin-off, the Company charged the net assets
transferred against retained earnings. A summary of the net assets
distributed is as follows:
<TABLE>
<CAPTION>
<S> <C>
Property, plant and equipment $ 4,509,836
Cash surrender value of life insurance 490,464
Working capital 3,200,000
Real estate purchase contract and mortgage (176,559)
Accrued liabilities (166,150)
----------
$ 7,857,591
==========
</TABLE>
AFFILIATION
Owatonna Canning Company is affiliated either by common ownership or
managerial control with various companies. Listed below are some of the
affiliated companies and the material transactions that have occurred between
those affiliates and Owatonna Canning Company:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Midwest Foods, Inc.
Income to Owatonna Canning Company from rental of
building and equipment to Midwest Foods, Inc. $ 334,557 $ 316,516 $ 358,658
========== ========== ==========
Administrative services $ 30,000 $ 30,000 $ 30,000
========== ========== ==========
</TABLE>
14<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
AFFILIATION (Continued)
Goodhue Canning Company and Olivia Canning Company
Owatonna Canning Company bills all Goodhue Canning Company and
Olivia Canning Company sales and collects related accounts
receivable. All transactions related to these billings have cleared
through the respective companies accounts on Owatonna Canning
Company's records. Transactions with those two affiliates were as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Goodhue Canning Company
Administrative and selling fees $ 63,564 $ 53,305 $ 54,852
Brokerage fees 63,788 34,740 30,566
Olivia Canning Company
Administrative and service fees 77,286 47,948 50,231
Brokerage fees 176,826 124,298 135,330
Hartle-Lange-Hammel Company
Rental expense 43,800 43,800 43,800
</TABLE>
MARKETABLE SECURITIES
The composition of marketable securities which are classified as available
- -for-sale at February 28, 1997 and February 29, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C>
February 28, 1997
Mortgage-backed securities $ 1,044,505 $ -- $ 99,721 $ 944,784
Municipal bond fund 1,673,035 32,010 147,317 1,557,728
Equity funds 1,058,883 18,376 23,436 1,053,823
---------- ---------- ---------- ----------
$ 3,776,423 $ 50,386 $ 270,474 $ 3,556,335
========== ========== ========== ==========
February 29, 1996
Mortgage-backed securities $ 1,041,072 $ -- $ 119,263 $ 921,809
Municipal bond funds 3,165,159 79,423 139,043 3,105,539
Other 1,114,290 -- 135,757 978,533
---------- ---------- --------- ----------
$ 5,320,521 $ 79,423 $ 394,063 $ 5,005,881
========== ========== ========= ==========
</TABLE>
15<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
Realized gains and losses are determined on a specific identification
basis and are reported in the statement of income and retained earnings as
realized gains and losses on disposition of securities. Gross gains of
$46,718, $5,401 and $47,906 were realized in 1997, 1996 and 1995,
respectively, and gross losses of $145,611 and $964,355 were realized in
1997 and 1995, respectively.
INVENTORIES
Major classifications of inventories are as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Canned foods $ 19,494,172 $ 14,596,332
Factory and farm supplies 1,052,629 1,072,040
---------- ----------
$ 20,546,801 $ 15,668,372
=========== ==========
</TABLE>
As a result of the merger of Princeville Canning Company into
Owatonna Canning Company in 1996, the Company changed the method of
valuation of canned foods of its Princeville division from the FIFO cost method
to the LIFO cost method. The effects of adopting the LIFO method at the
Princeville division was to increase February 29, 1996 inventories and net
income by $158,437. The cumulative effect of this change on the
operating results of prior years has not been presented, as the effect was
not readily determinable.
DEPRECIATION
Depreciation was charged to income, based on the estimated useful
lives of the assets, in the following amounts:
<TABLE>
<CAPTION>
Estimated
1997 1996 1995 Life - Years
<S> <C> <C> <C> <C>
Land improvements $ 46,683 $ 67,157 $ 86,950 10 -20
Buildings 252,260 254,383 262,612 10 -33
Machinery and equipment 1,313,174 1,234,812 1,198,959 5 -15
Farm equipment 527,386 517,169 512,392 2 - 8
Automobiles and trucks 100,131 85,330 78,011 3 - 6
Furniture and fixtures 88,321 89,121 81,818 5 -10
Bulk storage facility 7,691 7,690 7,691 40
Pollution control facilities 9,383 147,062 147,067 10 -15
---------- ---------- ----------
$ 2,345,029 $ 2,402,724 $ 2,375,500
========== ========== ==========
</TABLE>
16<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
INVESTMENT IN UNCONSOLIDATED AFFILIATES
The Company owns 33.058% in 1997 and 30.534% in 1996 and 1995 of
the outstanding common stock of Olivia Canning Company and has a 50%
interest in the partnership of Hartle-Lange-Hammel Company. The
following is a summary of these investments which are accounted for under
the equity method:
<TABLE>
<CAPTION>
1997
--------------------------------------
Hartle-
Olivia Lange-
Canning Hammel 1996 1995
Company Company Combined Combined Combined
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $ 1,389,535 $ 522,986 $ 1,912,521 $ 1,803,188 $ 1,655,063
Equity in undistributed net income 96,307 24,262 120,569 144,333 180,125
Dividends and distributions
received (8,000) (24,000) (32,000) (35,000) (32,000)
---------- ---------- ---------- ---------- ----------
Balance at end of year $ 1,477,842 $ 523,248 $ 2,001,090 $ 1,912,521 $ 1,803,188
========== ========== ========== ========= =========
</TABLE>
The financial position of Olivia Canning Company and
Hartle-Lange-Hammel Company is summarized as follows:
<TABLE>
<CAPTION> 1997
------------------------------------------
Hartle-
Olivia Lange-
Canning Hammel 1996
Company Combined Combined
Combined
<S> <C> <C> <C> <C>
Current assets $ 3,264,935 $ 6,380 $ 3,271,315 $ 3,063,092
Property, plant and equipment,
net of depreciation 1,376,909 1,050,000 2,426,909 2,722,518
Other assets 29,636 20 29,656 28,331
---------- ---------- ---------- ----------
$ 4,671,480 $ 1,056,400 $ 5,727,880 $ 5,813,941
========== ========== ========= =========
Current liabilities $ 136,527 $ 1,905 $ 138,432 $ 140,205
Long-term debt -- -- -- 30,986
Other liabilities 64,500 -- 64,500 38,000
Stockholders' equity or
partners' capital 4,470,453 1,054,495 5,524,948 5,604,750
--------- --------- --------- ---------
$ 4,671,480 $ 1,056,400 $ 5,727,880 $ 5,813,941
========= ========= ========= =========
</TABLE>
17<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
The net income of Olivia Canning Company for the years ended
February 28, 1997, February 29, 1996, and February 28, 1995, was $225,904,
$395,284, and $499,895, respectively. Net income for Hartle-Lange-Hammel
Company for the years ended December 31, 1996, 1995 and 1994 was $48,524,
$47,274 and $54,972, respectively.
Transactions with affiliates follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Olivia Canning Company
Brokerage received $ 176,826 $ 124,298 $ 135,330
Administrative and selling fees 77,286 47,948 50,231
Hartle-Lange-Hammel Company
Rental expense 43,800 43,800 43,800
</TABLE>
NOTES PAYABLE - BANK
The Company has lines of credit amounting to $5,500,000 at February 28,
1997 and $5,000,000 at February 29, 1996. The lines of credit at
February 28, 1997 consist of a $2,500,000 note expiring on July 15, 1997
and a $3,000,000 note expiring on July 31, 1997. The $5,000,000 line of
credit at February 29, 1996 expired on July 31, 1996. The $2,500,000 note
provides for interest at 7% per annum. The other notes provide for
interest to be determined under an "interest rate option" as defined in
the loan agreements and elected by the Company. There were no outstanding
borrowings against these lines of credit at either balance sheet date.
LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Real estate purchase contracts due through May 2006,
payable in varying amounts with interest at 7.5% to 10%.
Secured by real estate with a carrying value totaling
$327,531. Contracts totaling $176,559 were assumed
by Festal Farms Co. in 1997. $ 11,150 $ 225,002
Unsecured installment note due $750,000 annually with final
payment due August 10, 1998 with interest payable monthly at 10.49% 1,500,000 2,250,000
--------- ---------
1,511,150 2,475,002
Current maturities 761,150 787,293
---------- ----------
$ 750,000 $ 1,687,709
========== ==========
</TABLE>
18<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
The Company's installment notes contain certain restrictions relating to
working capital requirements,investments, indebtedness and payment of cash
dividends. All restrictive covenants have been complied with.
Scheduled principal maturities of long-term debt are:
<TABLE>
<CAPTION>
Year Ended
<S> <C>
February 28, 1998 $ 761,150
February 28, 1999 750,000
--------
$1,511,150
</TABLE>
EMPLOYEES' RETIREMENT PLANS
The Company complies with the accounting and disclosure provisions of
Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions." The 1997, 1996 and 1995 net periodic pension cost
(income) components are summarized as follows:
<TABLE>
<CAPTION>
1997
----------------------------------
Owatonna/ Owatonna Canning
Midwest Company and
Salaried Midwest Foods, Inc.
Employees' Hourly Workers'
Pension Plan Pension Plan Combined 1996 1995
<S> <C> <C> <C> <C> <C>
Service cost $ 107,082 $ 46,186 $ 153,268 $ 130,094 $ 111,362
Interest cost on projected benefit
obligation 162,927 169,426 332,353 329,983 299,145
Actual return on plan assets (314,809) (444,928) (759,737) (794,966) (287,330)
Net amortization and deferral
Amortization of initial
unrecognized net (assets)
obligation (65,195) 5,412 (59,783) (59,783) (59,783)
Amortization of unrecognized
prior service cost (48,317) 28,216 (20,101) (20,101) 17,855
Deferred expense 48,440 255,219 303,659 402,605 (167,822)
---------- ---------- --------- ---------- ---------
Total periodic pension cost (income) (109,872) 59,531 (50,341) (12,168) (86,573)
Attributable to Midwest Foods, Inc. -- (33,218) (33,218) (41,832) (31,978)
---------- ---------- --------- ---------- ----------
Net periodic pension cost (income) $ (109,872) $ 26,313 $ (83,559) $ (54,000) $ (118,551)
=========== =========== ========== =========== ===========
</TABLE>
19<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
EMPLOYEES' RETIREMENT PLANS (Continued)
The funded status of the plans and the amount recognized in the Company's
balance sheets at February 28, 1997 and February 29, 1996 are set forth as
follows:
<TABLE>
<CAPTION> 1997
---------------------------------------------
Owatonna/ Owatonna Canning
Midwest Company and
Salaried Midwest Foods, Inc.
Employees' Hourly Workers'
Pension Plan Pension Plan Combined 1996
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations
Vested benefit obligation $ (1,987,115) $ (2,398,512) $ (4,385,627) $ (4,229,814)
Nonvested benefit obligation (14,008) (72,629) (86,637) (80,319)
---------- ------------ ------------ ------------
Accumulated benefit obligation (2,001,123) (2,471,141) (4,472,264) (4,310,133)
Effect of projected compensation levels (420,143) (26,760) (446,903) (441,618)
---------- ------------ ------------- ------------
Actuarial present value of projected
benefit obligation (2,421,266) (2,497,901) (4,919,167) (4,751,751)
Plan assets at fair market value 4,443,628 3,137,520 7,581,148 6,779,092
------------ ------------- ------------ ------------
Plan assets at fair market value in excess
of projected benefit obligation 2,022,362 639,619 2,661,981 2,027,341
Unrecognized net gain (632,163) (329,666) (961,829) (406,086)
Prior service cost not yet recognized
in net periodic pension cost (8,469) 185,353 176,884 205,223
Unrecognized net (assets) obligations
being recognized over 7-16 years (423,766) 9,890 (413,876) (473,659)
------------ ------------- ------------ ------------
957,964 505,196 1,463,160 1,352,819
Prepayment attributable to
Midwest Foods, Inc. -- (281,899) (281,899) (283,657)
----------- ------------- ------------ ------------
Prepaid pension cost included in
other assets $ 957,964 $ 223,297 $ 1,181,261 $ 1,069,162
============ ============= ============ ============
</TABLE>
20<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
EMPLOYEES' RETIREMENT PLANS (Continued)
The assets of the plans consist principally of debt and equity securities
and fixed income instruments. Although the actual return on plan assets is
shown, the expected long-term rates of return used in determining net periodic
pension cost was 8%. The differences between actual return and expected
return are included in net amortization and deferral.
The discount rates used in determining the actuarial present value of the
projected benefit obligation were 7% in 1997 and 1996.
In connection with a collective bargaining agreement with the United Food
and Commercial Workers Union, the Company participates with Midwest Foods,
Inc. in a defined benefit pension plan covering all eligible hourly employees
who are members of the Union. Contributions to the plan were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Owatonna Canning Company $ 30,000 $ 66,000 $ 60,000
Midwest Foods, Inc. 30,000 66,000 62,000
---------- --------- ---------
$ 60,000 $ 132,000 $ 122,000
========== ========== ==========
</TABLE>
The Company has a noncontributory profit-sharing plan covering all of its
eligible salaried employees. Contributions charged to operations were
$360,444 in 1997, $271,528 in 1996 and $291,303 in 1995.
STOCKHOLDERS' EQUITY
The 6% cumulative preferred stock, callable at $102 per share, was retired
on February 29, 1996.
21<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
INCOME TAXES
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable or refundable
for the period plus or minus the change during the period in deferred tax
assets and liabilities.
Provisions for federal and state income taxes consist of the following:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current
Federal $ 2,139,666 $ 1,005,327 $ 2,226,781
State 525,804 249,416 494,647
----------- ----------- ------------
2,665,470 1,254,743 2,721,428
------------ ----------- -----------
Deferred
Federal (64,000) (106,000) 14,000
State (23,000) (23,000) (52,000)
------------ ----------- -----------
(87,000) (129,000) (38,000)
----------- ---------- -----------
$ 2,578,470 $ 1,125,743 $ 2,683,428
============ =========== ===========
</TABLE>
22<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
Differences between the provision for income taxes and income taxes at the
federal statutory rate of 34% and the effective rate are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Income taxes at the statutory rate $ 2,840,445 $ 1,104,377 $ 2,177,971
State income taxes, net of federal income tax benefit 347,031 163,947 326,467
Deferred income taxes, attributable to fluctuation
in tax rates (62,690) (9,960) 89,386
Tax exempt income (75,038) (76,943) (111,272)
Pension cost (38,114) (39,386) (59,398)
Equity in net income of affiliates (30,024) (38,317) (49,177)
Environmental tax -- 1,496 6,016
Capital losses carryforward utilized (392,290) -- 311,593
Prior year adjustment (26,990) 23,791 (25,178)
Other 16,140 (3,262) 17,020
------------ ----------- -----------
$ 2,578,470 $ 1,125,743 $ 2,683,428
============ =========== ===========
</TABLE>
The deferred tax assets and liability are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax liability
Excess of accelerated depreciation for tax
purposes over financial reporting $ 1,037,000 $ 1,058,000
------------- -----------
Deferred tax assets
Additional inventory costs capitalized
for tax purposes 216,000 149,000
Nondeductible accrued vacation pay 14,000 16,000
Nondeductible accrued bonus 7,000 6,000
Capital loss carryforward -- 449,000
----------- -----------
Gross deferred tax assets 237,000 620,000
Valuation allowance -- 449,000
----------- -----------
Net deferred tax assets 237,000 171,000
----------- -----------
Net deferred liability $ 800,000 $ 887,000
=========== ===========
</TABLE>
23<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
The significant components of deferred income tax expense for the years
ended February 28, 1997, February 29, 1996, and February 28, 1995 are as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Deferred tax expense $ 451,000 $ 7,000 $ --
Deferred tax benefit (89,000) (135,000) (488,000)
Increase (decrease) in the valuation allowance
for deferred tax assets (449,000) (1,000) 450,000
----------- ----------- ------------
Deferred income tax benefit - net $ (87,000) $ (129,000) $ (38,000)
============= ============ ============
</TABLE>
LITIGATION
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of management, all
of these pending matters are without merit or are of such kind or involve such
amounts that unfavorable dispositions would not have a material effect on the
financial position of the Company.
BUSINESS WITH MAJOR CUSTOMERS
Accounts receivable from one customer in 1997 and two customers in 1996
amounted to approximately $735,000 and $1,057,000, respectively.
SUBSEQUENT EVENT
In March 1997, the Company executed a Letter of Intent which provides for
an unrelated publicly held corporation to acquire 100% of the outstanding
stock of the Company and its affiliates in a tax-free reorganization. The
transaction is subject to regulatory approval, the results of certain due
diligence and the execution of final agreements.
RECLASSIFICATION
Certain amounts in the 1996 and 1995 financial statements have been
reclassified to agree with the 1997 presentation with no effect on net income.
24<PAGE>
OWATONNA CANNING COMPANY
UNAUDITED FINANCIAL STATEMENTS
FOUR MONTHS ENDED JUNE 30, 1997
AND JUNE 30, 1996
25<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
BALANCE SHEETS (unaudited)
JUNE 30, 1997 AND JUNE 30, 1996
ASSETS
1997 1996
<S> <C> <C>
Current assets
Cash $ 8,484,245 $ 8,289,764
Marketable securities 3,790,465 5,626,682
Accounts receivable 2,864,752 2,776,951
Inventories 18,416,655 12,931,829
Prepaid expenses 605,513 746,523
------------ ------------
Total current assets 34,161,630 30,371,749
Property, plant and equipment, net 14,134,345 16,248,791
Other assets
Investment in affiliates 1,993,359 2,036,685
Prepaid pension cost 1,208,096 1,069,162
Other 236,543 729,005
------------ ------------
3,437,998 3,834,852
------------ ------------
$ 51,733,973 $ 50,455,392
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
26<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
BALANCE SHEETS (unaudited)
(Continued)
JUNE 30, 1997 AND JUNE 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current liabilities
Current maturities of long-term debt $ 768,881 $ 787,479
Accounts payable 6,734,612 4,063,255
Accrued liabilities 3,038,607 522,062
------------ ------------
Total current liabilities 10,542,100 5,372,796
Long-term debt, non-current portion 777,388 1,668,856
Deferred income taxes 989,468 1,058,000
------------ ------------
Total liabilities 12,308,956 8,099,652
------------ ------------
Stockholders' equity
Capital stock
Class A common stock, par value $100
per share; 450 shares authorized,
issued and outstanding 45,000 45,000
Class B common stock, par value $100
per share; 9,000 shares authorized;
4,050 shares issued and outstanding 405,000 405,000
Net unrealized gains (losses) on marketable
securities 7,908 (530,499)
Retained earnings 38,967,109 42,436,239
------------ ------------
39,425,017 42,355,740
------------ ------------
$ 51,733,973 $ 50,455,392
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
27<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
STATEMENTS OF INCOME AND RETAINED EARNINGS (unaudited)
FOUR MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996
1997 1996
<S> <C> <C>
Sales $ 17,200,563 $14,478,352
Cost of sales 10,355,643 9,540,539
----------- -------------
Gross profit 6,844,920 4,937,813
------------ -------------
Selling and distribution expense 5,665,680 3,682,586
Administrative expense 2,404,447 646,824
----------- ------------
8,070,127 4,329,410
----------- ------------
Operating income (loss) - seasonal pack (1,225,207) 608,403
Nonseasonal pack income 6,186 51,890
----------- ------------
Operating income (loss) (1,219,021) 660,293
Other income (expense)
Equity in net income of affiliates 8,269 33,417
Interest income (expense), net 21,708 (61,724)
Miscellaneous 2,842 368
Gain on disposition of property and equipment 20,300 --
------------ -------------
Income (loss) before income taxes (1,165,902) 632,354
Income taxes (benefit) (433,992) 305,808
------------ -------------
Net income (loss) $ (731,910) $ 326,546
============ =============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
28<PAGE>
<TABLE>
<CAPTION>
OWATONNA CANNING COMPANY
STATEMENTS OF CASH FLOWS (unaudited)
FOUR MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996
1997 1996
<S> <C> <C>
Cash provided (used) by:
Operations
Net income (loss) $ (731,910) $ 326,546
Prior period adjustment 688,138 --
Depreciation 781,670 733,477
Changes in current assets and liabilities
Receivables 1,776,250 1,513,137
Inventories 2,130,146 2,736,543
Accounts payable 2,240,406 1,720,646
Other current assets and liabilities 1,077,414 473,856
Other (93,802) (197,059)
------------ ------------
Cash flow from investing 7,868,312 7,307,146
------------ ------------
Investing
Capital expenditures (2,096,945) (836,660)
Increase in marketable securities -- (427,717)
Other 11,144 160,008
------------ ------------
Cash flow from investing (2,085,801) (1,523,455)
------------ ------------
Financing
Debt transactions
Issuances of long-term debt 35,119 --
Repayments of long-term debt -- (18,667)
Stock transactions
Dividends (567,000) --
------------ ------------
Cash flow from financing (531,881) (18,667)
------------ ------------
Increase in cash 5,250,630 5,765,024
Balance at beginning of period 3,233,615 2,524,740
------------ ------------
Balance at end of period $ 8,484,245 $ 8,289,764
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
29<PAGE>
OWATONNA CANNING COMPANY
NOTES TO FINANCIAL STATEMENTS (unaudited)
SUMMARY OF ACCOUNTING POLICIES
Interim results are subject to significant seasonal variations and are not
necessarily indicative of the results of operations for a full fiscal year.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary for a fair statement of the results of the
interim periods shown have been made.
PRIOR PERIOD ADJUSTMENT
During the four months ended June 30, 1997, management determined that the
inventories of factory and farm supplies and that the accrued liabilities for
cash discounts and cooperative advertising were respectively understated in
the amounts of $1,336,318 and $214,785 at February 28, 1997. Accordingly, the
necessary adjustment to previously reported retained earnings in the amount of
$688,138, net of income taxes of $433,395, and has been recorded through
retained earnings.
INVENTORIES
Inventories at June 30 consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Canned foods $15,492,252 $11,371,024
Factory and farm supplies 2,924,403 1,560,805
---------- ----------
$18,416,655 $12,931,829
=========== ===========
</TABLE>
SUBSEQUENT EVENT
On September 24, 1997, 100% of the outstanding common stock of the Company
and its affiliates was acquired by Chiquita Brands International, Inc. in a
tax-free reorganization.
30<PAGE>
CHIQUITA BRANDS INTERNATIONAL, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the acquisition by Chiquita of the Owatonna Companies and the proposed
acquisitions by Chiquita of Stokely and AFF. Each transaction will be
accounted for as a purchase. The unaudited pro forma combined balance sheet
is based on the individual balance sheets of Chiquita, the Owatonna Companies,
Stokely and AFF at June 30, 1997 and has been prepared to reflect the
acquisitions assuming they all occurred on June 30, 1997. The unaudited pro
forma combined income statement for the year ended December 31, 1996 is based
on the individual income statements of Chiquita, Stokely and AFF for the
twelve months ended December 31, 1996 and of the Owatonna Companies for the
twelve months ended February 28, 1997 and has been prepared as if all the
acquisitions had occurred on January 1, 1996. The unaudited pro forma
combined income statement for the six months ended June 30, 1997 combines the
individual income statements of Chiquita, the Owatonna Companies, Stokely and
AFF for the same period and is prepared as if all the acquisitions had
occurred on January 1, 1997. These unaudited pro forma financial statements
should be read in conjunction with the historical financial statements and
notes thereto of Owatonna included elsewhere in this Form 8-K.
31<PAGE>
<TABLE>
<CAPTION> Chiquita Brands International, Inc.
Pro Forma Combined Balance Sheet (unaudited)
June 30, 1997
(in thousands) Owatonna Pro Forma Pro Forma
Chiquita Companies Stokely AFF Adjustments Combined
<S> <C> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and equivalents $ 233,077 $ 9,412 $ 2,228 $ 485 $ (17,226) (a) $ 227,976
Marketable securities -- 3,790 -- -- -- 3,790
Trade receivables, net 197,458 2,842 10,276 4,383 -- 214,959
Other receivables, net 72,739 -- -- 587 -- 73,326
Inventories 250,136 21,362 59,842 31,724 (368) (b) 362,696
Other current assets 33,644 958 1,050 3,826 (788) (c) 38,690
------- ------- ------- ------- ------- -------
Total current assets 787,054 38,364 73,396 41,005 (18,382) 921,437
Property, plant and equipment, net 1,130,785 16,095 40,468 10,104 -- 1,197,452
Investments and other assets 312,912 2,782 2,677 929 1,468 (d) 320,768
Intangibles, net 156,701 39 -- -- 9,423 (e) 166,163
------- ------- ------- ------- ------- --------
Total assets $2,387,452 $ 57,280 $116,541 $52,038 $ (7,491) $ 2,605,820
==================== ========= ======= ======== ===========
Liabilities and Shareholders' Equity
Current liabilities
Notes and loans payable $ 27,110 $ -- $ 6,137 $ 14,948 $ (14,948) (a) $ 33,247
Long-term debt due within
one year 97,489 774 2,584 1,142 (1,142) (a) 100,847
Accounts payable 199,281 3,009 27,201 4,115 -- 233,606
Accrued liabilities 90,033 3,684 3,407 3,372 3,600 (f) 104,096
------- ------- ------- ------- ------- --------
Total current liabilities 413,913 7,467 39,329 23,577 (12,490) 471,796
Long-term debt of parent company 697,788 -- -- -- -- 697,788
Long-term debt of subsidiaries 299,577 786 68,188 1,136 (33,093) (a) 336,594
Accrued pension and other
employee benefits 86,127 -- 2,945 521 (114) (g) 89,479
Other liabilities 89,679 1,298 -- 1,193 (2,491) (c) 89,679
------- ------- ------- ------- ------ -------
Total liabilities 1,587,084 9,551 110,462 26,427 (48,188) 1,685,336
--------- ------- ------- ------- ------- ---------
Shareholders' equity
Preferred stock 249,256 -- -- -- 4,329 (h) 253,585
Capital stock 18,750 520 572 865 767 (a)(i)(j) 21,474
Capital surplus 600,540 -- 43,521 2,498 67,044 (a)(i)(j) 713,603
Other shareholders' equity -- (279) (265) (526) 1,070 (j) --
Accumulated deficit (68,178) 47,488 (37,749) 22,774 (32,513) (j) (68,178)
-------- ------- ------- ------- ------- -------
Total shareholders' equity 800,368 47,729 6,079 25,611 40,697 920,484
------- ------- ------- ------ ------ -------
Total liabilities and
shareholders' equity $2,387,452 $ 57,280 $116,541 $ 52,038 $ (7,491) $2,605,820
==================== ========= ======== ======== =========
</TABLE>
32<PAGE>
NOTE: The Pro Forma Combined Balance Sheet has been prepared to reflect the
acquisition by Chiquita of 100% of the equity of the Owatonna Companies,
Stokely and AFF for $50.0 million, $11.4 million and $26.8 million,
respectively. Estimated transaction costs related to the acquisitions total
an additional $3.6 million. Pro forma adjustments are made to reflect:
(a) Assumed repayments of $17.2 million of AFF debt with cash and
$32.0 million of Stokely debt with
approximately 2.2 million shares of Chiquita Common Stock.
(b) Write-down of Owatonna Companies' inventory to fair value.
(c) The elimination of deferred tax assets and liabilities of the acquired
companies.
(d) The adjustment to fair value of the Owatonna Companies' prepaid
pension funding asset associated with its defined benefit pension plan.
(e) The excess of acquisition cost (including transaction costs)
over the fair value of net assets acquired, totaling $1.0 million
for the Owatonna Companies, $6.7 million for Stokely and $1.7 million
for AFF.
(f) Estimated transaction costs for professional services incurred in
connection with the acquisitions.
(g) Adjustment of the accumulated postretirement benefit liabilities of
Stokely and AFF.
(h) The issuance of $4.3 million (approximately 87,000 shares) of Chiquita
Series C Preference Stock to the former shareholders of the Owatonna
Companies.
(i) The issuance of Chiquita Common Stock of approximately $45.7 million
(approximately 3.3 million shares)
to the former shareholders of the Owatonna Companies, approximately
$11.4 million (approximately .8 million shares) to the former
shareholders of Stokely and approximately $26.8 million (approximately
1.9 million shares) to the former shareholders of AFF.
j) The elimination of the shareholders' equity accounts of the Owatonna
Companies, Stokely and AFF.
This Pro Forma Combined Balance Sheet is based on a preliminary
allocation of purchase price to the net assets acquired.
33<PAGE>
<TABLE>
<CAPTION>
Chiquita Brands International, Inc.
Pro Forma Combined Income Statement (unaudited)
Year Ended December 31, 1996
(in thousands, except per share data)
Pro Forma Pro Forma
Chiquita Owatonna Stokely AFF Adjustments Combined
<S> <C> <C> <C> <C> <C> <C>
Net sales $2,435,248 $61,885 $198,108 $81,111 $(40,329) (a) $2,736,023
Operating expenses
Cost of sales 1,947,888 32,346 160,022 69,178 (38,900) 2,170,534
Selling, general and
administrative 313,490 18,243 30,632 5,458 (1,074)(a) (b) 366,749
Depreciation 89,534 2,690 6,675 1,692 (569) (a) 100,022
Nonrecurring charges -- -- 26,029 -- (12,500) (a) 13,529
-------- ------- -------- ------- ------- -------
Operating income (loss) 84,336 8,606 (25,250) 4,783 12,714 85,189
Interest income 28,276 573 -- 12 (1,250) (c) 27,611
Interest expense (130,232) (365) (11,066) (1,645) 7,500 (a) (c) (135,808)
Other income, net 892 163 -- 53 -- 1,108
------- ------- ------- ------- ------- -------
Income (loss) before income taxes (16,728) 8,977 (36,316) 3,203 18,964 (21,900)
Income taxes (11,000) (2,755) -- (1,339) 3,794 (d) (11,300)
------- ------- ------- ------- ------- --------
Income (loss) before extraordinary item (27,728) 6,222 (36,316) 1,864 22,758 (33,200)
Less dividends on preferred stock (11,955) -- -- -- (216) (12,171)
---------- ---------- ---------- --------- ---------- -----------
Loss before extraordinary item
attributable to common shares $ (39,683) $ 6,222 $(36,316) $1,864 $22,542 $(45,371)
=========== ============ =========== =================== ===========
Loss per common share before
extraordinary item - primary and
fully diluted $(.72) $(.72)
========== =============
Shares used to calculate loss
per common share before
extraordinary item 55,167 63,338
========= =============
</TABLE>
34<PAGE>
NOTE: This Pro Forma Combined Income Statement, which gives effect to the
acquisition of the Owatonna Companies and the proposed acquisitions of
Stokely and AFF by Chiquita, includes pro forma adjustments to reflect:
(a) Elimination of operating results associated with Stokely's frozen
vegetable business, and elimination of nonrecurring charges resulting
from Stokely's sale of this business. The acquisition of Stokely by
Chiquita does not include any assets on operating
activity in the frozen vegetable business.
(b) Amortization of goodwill totaling $.2 million arising from the
acquisitions on a straight-line basis over 40 years.
(c) Assumed repayment of $17.2 million of AFF debt with cash and $32.0
million of Stokely debt with approximately 2.2 million shares
of Chiquita Common Stock.
(d) Elimination of tax expense of the Owatonna Companies and federal tax
expense of AFF as a result of including these companies in the
Chiquita consolidated tax returns.
This Pro Forma Combined Income Statement does not include any adjustment
to eliminate $13.5 million ($.21 per pro forma share) of nonrecurring
charges which are principally associated with the closing and write-down of
plant and office facilities and are included in Stokely's historical
operating income.
This Pro Forma Combined Income Statement is based on a preliminary
allocation of purchase price to the net assets acquired.
Furthermore, it is not necessarily indicative of the actual results of the
combined companies had the acquisitions occurred on January
1, 1996 or of the future results of the combined companies.
35<PAGE>
<TABLE>
<CAPTION>
Chiquita Brands International, Inc.
Pro Forma Combined Income Statement (unaudited)
Six Months Ended June 30, 1997
(in thousands, except per share data)
Owatonna Pro Forma Pro Forma
Chiquita Companies Stokely AFF Adjustments Combined
-------- --------- ------- --- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,277,643 $ 32,453 $ 71,879 $ 35,794 $ -- $ 1,417,769
Operating expenses
Cost of sales 948,107 19,446 56,893 28,490 -- 1,052,936
Selling, general and
administrative 147,212 12,380 12,762 2,912 (1,532) (a)(b) 173,734
Depreciation 43,041 1,486 2,398 746 -- 47,671
------ ------ ------ ------ ------ -------
Operating income (loss) 139,283 (859) (174) 3,646 1,532 143,428
Interest income 8,633 289 -- 6 (300) (c) 8,628
Interest expense (55,778) (185) (5,020) (381) 1,800 (c) (59,564)
Other income, net 439 38 -- (26) -- 451
------ ------ ------ ------ ------ ------
Income (loss) before income taxes 92,577 (717) (5,194) 3,245 3,032 92,943
Income taxes (8,200) 261 -- (1,007) 521 (d) (8,425)
------ ------ ------ ------ ------ ------
Net income (loss) $ 84,377 $ (456) $ (5,194) $ 2,238 $3,553 $ 84,518
======= ======= ======= ======= ======= ========
Earnings per common share:
- Primary $1.33 $ 1.16
- Fully diluted $1.16 $ 1.04
Shares used to calculate earnings
per common share:
- Primary 57,108 65,279
- Fully diluted 72,506 80,931
</TABLE>
NOTE: This Pro Forma Combined Income Statement, which gives effect to the
acquisition of the Owatonna Companies and the proposed acquisitions of
Stokely and AFF by Chiquita, includes pro forma adjustments to reflect:
(a) Amortization of goodwill totaling $.1 million arising from the
acquisitions on a straight-line basis over 40 years.
(b) Transaction costs for professional services incurred by the acquired
companies totaling $1.7 million.
(c) Assumed repayments of $17.2 million of AFF debt with cash and $32.0
million of Stokely debt with approximately 2.2 million
shares of Chiquita Common Stock.
(d) Elimination of tax expense of the Owatonna Companies and federal
tax expense of AFF as a result of including these
companies in the Chiquita consolidated tax returns.
This Pro Forma Combined Income Statement is based on a preliminary
allocation of purchase price to the net assets acquired.
Furthermore, it is not necessarily indicative of the actual results of
the combined companies had the acquisitions occurred on
January 1, 1997 or of the future results of the combined companies.
36<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: October 3, 1997 CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ William A. Tsacalis
William A. Tsacalis
Vice President and Controller
37<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CHIQUITA BRANDS INTERNATIONAL, INC.
AND
OWATONNA CANNING COMPANY,
OLIVIA CANNING COMPANY,
MIDWEST FOODS, INC.,
GOODHUE CANNING COMPANY
AND
THE SHAREHOLDERS REPRESENTATIVES
DATED AS OF AUGUST 22, 1997<PAGE>
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
1997 Financial Statements . . . . . . . . . . . . 1
Accounts . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . 1
Adjustment Date . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . 2
Announcement . . . . . . . . . . . . . . . . . . 2
Articles of Merger . . . . . . . . . . . . . . . 2
Buildings . . . . . . . . . . . . . . . . . . . . 2
Certificate . . . . . . . . . . . . . . . . . . . 2
Certificate of Merger . . . . . . . . . . . . . . 2
Chiquita . . . . . . . . . . . . . . . . . . . . 2
Chiquita Closing Certificate . . . . . . . . . . 2
Chiquita Common Shares . . . . . . . . . . . . . 3
Chiquita Counsel Opinion . . . . . . . . . . . . 3
Chiquita Preferred Shares . . . . . . . . . . . . 3
Claim Notice . . . . . . . . . . . . . . . . . . 3
Closing . . . . . . . . . . . . . . . . . . . . . 3
Closing Balance Sheets . . . . . . . . . . . . . 3
Closing Date . . . . . . . . . . . . . . . . . . 3
Closing Financial Statements . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . 3
Companies . . . . . . . . . . . . . . . . . . . . 3
Companies Closing Certificate . . . . . . . . . . 4
Companies Counsel Opinion . . . . . . . . . . . . 4
Companies Counsel Tax Opinion . . . . . . . . . . 4
Confidentiality Agreement . . . . . . . . . . . . 4
Consulting Agreement . . . . . . . . . . . . . . 4
Contracts . . . . . . . . . . . . . . . . . . . . 4
Control . . . . . . . . . . . . . . . . . . . . . 4
Disclosure Documents . . . . . . . . . . . . . . 4
Disclosure Schedule . . . . . . . . . . . . . . . 4
Drop-Down . . . . . . . . . . . . . . . . . . . . 4
Effective Time of the Merger . . . . . . . . . . 4
Employees . . . . . . . . . . . . . . . . . . . . 4
Employee Benefit Plans . . . . . . . . . . . . . 5
Employee and Equipment Leasing Agreement . . . . 5
Employment Agreement . . . . . . . . . . . . . . 5
Environmental Law(s) . . . . . . . . . . . . . . 5
Environmental Losses . . . . . . . . . . . . . . 5
Equipment . . . . . . . . . . . . . . . . . . . . 5
ERISA . . . . . . . . . . . . . . . . . . . . . . 5
ERISA Affiliate . . . . . . . . . . . . . . . . . 5
Escrow Agent . . . . . . . . . . . . . . . . . . 6
i<PAGE>
Escrow Agreement . . . . . . . . . . . . . . . . 6
Escrow Funds . . . . . . . . . . . . . . . . . . 6
Estimated Total Merger Consideration . . . . . . 6
Existing Bank Accounts . . . . . . . . . . . . . 6
Existing Contracts . . . . . . . . . . . . . . . 6
Existing Indebtedness . . . . . . . . . . . . . . 6
Existing Insurance Policies . . . . . . . . . . . 7
Existing Investments . . . . . . . . . . . . . . 7
Existing Liens . . . . . . . . . . . . . . . . . 7
Expenses Funds . . . . . . . . . . . . . . . . . 7
Farmco . . . . . . . . . . . . . . . . . . . . . 7
Final Pre-Closing Period Other Tax Returns . . . 7
GAAP . . . . . . . . . . . . . . . . . . . . . . 7
Goodhue . . . . . . . . . . . . . . . . . . . . . 7
Hazardous Substance(s) . . . . . . . . . . . . . 7
Historical Financial Statements . . . . . . . . . 7
IRS . . . . . . . . . . . . . . . . . . . . . . . 8
Indebtedness . . . . . . . . . . . . . . . . . . 8
Initial Merger Consideration . . . . . . . . . . 8
Initial Payment Funds . . . . . . . . . . . . . . 8
Intangible Assets . . . . . . . . . . . . . . . . 8
Inventory . . . . . . . . . . . . . . . . . . . . 8
Investment . . . . . . . . . . . . . . . . . . . 8
Investment Representative Agreement . . . . . . . 8
Knowledge of the Companies . . . . . . . . . . . 9
Law . . . . . . . . . . . . . . . . . . . . . . . 9
Letter of Intent . . . . . . . . . . . . . . . . 9
Letter of Transmittal . . . . . . . . . . . . . . 9
Lien . . . . . . . . . . . . . . . . . . . . . . 9
Majority Authorization . . . . . . . . . . . . . 9
Material Adverse Change . . . . . . . . . . . . . 9
Material Adverse Effect . . . . . . . . . . . . . 9
Merger . . . . . . . . . . . . . . . . . . . . . 9
Midwest . . . . . . . . . . . . . . . . . . . . . 9
Migrant Workers . . . . . . . . . . . . . . . . . 9
Net Book Value . . . . . . . . . . . . . . . . . 10
New Owatonna . . . . . . . . . . . . . . . . . . 10
Olivia . . . . . . . . . . . . . . . . . . . . . 10
OCC . . . . . . . . . . . . . . . . . . . . . . . 10
Partnership . . . . . . . . . . . . . . . . . . . 10
Person . . . . . . . . . . . . . . . . . . . . . 10
Post-Closing Partial Period . . . . . . . . . . . 11
Pre-Closing Partial Period . . . . . . . . . . . 11
Principal Shareholder Agreements . . . . . . . . 11
Private Placement Memorandum . . . . . . . . . . 11
Real Estate . . . . . . . . . . . . . . . . . . . 11
Real Estate Agreements . . . . . . . . . . . . . 11
Registration Rights Agreement . . . . . . . . . . 11
Related Documents . . . . . . . . . . . . . . . . 11
Release . . . . . . . . . . . . . . . . . . . . . 11
Shareholder Agreements . . . . . . . . . . . . . 11
Shareholders . . . . . . . . . . . . . . . . . . 11
ii<PAGE>
Shareholders Certifications . . . . . . . . . . . 12
Shareholders Representatives . . . . . . . . . . 12
Shareholder's Share . . . . . . . . . . . . . . . 12
Stock . . . . . . . . . . . . . . . . . . . . . . 12
Subsidiary . . . . . . . . . . . . . . . . . . . 12
Supply Agreement . . . . . . . . . . . . . . . . 12
Survey . . . . . . . . . . . . . . . . . . . . . 12
Surviving Corporation . . . . . . . . . . . . . . 13
Tax . . . . . . . . . . . . . . . . . . . . . . . 13
Tax Claims . . . . . . . . . . . . . . . . . . . 13
Tax Settlement Amount . . . . . . . . . . . . . . 13
Temporary Access Agreement . . . . . . . . . . . 13
Title Commitment . . . . . . . . . . . . . . . . 13
Title Company . . . . . . . . . . . . . . . . . . 13
Title Policy . . . . . . . . . . . . . . . . . . 13
Total Merger Consideration . . . . . . . . . . . 13
Transferred Property . . . . . . . . . . . . . . 14
Value . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . 14
THE MERGER . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Actions to be Taken . . . . . . . . . . . . 14
2.2 Conversion or Cancellation of Stock . . . . 16
2.3 Delivery of Initial Merger Consideration . . 17
2.4 Post-Closing Adjustment . . . . . . . . . . 19
2.5 Reorganization . . . . . . . . . . . . . . . 21
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . 21
OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . 21
3.1 Shareholders Representatives . . . . . . . . 21
3.2 Disclosure Schedule . . . . . . . . . . . . 24
3.3 Escrow Agreement . . . . . . . . . . . . . . 24
3.4 Registration Rights Agreement . . . . . . . 24
3.5 Consulting Agreement . . . . . . . . . . . . 24
3.6 Drop-Down . . . . . . . . . . . . . . . . . 24
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . 25
REPRESENTATIONS ANDWARRANTIES OF THE COMPANIES . . . . 25
4.1 Organization . . . . . . . . . . . . . . . . 25
4.2 Businesses . . . . . . . . . . . . . . . . . 25
4.3 Capitalization . . . . . . . . . . . . . . . 25
4.4 Authorization; Enforceability . . . . . . . 26
4.5 No Violation or Conflict . . . . . . . . . . 27
4.6 Title to Assets . . . . . . . . . . . . . . 27
4.7 Litigation . . . . . . . . . . . . . . . . . 27
4.8 Financial Statements . . . . . . . . . . . . 28
4.9 Absence of Certain Changes . . . . . . . . . 28
4.10 Buildings and Equipment . . . . . . . . . . 29
4.11 Existing Contracts . . . . . . . . . . . . . 29
4.12 Performance of Contracts . . . . . . . . . . 30
4.13 Contingent and Undisclosed Liabilities . . . 31
4.14 Existing Insurance Policies . . . . . . . . 31
iii<PAGE>
4.15 Employee Benefit Plans. . . . . . . . . . . 32
4.16 Existing Bank Accounts . . . . . . . . . . . 35
4.17 Permits; Compliance with Law . . . . . . . . 35
4.18 Environmental Matters . . . . . . . . . . . 35
4.19 Brokers . . . . . . . . . . . . . . . . . . 36
4.20 Tax and Other Returns and Reports . . . . . 37
4.21 Real Estate . . . . . . . . . . . . . . . . 39
4.22 Other Approvals . . . . . . . . . . . . . . 40
4.23 Investments . . . . . . . . . . . . . . . . 40
4.24 Labor Matters . . . . . . . . . . . . . . . 40
4.25 Articles; Bylaws . . . . . . . . . . . . . . 41
4.26 Indebtedness . . . . . . . . . . . . . . . . 41
4.27 Subsidiaries . . . . . . . . . . . . . . . . 41
4.28 Accounts . . . . . . . . . . . . . . . . . . 41
4.29 Inventory . . . . . . . . . . . . . . . . . 41
4.30 Unemployment Compensation . . . . . . . . . 41
4.31 Intangible Assets . . . . . . . . . . . . . 41
4.32 Customers . . . . . . . . . . . . . . . . . 42
4.33 Disclosure . . . . . . . . . . . . . . . . . 42
4.34 Ancillary Agreements . . . . . . . . . . . . 42
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . 43
REPRESENTATIONS AND WARRANTIES OF CHIQUITA . . . . . . 43
5.1 Organization . . . . . . . . . . . . . . . . 43
5.2 Authorization; Enforceability . . . . . . . 43
5.3 No Violation or Conflict . . . . . . . . . . 43
5.4 Brokers. . . . . . . . . . . . . . . . . . . 43
5.5 Litigation . . . . . . . . . . . . . . . . . 43
5.6 Governmental Approvals . . . . . . . . . . . 44
5.7 Capitalization . . . . . . . . . . . . . . . 44
5.8 Securities Filings . . . . . . . . . . . . . 44
5.9 Disclosure . . . . . . . . . . . . . . . . . 45
5.10 Investment Intent . . . . . . . . . . . . . 45
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . 45
CERTAIN MATTERS PENDING THE CLOSING . . . . . . . . . 45
6.1 Full Access. . . . . . . . . . . . . . . . . 45
6.2 Carry on in Regular Course . . . . . . . . . 46
6.3 Use of Assets . . . . . . . . . . . . . . . 46
6.4 Preservation of Relationships . . . . . . . 46
6.5 No Default . . . . . . . . . . . . . . . . . 46
6.6 Publicity . . . . . . . . . . . . . . . . . 46
6.7 Existing Insurance Policies . . . . . . . . 47
6.8 Employment Matters . . . . . . . . . . . . . 47
6.9 Contracts and Commitments . . . . . . . . . 47
6.10 Indebtedness; Investments . . . . . . . . . 47
6.11 Certain Transactions . . . . . . . . . . . . 47
6.12 Duties Concerning Covenants and Representations 47
6.13 Amendments . . . . . . . . . . . . . . . . . 48
6.14 Dividends; Redemptions; Issuance of Stock . 48
6.15 Reporting to Chiquita . . . . . . . . . . . 48
6.16 Blue Sky Approvals . . . . . . . . . . . . . 49
iv<PAGE>
6.17 Shareholders Meetings . . . . . . . . . . . 49
6.18 Notice of Dissenting Shareholders . . . . . 50
6.19 No Encouragement of Dissent . . . . . . . . 50
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . 50
CONDITIONS PRECEDENT TO THE OBLIGATIONS OFCHIQUITA . . 50
7.1 Compliance with Agreement . . . . . . . . . 50
7.2 Proceedings and Instruments Satisfactory;
Shareholders Approval . . . . . . . . . . . 50
7.3 No Litigation . . . . . . . . . . . . . . . 51
7.4 Representations and Warranties of the Companies 51
7.5 Material Adverse Change . . . . . . . . . . 51
7.6 Deliveries Prior to or At Closing . . . . . 51
7.7 Real Estate . . . . . . . . . . . . . . . . 52
7.8 Escrow Agreement . . . . . . . . . . . . . . 53
7.9 Affiliates . . . . . . . . . . . . . . . . . 53
7.10 Registration Rights Agreement . . . . . . . 53
7.11 Listing; Blue Sky . . . . . . . . . . . . . 53
7.12 Amendment of Certificate of Incorporation . 53
7.13 Ancillary Agreements . . . . . . . . . . . . 54
7.14 No Shareholder Dissents . . . . . . . . . . 54
7.15 Receipt of Shareholder Agreements, Shareholders
Certifications, Investment Representative
Agreements . . . . . . . . . . . . . . . . . 54
7.16 Nonoccurrence of Certain Conditions . . . . 54
7.17 Consents . . . . . . . . . . . . . . . . . . 55
7.18 Surveys . . . . . . . . . . . . . . . . . . 55
7.19 Leases, etc. . . . . . . . . . . . . . . . . 55
7.20 Transfer of Certain Properties . . . . . . . 55
7.21 Real Estate Agreements . . . . . . . . . . . 55
7.22 Lease Agreement . . . . . . . . . . . . . . 56
7.23 Fees of Dorsey & Whitney LLP . . . . . . . . 56
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . 56
CONDITIONS PRECEDENT TO THEOBLIGATIONS OF THE COMPANIES 56
8.1 Compliance with Agreement . . . . . . . . . 56
8.2 Proceedings and Instruments Satisfactory;
Shareholders Approval . . . . . . . . . . . 56
8.3 No Litigation . . . . . . . . . . . . . . . 56
8.4 Representations and Warranties . . . . . . . 57
8.5 Deliveries at Closing . . . . . . . . . . . 57
8.6 Escrow Agreement . . . . . . . . . . . . . . 57
8.7 Registration Rights Agreement . . . . . . . 57
8.8 Chiquita Common and Preferred Shares . . . . 57
8.9 Listing; Blue Sky . . . . . . . . . . . . . 58
8.10 Amendment of Certificate of Incorporation . 58
8.11 Companies Counsel Tax Opinion . . . . . . . 59
8.12 Shareholder Dissents . . . . . . . . . . . . 59
8.13 Real Estate Agreements . . . . . . . . . . . 59
8.14 Consulting Agreement . . . . . . . . . . . . 59
8.15 Business Name . . . . . . . . . . . . . . . 59
8.16 Receipt of Shareholder Agreements . . . . . 59
v<PAGE>
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . 59
INDEMNITIES . . . . . . . . . . . . . . . . . . . . . 59
9.1 Rights Against Escrow . . . . . . . . . . . 59
9.2 Indemnity by Chiquita . . . . . . . . . . . 60
9.3 Provisions Regarding Indemnity . . . . . . . 61
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . 65
OBLIGATIONS OF CHIQUITA AFTER THE CLOSING DATE . . . . 65
10.1 Current Public Information . . . . . . . . . 65
10.2 Removal of Legend. . . . . . . . . . . . . . 65
10.3 Access to Books and Records . . . . . . . . 65
10.4 Employee Benefits . . . . . . . . . . . . . 65
10.5 Further Issuances of Chiquita Preferred Shares 66
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . 66
INTERCOMPANY ARRANGEMENTS . . . . . . . . . . . . . . 66
ARTICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . 66
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . 66
12.1 Chiquita's Right to Reimbursement . . . . . 66
12.2 Chiquita Indemnity . . . . . . . . . . . . . 67
12.3 Allocation Between Partial Periods . . . . . 67
12.4 Filing of Tax Returns . . . . . . . . . . . 68
12.5 Post-Closing Audits . . . . . . . . . . . . 70
12.6 Closing Date Tax Balance Sheets . . . . . . 71
12.7 Cooperation . . . . . . . . . . . . . . . . 71
12.8 Refunds . . . . . . . . . . . . . . . . . . 72
ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . 72
TERMINATION; MISCELLANEOUS . . . . . . . . . . . . . . 72
13.1 Termination; Termination Fee . . . . . . . . 72
13.2 Rights on Termination; Waiver . . . . . . . 73
13.3 Entire Agreement; Amendment . . . . . . . . 74
13.4 Expenses . . . . . . . . . . . . . . . . . . 74
13.5 Indemnification . . . . . . . . . . . . . . 75
13.6 Governing Law . . . . . . . . . . . . . . . 75
13.7 Assignment . . . . . . . . . . . . . . . . . 75
13.7 Notices . . . . . . . . . . . . . . . . . . 75
13.8 Counterparts; Headings . . . . . . . . . . . 76
13.9 Interpretation . . . . . . . . . . . . . . . 77
13.10 Severability . . . . . . . . . . . . . . . 77
13.11 Specific Performance . . . . . . . . . . . 77
13.12 No Reliance . . . . . . . . . . . . . . . . 77
13.13 Further Assurances . . . . . . . . . . . . 78
vi<PAGE>
EXHIBITS:
A. Form of Chiquita Closing Certificate
B. Form of Chiquita Counsel Opinion
C. Terms and Conditions of Chiquita Preferred Stock
D. Form of Companies Closing Certificates
E. Forms of Companies Counsel Opinion and Companies Tax
Counsel Opinion
F. Form of Escrow Agreement
G. Form of Letter of Transmittal
H. Form of Registration Rights Agreement
I. Form of Shareholder Agreement
J. Form of Shareholders Certification
K. Form of affidavit of Chadwick S. Lange and Dean
Christiansen to be furnished pursuant to Section 7.6(h)
SCHEDULES:
1. Persons To Whom "Knowledge of the Companies" Attributable
2. Title Commitments
3. List of Company Shareholders
4. Accounting Policies and Procedures
5. Properties to be Transferred to Farmco
vii<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is
made as of this 22nd day of August, 1997 by and among (i)
CHIQUITA BRANDS INTERNATIONAL, INC., (ii) OWATONNA CANNING
COMPANY, OLIVIA CANNING COMPANY, MIDWEST FOODS, INC. and
GOODHUE CANNING COMPANY, and (iii) CHADWICK S. LANGE, KAREN
E. LANGE, RICHARD JACKSON and ANN JACKSON, as Shareholders
Representatives. Certain capitalized terms used in this
Agreement are defined in Article 1 of this Agreement.
RECITALS
WHEREAS, the Companies are engaged in the businesses
of processing and canning food products distributed from their
plants in Minnesota and Illinois; and
WHEREAS, the Companies and Chiquita desire to effect
a merger transaction by which each Company shall be merged
into Chiquita and all of the outstanding capital stock of each
Company will be converted into shares of capital stock of
Chiquita as the surviving corporation in such merger.
NOW THEREFORE, in consideration of the Recitals and
of the mutual covenants, conditions and agreements set forth
herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed that:
ARTICLE 1
DEFINITIONS
When used in this Agreement, except as the context
otherwise indicates, the following terms shall have the
meanings specified:
"1997 Financial Statements" means the audited
Balance Sheet and Statement of Income and Retained Earnings of
each of the Companies (other than Midwest) at and for the
fiscal year ended on February 28, 1997 and of Midwest at and
for the fiscal year ended August 31, 1996.
"Accounts" shall mean all accounts receivable owned
by any of the Companies or the Partnership on the relevant
date of reference.
"Act" shall mean the Securities Act of 1933, as the
same may be in effect from time to time.
"Adjustment Date" shall have the meaning specified
in Section 2.3 of this Agreement.
1<PAGE>
"Affiliate" shall mean any Person:
(a) who is an officer or director, or both, of
any of the Companies;
(b) who beneficially owns, or Controls a
Person who beneficially owns, any of the issued and
outstanding shares of capital stock of any of the Companies;
(c) in which one or more Affiliates, or
Persons controlled by one or more Affiliates, own fifty
percent (50%) or more of the issued and outstanding shares of
capital stock or equity interest;
(d) which directly or indirectly Controls or
is Controlled by or is under common Control with, any of the
Companies; or
(e) who is a Shareholder or a member of the
immediate family of a Shareholder.
"Agreement" shall mean this Agreement and Plan of
Merger, together with the Exhibits and Schedules attached
hereto and the Disclosure Schedule.
"Announcement" shall mean any public notice,
release, statement or other communication to employees,
suppliers, distributors, customers, the general public, the
press or any securities exchange or securities quotation
system relating to the transactions described in this
Agreement.
"Articles of Merger" shall have the meaning
specified in Section 2.1(e) of this Agreement.
"Buildings" shall mean all buildings, fixtures,
structures and improvements leased or owned by any of the
Companies or the Partnership and located on the Real Estate.
"Certificate" shall mean a certificate which
immediately prior to the Effective Time of the Merger
represented shares of Stock of a Company.
"Certificate of Merger" shall have the meaning
specified in Section 2.1(e) of this Agreement.
"Chiquita" shall mean Chiquita Brands International,
Inc., a New Jersey corporation.
"Chiquita Closing Certificate" shall mean a Closing
Certificate of Chiquita in the form of Exhibit A attached to
this Agreement.
2<PAGE>
"Chiquita Common Shares" shall mean the shares of
Capital Stock of Chiquita, par value $.33 per share, to be
issued pursuant to this Agreement.
"Chiquita Counsel Opinion" shall mean an opinion of
Robert W. Olson, Esq. in the form of Exhibit B attached to
this Agreement.
"Chiquita Preferred Shares" shall mean the shares of
$2.50 Convertible Preference Stock, Series C, to be issued
pursuant to this Agreement, the terms and conditions of which
are set forth in Exhibit C attached to this Agreement.
"Claim Notice" shall have the meaning specified in
Section 9.3(b) of this Agreement.
"Closing" shall mean the consummation of the
transactions contemplated by this Agreement, to be held at
10:00 A.M., Central Time, on the Closing Date at the offices
of Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis,
Minnesota 55402, or such other time and place as the parties
may mutually agree to in writing.
"Closing Balance Sheets" means the audited balance
sheets of the Companies as at June 30, 1997 included in the
Closing Financial Statements.
"Closing Date" shall mean: (a) September 23, 1997,
or (b) such other date as the parties may mutually agree to in
writing.
"Closing Financial Statements" shall mean the
audited Balance Sheet of each of the Companies as at June 30,
1997 and the audited Statement of Income and Retained Earnings
of each of the Companies for the period from March 1, 1997 (or
August 31, 1996 in the case of Midwest) up to June 30, 1997,
in each case as audited by the firm of Hutton Nelson &
McDonald LLP and in each case including all adjustments
recommended by Hutton Nelson & McDonald LLP, including those
that might otherwise have been passed on grounds of
immateriality.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Commission" shall mean the Securities and Exchange
Commission.
"Companies" shall mean OCC, Olivia, Midwest and
Goodhue; provided, however, that following the Merger, the
Companies shall mean Chiquita and that following the Drop-
Down, "Companies" shall mean New Owatonna.
3<PAGE>
"Companies Closing Certificate" shall mean the
Closing Certificates of the Companies in the form of Exhibit D
attached to this Agreement.
"Companies Counsel Opinion" and "Companies Counsel
Tax Opinion" shall mean the opinions of Dorsey & Whitney LLP
in the forms of Exhibits E-1 and E-2 attached to this
Agreement.
"Confidentiality Agreement" shall mean the agreement
between Chiquita and OCC dated as of September 3, 1996.
"Consulting Agreement" shall mean the Consulting
Agreement between OCC and Stephens J. Lange.
"Contracts" shall mean all of the contracts,
agreements, leases, relationships and commitments, written or
oral, to which any of the Companies or the Partnership is a
party or by which any of the Companies or the Partnership or
any of their assets are bound and which are required to be set
forth in the Disclosure Schedule by Section 4.11 or 4.21 of
this Agreement.
"Control" (including the terms "Controlling,"
"Controlled by" and "under common Control with"), as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through
the ownership of voting securities or by contract or
otherwise.
"Disclosure Documents" shall have the meaning
specified in Section 6.17 of this Agreement.
"Disclosure Schedule" shall mean the Disclosure
Schedule, dated the date of this Agreement, delivered by the
Companies to Chiquita contemporaneously with the execution and
delivery of this Agreement.
"Drop-Down" shall mean the transaction, immediately
following the Merger, by which Chiquita transfers all of the
assets of the Companies as of the Effective Time of the Merger
to New Owatonna and New Owatonna assumes all of the
liabilities of the Companies as of the Effective Time of the
Merger, pursuant to the terms of an assignment and assumption
agreement which shall be in form and substance reasonably
acceptable to the Companies.
"Effective Time of the Merger" shall have the
meaning specified in Section 2.1(e).
"Employees" shall mean all of the employees,
4<PAGE>
including any Migrant Workers, of any of the Companies and the
Partnership as of the relevant date of reference.
"Employee Benefit Plans" shall mean any pension
plan, profit sharing plan, bonus plan, incentive compensation
plan, stock purchase plan, stock ownership plan, stock option
plan, stock appreciation plan, employee benefit plan, employee
benefit policy, retirement plan, fringe benefit program,
insurance plan, severance plan, disability plan, sick leave
plan, death benefit plan, or any other plan, program or policy
to provide retirement income, fringe benefits or other
benefits to former or current employees of any of the
Companies or the Partnership.
"Employee and Equipment Leasing Agreement" shall
mean the Employee and Equipment Leasing Agreement between OCC
and Farmco dated as of the date hereof.
"Employment Agreement" shall mean the Employment
Agreement between OCC and Chadwick S. Lange dated as of the
date hereof.
"Environmental Law(s)" shall mean any and all
federal, state and local laws, statutes, codes, ordinances,
regulations, rules, consent decrees, consent orders, judicial
orders, administrative orders or other requirements of law
relating to health, safety or the environment. The term
Environmental Law includes, but is not limited to the
Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA") 42 U.S.C.
Section 9601-9675, the Resource Conservation and Recovery Act
of 1976 ("RCRA") 42 U.S.C. Section 6901-6991, the Clean Water
Act 33 U.S.C. Section 1321 et seq;., and the Clean Air Act 42
U.S.C. Section 7401 et seq;., the Occupational Safety and
Health Act, the Toxic Substance Control Act, the Emergency
Planning and Community Right to Know Act and any comparable or
implementing state or local statutes or ordinances, and
regulations and guidance promulgated or issued under any or
all of the above, all as amended as of the Closing Date.
"Environmental Losses" shall have the meaning set
forth in Section 9.3(e)(ii) of this Agreement.
"Equipment" shall mean all machinery, equipment,
boilers, furniture, furnishings, parts, tools, office
equipment, computers and other items of tangible personal
property owned or used by any of the Companies or the
Partnership as of the relevant date of reference.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
5<PAGE>
"ERISA Affiliate" shall mean:
(a) any corporation other than the Companies, i.e.,
either a subsidiary corporation or an affiliated or associated
corporation of Chiquita , which together with Chiquita is a
member of a "controlled group" of corporations;
(b) any organization which together with the
Companies or the Partnership is under "common control"; or
(c) any organization which together with the
Companies or the Partnership is an "affiliated service group";
as those terms are used in Sections 414(b), 414(c) and 414(m)
of the Code.
The term "ERISA Affiliate" also includes any other entity
required to be aggregated with the Companies or the
Partnership pursuant to regulations under Section 414(o) of
the Code.
"Escrow Agent" shall mean such company as shall be
mutually agreed upon by the parties hereto prior to the
Closing.
"Escrow Agreement" shall mean the Escrow Agreement
by and among Chiquita, the Escrow Agent and the Shareholders
Representatives in the form of Exhibit F attached to this
Agreement.
"Escrow Funds" shall have the meaning specified in
Section 2.3(b) of this Agreement.
"Estimated Total Merger Consideration" shall mean an
estimate of the Total Merger Consideration mutually agreed to
by Chiquita and the Companies at or before the Closing Date,
or, in the event Chiquita and the Companies do not so agree,
$50,000,000, which amount will be allocated among the
Companies as follows: (i) OCC - $41,700,000, (ii) Midwest -
$1,850,000, (iii) Goodhue - $3,500,000 and (iv) Olivia -
$2,950,000.
"Existing Bank Accounts" shall mean any and all
checking accounts, savings accounts, money market accounts,
custodial accounts, certificates of deposit, safe deposit
boxes and other bank or other similar accounts maintained by
any of the Companies or the Partnership with any financial
intermediary.
"Existing Contracts" shall mean those Contracts
which are listed on the Disclosure Schedule.
6<PAGE>
"Existing Indebtedness" shall mean all Indebtedness
of any of the Companies or the Partnership.
"Existing Insurance Policies" shall mean all of the
insurance policies in effect and owned by any of the Companies
or the Partnership.
"Existing Investments" shall mean all Investments of
any of the Companies or the Partnership.
"Existing Liens" shall mean those Liens affecting
any of the owned properties of any of the Companies or the
Partnership on the relevant date of reference to the extent
shown on the Disclosure Schedule or Schedule B-II (or in the
case of the Title Commitment issued for Peoria County,
Illinois real estate, Schedule B) of the Title Commitments;
provided, the standard exceptions in the Title Commitments
shall not be considered Existing Liens.
"Expenses Funds" shall have the meaning set forth in
Section 2.3(c) of this Agreement.
"Farmco" shall mean Festal Farms Co., a Minnesota
corporation.
"Final Pre-Closing Period Other Tax Returns" shall
have the meaning specified in Section 12.4 of this Agreement.
"GAAP" shall mean generally accepted accounting
principles in the United States consistently applied by the
Companies and the Partnership prior to the Closing Date.
"Goodhue" shall mean Goodhue Canning Company, a
Minnesota corporation.
"Hazardous Substance(s)" shall mean any pollutant,
contaminant or waste, hazardous or toxic chemical, including
without limitation the following: friable asbestos-containing
materials; urea formaldehyde foam insulation; petroleum and
its derivatives, by-products and other hydrocarbons;
radioactive materials; radon gas; paint containing lead;
polychlorinated biphenyls (PCB's) in any form or condition; or
any explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous substance which
is regulated under any Environmental Law.
"Historical Financial Statements" shall mean the
audited (except in the case of the Partnership, which shall
mean unaudited) Consolidated Balance Sheet, Statement of
Income and Retained Earnings and Statement of Cash Flows of
each of the Companies and the Partnership at and for each of
the fiscal years ended on February 28, 1995, February 29, 1996
7<PAGE>
and February 28, 1997 (or, in the case of Midwest, August 31,
1994, August 31, 1995 and August 31, 1996, and in the case of
the Partnership, December 31, 1994, December 31, 1995 and
December 31, 1996).
"IRS" shall mean the Internal Revenue Service.
"Indebtedness" shall mean all liabilities or
obligations of any of the Companies or the Partnership,
whether primary or secondary or absolute or contingent: (a)
for borrowed money; or (b) evidenced by notes, bonds,
debentures or similar instruments; or (c) secured by Liens on
any assets of any of the Companies or the Partnership by means
of a security agreement with a third party.
"Initial Merger Consideration" shall have the
meaning set forth in Section 2.3(a) of this Agreement.
"Initial Payment Funds" shall have the meaning
specified in Section 2.3(a) of this Agreement.
"Intangible Assets" shall mean all of the United
States and foreign patents, patent applications, trade names,
trademarks, service marks, trademark registrations, service
mark registrations, trademark applications, service mark
applications, registered copyrights, copyright applications,
formulas, trade secrets and knowhow owned or used by any of
the Companies or the Partnership at the relevant date of
reference.
"Inventory" shall mean all inventories of the
Companies and the Partnership, including raw materials, spare
parts, supplies, ingredients, stored inventories, work in
process and finished goods.
"Investment" by any one or more of the Companies or
the Partnership shall mean at the relevant date of reference:
(a) any transfer or delivery of cash, stock or other property
or value by any one or more of the Companies or the
Partnership in exchange for debt, stock or any other security
of another Person; (b) any loan, advance or capital
contribution to or in any other Person; (c) any guaranty or
assumption of any liability or obligation of any other Person;
and (d) any investments in any fixed property or fixed assets
other than fixed properties and fixed assets acquired and used
in the ordinary course of the business of any of the Companies
or the Partnership. "Investment" shall not include any
guaranty or assumption of liability created pursuant to the
deposit and collection of checks in the ordinary course of
business or any account receivable, prepaid expense or other
advance made in the ordinary course of business.
8<PAGE>
"Investment Representative Agreement" shall mean an
agreement between Chiquita and a person appointed by a
Shareholder as such Shareholder's investment representative in
accordance with such Shareholder's Certification signed by
such Shareholder.
"Knowledge of the Companies" shall mean actual
knowledge of any of the Persons identified in Schedule 1
attached to this Agreement.
"Law" shall mean any federal, state, local or other
law, rule, regulation or governmental requirement of any kind
(other than Environmental Laws), including any rules,
regulations and orders promulgated thereunder and any final
orders, decrees, consents or judgments of any court of
competent jurisdiction.
"Letter of Intent" shall mean the letter of intent
dated as of March 17, 1997, by and among Chiquita, each of the
Companies, Chadwick S. Lange, Karen E. Lange, Stephens J.
Lange, Gertrude H. Lange, the Olmsted Family Trust and Ann
Jackson.
"Letter of Transmittal" shall have the meaning
specified in Section 2.3(d) of this Agreement.
"Lien" shall mean, with respect to any asset: (a)
any mortgage, pledge, lien, charge, claim, restriction,
reservation, condition, easement, covenant, lease, encroach-
ment, title defect, imposition, security interest or other
encumbrance of any kind whether imposed by Law, by Contract or
otherwise; and (b) the interest of a vendor or lessor under
any conditional sale agreement, financing lease or other title
retention agreement relating to such asset.
"Majority Authorization" shall have the meaning set
forth in Section 3.1(b) of this Agreement.
"Material Adverse Change" and "Material Adverse
Effect" shall mean a material adverse change in, or material
adverse effect on, as the case may be, the results of
operations, financial condition, business, assets, liabilities
or, to the Knowledge of the Companies, prospects (excluding
general economic or general market conditions) of the
Companies, taken as a whole.
"Merger" shall have the meaning specified in Section
2.1(a) of this Agreement.
"Midwest" shall mean Midwest Foods, Inc., a
Minnesota corporation.
9<PAGE>
"Migrant Workers" shall mean all Persons who provide
services to any of the Companies or the Partnership and whose
services, employment, housing or transportation are subject to
any local, state or federal laws, statutes, ordinances,
regulations or orders related to migrant or seasonal
agricultural labor.
"Net Book Value" of a Company shall mean the
shareholders' equity of such Company as of June 30, 1997, as
derived from the Closing Financial Statements; provided,
however, that:
-The Net Book Value of OCC shall mean the sum of (a) the
Shareholders' equity of OCC as of June 30, 1997, as so
derived, and (b) $1,700,000; increased by (c) 60% of the
amount of OCC's LIFO inventory reserve included in the Closing
Financial Statements if (A) OCC shall have continued to
maintain sales levels from February 28, 1997 through June 30,
1997 in the ordinary course of business consistent with good
business practice and (B) the inventory value resulting from
the elimination of such LIFO reserve as of July 1, 1997 would
pass the "lower of cost or market" test and by (d) $100,000 if
all transaction costs incurred by or for the benefit of OCC or
any of the other Companies on or prior to the Closing Date
shall have been fully recorded in the Closing Financial
Statements; and
-there shall be excluded from the Net Book Value of each
Company any gains subsequent to February 28, 1997 from the
write-up of property, plant or equipment or from insurance
claims or recoveries in excess of the carrying value of lost
or damaged property, plant or equipment.
"New Owatonna" shall mean a limited liability
company to be organized by Chiquita under Delaware Law prior
to the Closing as a wholly owned subsidiary of Chiquita, which
shall be named Owatonna Canning Company.
"Olivia" shall mean Olivia Canning Company, a
Minnesota corporation.
"OCC" shall mean Owatonna Canning Company, a
Minnesota corporation.
"Partnership" shall mean Hartle-Lange-Hammel
Company, a Minnesota general partnership.
"Partnership Amendment" shall mean the Agreement to
Amend the Partnership Agreement of Hartle-Lange-Hammel Company
dated as of the date hereof between OCC and Stephens J. Lange.
"Person" shall mean a natural person, corporation,
10<PAGE>
limited liability company, joint stock company, trust,
partnership, governmental entity, agency or branch or
department thereof, or any other legal entity.
"Post-Closing Partial Period" shall have the meaning
specified in Section 12.3 of this Agreement.
"Pre-Closing Partial Period" shall have the meaning
specified in Section 12.1 of this Agreement.
"Principal Shareholder Agreements" shall mean the
agreements between Chiquita and certain of the Shareholders of
the Companies obligating said Shareholders to vote to approve
the Merger.
"Private Placement Memorandum" shall have the
meaning specified in Section 6.17 of this Agreement.
"Real Estate" shall mean the real property interests
identified in the Disclosure Schedule.
"Real Estate Agreements" shall mean the silage
spreading, irrigation, machinery parking, easement, warehouse,
farm shop, carpenter shop and garages lease agreements, in
form and substance reasonably satisfactory to the Companies
and Chiquita, between Farmco and OCC, necessary to satisfy the
requirements of Section 7.19.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement by and among Chiquita and the
Shareholders Representatives in the form of Exhibit H attached
to this Agreement.
"Related Documents" shall mean the Certificate of
Merger, Articles of Merger, Registration Rights Agreement,
Supply Agreement, Escrow Agreement, Employment Agreement,
Partnership Amendment and Real Estate Agreements.
"Release" means a release, as such term is defined
in the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, and any similar or implementing
state or local law.
"Shareholder Agreements" shall mean agreements
entered into between each of the Shareholders and Chiquita in
the form of Exhibit I attached to this Agreement.
"Shareholders" shall mean all Persons owning of
record any shares of Stock immediately prior to the Effective
Time of the Merger.
11<PAGE>
"Shareholders Certifications" shall mean
Certifications completed and signed by Shareholders in the
form of Exhibit J attached to this Agreement.
"Shareholders Representatives" shall mean Chadwick
S. Lange and Karen E. Lange for purposes of this Agreement and
the Escrow Agreement and shall mean Richard Jackson and Ann
Jackson for purposes of the Registration Rights Agreement.
A "Shareholder's Share" of the Initial Merger
Consideration shall mean that percentage of the Initial Merger
Consideration which the aggregate Value of such Shareholder's
Stock in all the Companies bears to the Initial Merger
Consideration. A "Shareholder's Share" of the Total Merger
Consideration shall mean that percentage of the Total Merger
Consideration which the aggregate Value of such Shareholder's
Stock in all the Companies bears to the Total Merger
Consideration.
"Stock" shall mean all capital stock of the
Companies issued and outstanding at the date of this
Agreement, consisting of: (a) 450 shares of Class A common
voting stock of OCC, $100 par value; (b) 4,050 shares of Class
B common non-voting stock of OCC, $100 par value; (c) 121
shares of capital stock of Olivia, $100 par value; (d) 1,000
Common Shares of Midwest, $10 par value; (e) 500 Participating
Non-Voting Shares of Midwest, $10 par value; and (f) 140
common voting shares of Goodhue, $100 par value.
"Subsidiary" shall mean any corporation, at least a
majority of the outstanding capital stock of which (of any
class or classes, however designated, having ordinary voting
power for the election of at least a majority of the board of
directors of such corporation) shall at the time be owned by
the relevant Person directly or through one or more
corporations which are themselves Subsidiaries.
"Supply Agreement" shall mean the Supply Agreement
between Farmco and OCC dated as of the date hereof.
"Survey" shall mean a certified survey map prepared
by a surveyor selected by Chiquita depicting Real Estate that
Chiquita, in its sole discretion, chooses to have surveyed,
which shall be sufficient to enable the Title Company to
eliminate its standard survey exceptions relating to the
surveyed real property and shall include those matters
required to be included on a land survey in accordance with
the Minimum Standard Detail Requirements and Classifications
for ALTA/ACSM Land Title Surveys as jointly established and
adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992 (the
"Requirements"), including those items of Table A of the
12<PAGE>
Requirements selected by Chiquita.
"Surviving Corporation" shall have the meaning
specified in Section 2.1(a) of this Agreement.
"Tax" or "Taxes" shall mean all federal, state,
territorial, local, foreign and other taxes, or assessments
including, without limitation, income, estimated income,
business, occupation, franchise, property, sales, employment,
gross receipts, use, transfer, ad valorem, fuel, vehicle,
profits, license, capital, payroll, escheat, excise, goods and
services, severance, stamp, value add transfer value added and
including, without limitation, interest, penalties and
additions in connection therewith for which any of the
Companies, any Subsidiary of any of the Companies or the
Partnership, as applicable, is or may be liable.
"Tax Claims" shall have the meaning specified in
Section 12.5(a) of this Agreement.
"Tax Settlement Amount" shall have the meaning
specified in Section 12.5(b) of this Agreement.
"Temporary Access Agreement" shall mean the
Temporary Access Agreement by and among OCC, Olivia, Midwest,
Goodhue and Chiquita dated April 1, 1997.
"Title Commitments" shall mean the Title Commitments
listed on the attached Schedule 2.
"Title Company" shall mean First American Title
Insurance Company or such other title insurance company which
may be selected by Chiquita.
"Title Policy" shall mean an owner's policy of title
insurance on an American Land Title Association form
consistent with the Title Commitments, to be dated the Closing
Date, insuring the Companies as fee simple owners of the real
estate listed in the Title Commitments.
"Total Merger Consideration" shall mean the sum of
(a) 100% of the Net Book Value of OCC, Midwest and Goodhue and
(b) 66.942% of the Net Book Value of Olivia; provided,
however, that in the event that the Closing is delayed until
after October 1, 1997 because of the occurrence and
continuation of a condition contemplated by Section 7.16 of
this Agreement, Total Merger Consideration shall mean said sum
plus interest on said sum at 8% per annum from October 1, 1997
to the Effective Time of the Merger, minus accrued dividends
on Chiquita Preferred Shares from October 1, 1997 to the
Effective Time of the Merger.
13<PAGE>
"Transferred Property" shall mean all property
owned, operated or controlled by the Companies and the
Partnership at the time of the execution of this Agreement
including the Real Estate and all other properties or
facilities of the Companies and the Partnership (including
leased properties, underlying soils and groundwater and areas
leased to tenants, if any).
"Value" of Chiquita Common Shares shall mean $13.91
per share and the "Value" of Chiquita Preferred Shares shall
mean $50 per share, except that for purposes of the
reimbursement of Chiquita for Losses from the Escrow Funds and
reimbursement of the Shareholders Representatives and Chiquita
from the Expenses Funds for expenses incurred pursuant to
Sections 2.4(c), 3.1(j) and 12.4, and for purposes of valuing
the Chiquita Common Share component of (x) that portion of any
delivery of Chiquita Common and Preferred Shares pursuant to
Section 2.4(a)(i) which represents more than 95% of the
Estimated Total Merger Consideration and (y) any delivery of
Chiquita Common and Preferred Shares pursuant to Section
2.4(a)(ii), the "Value" of a Chiquita Common Share as of a
particular date shall mean the average of the last sales
prices of Chiquita Common Shares on the New York Stock
Exchange Composite Tape for the 15 trading days ending on the
second day preceding such particular date. The "Value" of a
Shareholder's Stock in a particular Company shall mean that
percentage of the Net Book Value of such Company which is
equal to such Shareholder's total percentage equity interest
in such Company, as set forth in Schedule 3 attached to this
Agreement.
ARTICLE 2
THE MERGER
2.1 Actions to be Taken. Subject to the terms and
conditions of this Agreement, including the fulfillment (or
waiver) of all conditions to the obligations of the parties
contained herein, at the Effective Time of the Merger (as
hereinafter defined) and pursuant to the New Jersey Business
Corporation Act and the Minnesota Business Corporation Act,
the following shall occur:
(a) Each Company shall be merged with and into
Chiquita (the "Merger"). Chiquita shall be the surviving
corporation (the "Surviving Corporation") in the Merger. The
separate corporate existence of each Company shall cease at
the Effective Time of the Merger, and thereupon the Companies
and Chiquita shall be a single corporation. The Surviving
Corporation shall succeed to all of the rights, privileges,
powers and franchises of a public or private nature of the
Companies, all of the properties and assets of the Companies
14<PAGE>
and all of the debts, choses in action and other interests due
or belonging to the Companies, and shall be subject to, and
responsible for, all of the debts, liabilities and duties of
the Companies with the effect set forth in the New Jersey
Business Corporation Act and the Minnesota Business
Corporation Act. If, at any time after the Effective Time of
the Merger, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to
vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Companies
acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or to otherwise
carry out this Agreement, the officers and directors of the
Surviving Corporation shall and will be authorized to execute
and deliver, in the name and on behalf of the Companies or
otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of
the Companies or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or
to otherwise carry out this Agreement.
(b) The Certificate of Incorporation of
Chiquita at the Effective Time of the Merger shall be and
remain the certificate of incorporation of the Surviving
Corporation until amended as provided by law.
(c) The by-laws of Chiquita at the Effective
Time of the Merger shall be and remain the by-laws of the
Surviving Corporation until amended as provided by law or by
the certificate of incorporation or the by-laws of the
Surviving Corporation.
(d) The officers and directors of Chiquita at
the Effective Time of the Merger shall be the officers and
directors, respectively, of the Surviving Corporation until
their successors shall have been elected and qualified or
until otherwise provided by law or the certificate of
incorporation or by-laws of the Surviving Corporation.
(e) As soon as practicable after the terms and
conditions of this Agreement have been satisfied, a
Certificate of Merger, in proper form and properly executed in
accordance with the New Jersey Business Corporation Act (the
"Certificate of Merger") shall be filed with the Secretary of
State of the State of New Jersey and Articles of Merger, in
proper form and executed in accordance with the Minnesota
Business Corporation Act (the "Articles of Merger"), shall be
filed with the Secretary of State of the State of Minnesota.
15<PAGE>
The Merger shall become effective when the Certificate of
Merger and Articles of Merger are so filed. (The date and time
when the Merger becomes effective is referred to in this
Agreement as the "Effective Time of the Merger".)
(f) At the Effective Time of the Merger, the
stock transfer books of the Companies shall be closed and
there shall be no further registration of transfers of shares
of Stock of the Companies thereafter on the records of the
Companies. From and after the Effective Time of the Merger,
the holders of certificates representing shares of Stock of
the Companies immediately prior to the Effective Time of the
Merger shall cease to have any rights with respect to such
shares of Stock of the Companies except as otherwise provided
in this Agreement or by law.
2.2 Conversion or Cancellation of Stock. As of the
Effective Time of the Merger, by virtue of the Merger and
without any action on the part of any Shareholder:
(a) The shares of Stock of the Companies issued
and outstanding immediately prior to the Effective Time of the
Merger shall be converted into Chiquita Common Shares or
Chiquita Preferred Shares, or a combination thereof, having an
aggregate Value equal to the Total Merger Consideration, in
accordance with the elections of the Shareholders set forth in
the Shareholder Agreements; provided, however, that:
(i) the maximum Value of Chiquita
Preferred Shares which may be elected by a Shareholder of any
one Company shall be 50% of such Shareholder's Share of the
Total Merger Consideration attributable to such Company;
(ii) the aggregate Value of Chiquita
Common and Preferred Shares to be received by each particular
Shareholder shall be equal to such Shareholder's Share
multiplied by the Total Merger Consideration;
(iii) in lieu of receiving any fractional
Chiquita Common Share or Chiquita Preferred Share, the
Shareholders shall receive an amount of cash determined by
multiplying the Value of one Chiquita Common Share or Chiquita
Preferred Share, as the case may be, by the fraction of a
share otherwise issuable; and
(iv) if any Shareholder shall not have
made an election in a Shareholder Agreement delivered prior to
the Effective Time of the Merger, such Shareholder shall be
deemed to have elected to receive his or her share of the
Total Merger Consideration entirely in Chiquita Common Shares.
16<PAGE>
(b) any shares of its own Stock held in the
treasury of a Company shall be canceled and retired; and
(c) the shares of Stock of Olivia held by OCC
shall be canceled and retired.
2.3 Delivery of Initial Merger Consideration.
(a) As of the Effective Time of the Merger,
Chiquita shall deposit, or shall cause to be deposited,
Chiquita Common Shares and Chiquita Preferred Shares with a
Value of 92% of the Estimated Total Merger Consideration (the
"Initial Merger Consideration") with the Escrow Agent in a
fund (the "Initial Payment Funds") for the benefit of the
Shareholders and in exchange for the outstanding shares of
Stock of the Companies. Except as provided in Sections 2.3(b)
and 2.3(c), the Initial Payment Funds shall not be used for
any other purpose. The composition of the number of Chiquita
Common Shares and Chiquita Preferred Shares to be deposited
shall be pro rata to the elections of the Shareholders
described in Section 2.2(a) and made in the Shareholder
Agreements.
(b) As of the Effective Time of the Merger,
pursuant to the Escrow Agreement, the Escrow Agent shall
withhold from the Initial Payment Funds in separate funds
Chiquita Common Shares with a Value of $5,000,000 (the "Escrow
Funds"). The Escrow Funds shall be available as security for
the indemnification of Chiquita pursuant to Articles 9 and 12
of this Agreement and the Escrow Agreement. The Escrow Funds
will not be used for any other purposes, and will be
distributed by the Escrow Agent in accordance with Articles 9
and 12 of this Agreement and the Escrow Agreement.
(c) As of the Effective Time of the Merger,
pursuant to the Escrow Agreement, the Escrow Agent shall
withhold from the Initial Payment Funds in separate funds (the
"Expenses Funds") Chiquita Common Shares with a Value of
$250,000. The Expenses Funds will be available for
reimbursement of (i) out-of-pocket expenses incurred by the
Shareholders Representatives in acting on behalf of the
Shareholders in connection with the Merger before and after
the Effective Time of the Merger,(ii) expenses incurred by
Chiquita on behalf of the Shareholders pursuant to Sections
2.4(c) and 12.4, and (iii) transaction costs incurred by or
for the benefit of any of the Companies prior to the Closing
Date and not fully recorded in the Closing Financial
Statements as described in Section 13.4.
(d) At or before the Effective Time of the
Merger, the parties shall calculate each Shareholder's Share
of the Initial Merger Consideration based on the estimated Net
17<PAGE>
Book Value of each Company. Immediately before or within three
business days after the Effective Time of the Merger, Chiquita
shall instruct the Escrow Agent to mail to each Shareholder
(A) a Letter of Transmittal in the form of Exhibit G hereto
(which shall specify that delivery of the Certificates held by
such Shareholder shall be effected, and risk of loss of such
Certificates shall pass, only upon proper delivery of such
Certificates to the Escrow Agent), and (B) instructions for
use in effecting the surrender of such Certificates in
exchange for the portion of the Initial Merger Consideration
which the holder of the Stock represented by such Certificate
is entitled to receive in the Merger. Upon surrender of a
Certificate for cancellation to the Escrow Agent, together
with such letter of transmittal, duly executed, and such other
documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall receive in
exchange, subject to Section 2.4(a),(i) prompt delivery of 60%
of the portion of the Initial Merger Consideration which the
holder of the Stock represented by such Certificate is
entitled to receive in the Merger, (ii) the right to receive
promptly after the Adjustment Date 40% of the portion of the
Initial Merger Consideration which the holder of Stock
represented by such Certificate is entitled to receive in the
Merger (less a proportionate share, if any, of the Initial
Merger Consideration recovered by Chiquita from the Initial
Payment Funds pursuant to Section 2.4(a)(ii)) and less
proportionate amounts withheld in the Escrow Funds and
Expenses Funds on behalf of such holder with respect to the
Stock represented by such Certificate pursuant to Sections
2.3(b) and 2.3(c), (iii) the right to receive a proportionate
share of the excess, if any, of the Total Merger Consideration
over the Initial Merger Consideration, and (iv) the right to
receive a proportionate share of the remainder, if any, of the
Escrow Funds and the Expenses Funds in accordance with the
terms of the Escrow Agreement; and the Certificate so
surrendered shall forthwith be canceled. Until surrendered as
contemplated by this Section 2.3, each Certificate shall be
deemed at any time after the Effective Time of the Merger to
represent solely the right to receive the portion of the Total
Merger Consideration attributable to the shares of Stock of
the Companies formerly represented by such Certificate.
(e) In the event any Certificates shall have been
lost, stolen or destroyed, Chiquita shall issue in exchange
for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof,
such shares of Chiquita Common or Preferred Shares and/or cash
as may be required pursuant to this Article 3; provided,
however, that Chiquita may, in its discretion and as a
condition precedent to the delivery thereof, require the owner
of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity
18<PAGE>
against any claim that may be made against Chiquita with
respect to the Certificates alleged to have been lost, stolen
or destroyed.
2.4 Post-Closing Adjustment. (a) As soon as
practicable after the Closing Financial Statements become
available and the procedures contemplated by paragraph (c)
below are completed (the "Adjustment Date"):
(i) In the event that the Total Merger
Consideration exceeds the Initial Merger Consideration,
Chiquita shall deliver to the Escrow Agent additional Chiquita
Common and Preferred Stock having a Value equal to (A) the
excess of the Total Merger Consideration over the Initial
Merger Consideration, plus (B) interest at 8% per annum on the
excess of the Total Merger Consideration over the Initial
Merger Consideration from the Effective Time of the Merger.
The composition of the number of Chiquita Common Shares and
Chiquita Preferred Shares to be deposited shall be pro rata to
the elections of the Shareholders described in Section 2.2(a)
and made in the Shareholder Agreements.
(ii) In the event that the Total Merger
Consideration is less than the Initial Merger Consideration,
Chiquita shall have the right to recover first from the
Initial Payment Funds and second, in the event the Initial
Payment Funds are exhausted, from the Shareholders, pursuant
to the Shareholder Agreements, and in accordance with the
Shareholders' respective elections and Shares: Chiquita Common
and Preferred Stock and/or cash having a Value equal to (i)
the excess of the Initial Merger Consideration over the Total
Merger Consideration plus (ii) interest at 8% per annum on the
amount of such excess from the Effective Time of the Merger.
If a Shareholder's Share of the Total Merger Consideration
shall be different than such Shareholders' Share of the
Initial Merger Consideration, Chiquita and the Shareholders
Representatives shall jointly give such instructions to the
Escrow Agent and the Shareholders, and take such other
actions, as shall be reasonably necessary in order to cause
the deliveries of Chiquita Preferred and Common Shares and
cash in lieu of fractional shares contemplated by this Section
2.4(a) to be made to and/or by the Shareholders in such manner
as will result in each Shareholder receiving such
Shareholder's Share of the Total Merger Consideration.
(b) In lieu of delivering any fractional
Chiquita Common or Preferred Shares pursuant to clause (a) of
this Section 2.4, Chiquita or the Shareholders, as the case
may be, shall deliver an amount of cash determined by
multiplying the Value of one Chiquita Common or Preferred
Share, as the case may be, by the fraction of a share
19<PAGE>
otherwise deliverable.
(c) The Shareholders Representatives shall
cause, at Chiquita's expense, the Closing Financial
Statements, together with their calculation of the Total
Merger Consideration, to be delivered to Chiquita as soon as
practicable, and not later than one week after the Closing.
The Shareholders Representatives shall cause, at Chiquita's
expense, the Closing Financial Statements to be audited by,
and accompanied by the unqualified report thereon of the firm
of Hutton Nelson & McDonald LLP (except the report relating to
the Closing Financial Statements of Midwest may be qualified
to the same extent as the report relating to the 1997
Financial Statements of Midwest). Such report shall state that
the Closing Financial Statements present fairly, in all
material respects, the financial condition of the Companies as
of June 30, 1997 and the results of their operations for the
period from February 28, 1997 until June 30, 1997 in
conformity with GAAP consistently applied (or from August 31,
1996 to June 30, 1997 in the case of Midwest) and in
accordance with consistently applied accounting policies and
methods, and the accounting policies and procedures set forth
in the attached Schedule 4. The report will be accompanied by
a separate statement by Hutton Nelson and McDonald LLP that
the Total Merger Consideration has been determined in
accordance with the provisions of this Agreement.
Chiquita shall have 30 days after delivery of
the Closing Financial Statements to notify the Shareholders
Representatives of any disagreement Chiquita may have with the
Shareholders Representatives' calculation of the Total Merger
Consideration and/or with any amount in or underlying any of
the Closing Financial Statements or the 1997 Financial
Statements or the principles or methods for determining such
amount (including that such amount was not determined in
conformity with GAAP consistently applied). If there is no
such disagreement, the Total Merger Consideration shall be as
calculated by the Shareholders Representatives, and the Post-
Closing Adjustment shall thereupon be carried out in the
manner provided in Sections 2.4(a) through 2.4(b). If Chiquita
notifies the Shareholders Representatives of its disagreement,
Chiquita and the Shareholders Representatives will endeavor in
good faith to resolve the disagreement. If such disagreement
shall not have been resolved within 15 days of Chiquita's
notice of disagreement, either party shall be entitled to
submit the disagreement to the independent accounting firm of
Price Waterhouse LLP (Chicago office), which shall resolve the
disagreement by reporting on, and shall limit its review to,
(A) whether, in its opinion, the amounts in the Closing
Financial Statements or the 1997 Financial Statements as to
which there is disagreement were determined in conformity with
GAAP consistently applied and in accordance with consistently
20<PAGE>
applied accounting policies and methods and the accounting
policies and procedures set forth in the attached Schedule 4
and, if not, what adjustments would be necessary in order for
it to be able to render such an opinion and (B) whether the
Total Merger Consideration was determined in accordance with
this Agreement and, if not, what adjustments would be
necessary in order for it to conclude that it was so
determined. The Post-Closing Adjustment shall be completed as
soon as practicable thereafter as provided in Sections 2.4(a)
through 2.4(b) on the basis of such independent accounting
firm's report. Said report shall be final and binding on the
parties. The fees and expenses of the independent accounting
firm shall be borne equally by Chiquita and the Shareholders.
The portion of said fees and expenses payable by the
Shareholders shall be paid initially by Chiquita, subject to
the right of Chiquita to reimbursement for such expenses
thereafter: first from the Expenses Funds; second, in the
event the Expenses Funds are exhausted, from the Initial
Payment Funds; and third, in the event the Initial Payment
Funds are exhausted, from the Shareholders in accordance with
their respective Shareholder's Shares. Chiquita and the
Shareholders Representatives shall give the Escrow Agent such
instructions as are necessary to carry out the purpose and
intent of this paragraph (c).
2.5 Reorganization. The parties intend that this
Agreement be a plan of reorganization within the meaning of
Section 368(a)(1)(A) of the Code.
ARTICLE 3
OTHER AGREEMENTS
3.1 Shareholders Representatives. (a) Chadwick S.
Lange and Karen E. Lange (for purposes of this Agreement and
the Escrow Agreement) and Richard Jackson and Ann Jackson (for
purposes of the Registration Rights Agreement), and each of
them, shall be the representatives of the Shareholders, as
agents and attorneys in fact with full power of substitution
to do any and all things and execute any and all documents
which may be necessary, convenient or appropriate to
facilitate the consummation of the transactions contemplated
by this Agreement, including but not limited to: (i)
execution of the Escrow Agreement and the Registration Rights
Agreement; (ii) amendments to this Agreement, the Escrow
Agreement and the Registration Rights Agreement, or any of
them; (iii) execution of documents and certificates pursuant
to this Agreement, the Escrow Agreement and the Registration
Rights Agreement, including documents relating to the
resolution of any disputes concerning the determination of the
Total Merger Consideration in accordance with Section 2.4(c)
21<PAGE>
of this Agreement; (iv) receipt of payments or deliveries
under or pursuant to this Agreement, the Escrow Agreement and
the Registration Rights Agreement and disbursement thereof to
the Shareholders and others, as contemplated by this
Agreement, the Escrow Agreement or the Registration Rights
Agreement or otherwise; (v) acting as agent for the
Shareholders in connection with the registration rights set
forth in the Registration Rights Agreement and taking any
actions necessary or desirable with respect thereto including
resolving any and all disputes among Shareholders with respect
to the number of shares of Chiquita Common or Preferred Stock
to be registered for the account of any Shareholder; and (vi)
receipt and forwarding of notices and communications pursuant
to this Agreement, the Escrow Agreement and the Registration
Rights Agreement. This power of attorney shall not be
affected by the disability or incapacity of the principal
pursuant to any applicable Law.
(b) In the event that the Shareholders
Representatives are of the opinion that they require further
authorization or advice from the Shareholders on any matters
concerning this Agreement, the Shareholders Representatives
shall be entitled to seek such further authorization from the
Shareholders prior to acting on their behalf. In such event,
each Shareholder shall have the number of votes equal to his
Shareholder's Share with respect to voting Stock exchanged in
connection with the Merger, and the authorization of a
majority of the votes of the Shareholders (a "Majority
Authorization") shall be binding on all of the Shareholders
and shall constitute the authorization by the Shareholders.
(c) Chiquita shall be fully protected in
dealing with the Shareholders Representatives under this
Agreement and the Escrow Agreement and may rely upon the
authority of the Shareholders Representatives to act as the
agents of the Shareholders. Any payment by Chiquita to the
Shareholders Representatives under this Agreement and the
Escrow Agreement shall be considered a payment by Chiquita to
the Shareholders. The appointment of the Shareholders
Representatives is coupled with an interest and shall be
irrevocable by any Shareholder in any manner or for any
reason.
(d) Any act of the Shareholders Represen-
tatives shall require the act of both of the Shareholders
Representatives. Either of the Shareholders Representatives
may resign from his capacity as a Shareholders Representative
at any time by written notice delivered to Chiquita and all of
the other Shareholders. If there is a vacancy at any time in
either of the positions of Shareholders Representative for any
reason, the remaining Shareholders Representative may act with
full power and authority until such time as that remaining
22<PAGE>
Shareholders Representative shall select a successor to fill
such vacancy. If at any time there is no Person acting as a
Shareholder Representative for any reason, the Shareholders
shall, by Majority Authorization, elect at least two Persons
to act as Shareholders Representatives under this Agreement,
and, if they fail to do so within 15 days after being
requested to do so by Chiquita or any Shareholder, Chiquita
shall designate the Shareholder(s) to become the Shareholders
Representative(s).
(e) In the event that the Shareholders
Representatives are unable to agree, either Chiquita or one of
the Shareholders Representatives shall have the right to
request the Shareholders, by Majority Authorization, to
appoint one or more additional Shareholders Representatives so
as to break the deadlock.
(f) Each of the Shareholders Representatives
acknowledges that he or she has carefully read and understands
this Agreement, hereby accepts such appointment and
designation, and represents that he or she will act in his or
her capacity as a Shareholders Representative in strict
compliance with and conformance to the provisions of this
Agreement.
(g) The Shareholders Representatives shall not
be liable to the Shareholders for any error of judgment, or
any act done or step taken or omitted by them in good faith or
for any mistake in fact or Law, or for anything which they may
do or refrain from doing in connection with this Agreement,
except for their own bad faith, willful misconduct or gross
negligence. The Shareholders Representatives may seek the
advice of legal counsel in the event of any dispute or
question as to the construction of any of the provisions of
this Agreement or their duties hereunder, and they shall incur
no liability to the Shareholders and shall be fully protected
with respect to any action taken, omitted or suffered by them
in good faith in accordance with the opinion of such counsel.
(h) Chiquita and the Shareholders
Representatives acknowledge and agree that: (i) the
Shareholders Representatives shall be acting as such only as
the agents of the Shareholders and at the request of the
Shareholders and not as the agents of, or at the request of,
any one or more of Chiquita and the Companies; and (ii) the
Shareholders Representatives shall not be entitled to any
indemnification from any one or more of Chiquita or the
Companies for any matter arising as a result of their acting
as Shareholders Representatives, whether under Law or other-
wise; provided this clause (ii) shall not affect or limit the
right of the Shareholders Representatives to indemnification,
in their capacities as Shareholders, pursuant to Article 9 of
this Agreement or pursuant to Section 5 of the Registration
23<PAGE>
Rights Agreement.
(i) The addresses set forth on the List of
Shareholders attached to this Agreement as Schedule 3 shall be
the addresses used for all notices to Shareholders by the
Shareholders Representatives under this Agreement until notice
of a different address is provided in writing in the
procedural manner set forth in Section 13.8 of this Agreement.
(j) The Shareholders Representatives shall be
entitled to reimbursement from the Expenses Funds for out-of-
pocket expenses incurred in acting on behalf of the
Shareholders in connection with the transactions contemplated
under this Agreement before and after the Merger. Reimbursable
expenses will include, but not be limited to, expenses to
engage legal counsel, accountants and other third parties to
protect against liability of the Shareholders Representatives
to the Shareholders, Chiquita or others for acts or omissions
in the capacity as Shareholders Representatives (except for
acts or omissions in bad faith, willful misconduct and gross
negligence).
In addition, by means of reimbursement from the Expenses
Funds and directly from the Shareholders in the event such
fund is exhausted, the Shareholders Representatives shall be
indemnified and held harmless by the Shareholders from and
against any liabilities, damages or obligations (including
costs, fees and expenses of legal counsel relating thereto)
which the Shareholders Representatives may incur as a result
of their acts or omissions while serving as such Shareholders
Representatives except for acts or omissions which constitute
the bad faith, willful misconduct or gross negligence of the
Shareholders Representative seeking such indemnification.
3.2 Disclosure Schedule. Contemporaneously with
the execution and delivery of this Agreement, the Companies
have delivered the Disclosure Schedule to Chiquita.
3.3 Escrow Agreement. At the Closing, Chiquita,
the Escrow Agent and the Shareholders Representatives shall
execute and deliver the Escrow Agreement in the form attached
hereto as Exhibit E, with such changes therein requested by
the Escrow Agent as Chiquita and the Shareholders
Representatives approve, which approval shall not be
unreasonably withheld.
3.4 Registration Rights Agreement. At the Closing,
Chiquita and the Shareholders Representatives shall execute
and deliver the Registration Rights Agreement in the form
attached to this Agreement as Exhibit G, which contains
provisions relating to, among other matters, certain covenants
24<PAGE>
of Chiquita and the Shareholders Representatives with respect
to the registration of the Shareholders' Chiquita Common
Shares under federal and state securities laws.
3.5 Consulting Agreement. At the Closing, OCC and
Stephens J. Lange shall execute and deliver the Consulting
Agreement.
3.6 Drop-Down. Chiquita shall cause the Drop-Down
to occur immediately after the Effective Time of the Merger.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF THE COMPANIES
The Companies represent and warrant to Chiquita
that, except as set forth in the Disclosure Schedule:
4.1 Organization. (a) Each of the Companies is a
corporation duly organized, validly existing and in good
standing under the Laws of the State of Minnesota. Each of
the Companies is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction set
forth with reference to such Company in the Disclosure
Schedule, which jurisdictions include each jurisdiction in
which such qualification is required except for jurisdictions
in which failure of any of the Companies to so qualify will
not have a Material Adverse Effect.
(b) Each of the Companies has full corporate
power and authority to carry on its business as it is now
conducted and to own its assets and properties.
(c) The Partnership is a general partnership
duly and validly organized and existing under the laws of the
State of Minnesota. The general partners of the Partnership
are OCC and Stephens J. Lange. The Partnership has full power
to carry on its business as it is now conducted and to own its
assets and properties.
4.2 Businesses. The only businesses conducted by
the Companies and the Partnership are (i) processing and
canning food products and selling and distributing such
products, (ii) rental of residential housing, (iii)
warehousing of other companies' products, (iv) leasing excess
capacity on trucks, (v) leasing land, and (vi) agricultural
farming in the State of Illinois.
4.3 Capitalization. (a) The entire authorized
capital stock of OCC consists of: (i) 450 shares of Class A
25<PAGE>
common voting stock, $100 par value, all of which 450 shares
are issued and outstanding; (ii) 9,000 shares of Class B
common non-voting stock, $100 par value, of which 4,050 shares
are issued and outstanding; and (iii) 550 shares of 6%
cumulative preferred stock, $100 par value, none of which
shares are issued and outstanding.
(b) The entire authorized capital stock of
Olivia consists of 500 shares of capital stock, $100 par
value, of which 121 shares are issued and outstanding.
(c) The entire authorized capital stock of
Midwest consists of: (i) 4,000 Common Shares, $10 par value,
of which 1,000 shares are issued and outstanding; and (ii)
6,000 Participating Non-Voting Shares, $10 par value, of which
500 shares are issued and outstanding.
(d) The entire authorized capital stock of
Goodhue consists of (i) 300 common voting shares, $100 par
value, of which 140 are issued and outstanding; and (ii) 200
preferred nonvoting shares, $100 par value, none of which
shares are issued and outstanding.
(e) All of the outstanding capital stock of
each of the Companies is duly authorized, validly issued,
fully paid and nonassessable, and was not issued in violation
of any preemptive rights. Except as set forth in the
Disclosure Schedule, there are no options, warrants,
conversion rights or other rights to subscribe for or
purchase, or other contracts to which any of the Companies is
a party with respect to, any capital stock of any of the
Companies. All of the issued and outstanding shares of
capital stock of the Companies are owned of record by the
Shareholders. Schedule 3 attached to this Agreement sets
forth the name and address of each Shareholder and the number
of shares of capital stock of each of the Companies owned of
record by each Shareholder, in each case as set forth on the
books and records of the Company as of the date hereof and as
of the time immediately prior to the Effective Time of the
Merger.
(f) OCC and Stephens J. Lange each own a 50%
interest in the Partnership and share equally in the profits
of the Partnership.
4.4 Authorization; Enforceability. The execution,
delivery and performance by the Companies of this Agreement,
the Certificate and Articles of Merger and all documents and
instruments by any of the Companies required by this
Agreement, are within the corporate power of such Company and
have been duly authorized by the requisite vote of the board
of directors of such Company. This Agreement is, and the
26<PAGE>
Certificate and Articles of Merger and all documents and
instruments required by this Agreement to be executed and
delivered by any of the Companies will be, when executed and
delivered, duly executed and delivered by such Company, and
are or will be, when executed and delivered, the valid and
binding obligations of such Company, enforceable against such
Company in accordance with their respective terms, except as
the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
Laws generally affecting the rights of creditors and subject
to general equity principles. Except for the approval of the
transactions contemplated by this Agreement by the requisite
vote of the shareholders of each Company, no further approvals
of any kind are required for the Companies to perform this
Agreement, the Certificate and Articles of Merger and all
documents and instruments by any of the Companies required by
this Agreement.
4.5 No Violation or Conflict. The execution,
delivery and performance by the Companies of this Agreement,
the Certificate and Articles of Merger and all documents and
instruments by any of the Companies required by this Agreement
do not and will not: (a) conflict with or violate any Law,
the Articles of Incorporation or Bylaws of any of the
Companies or any Existing Contract; or (b) result in the
creation of (or give any party the right to create) any Lien
upon any rights, properties or assets of any of the Companies;
or (c) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, or create in any
party the right to terminate, amend, modify, accelerate or
postpone (or give any party the right, upon notice, with the
passage of time, or otherwise, to terminate, amend, modify,
accelerate or postpone) the time within which, or the terms
and conditions under which, any liabilities, duties or
obligations are to be satisfied or performed, or any rights or
benefits are to be received, under any of the Existing
Contracts.
4.6 Title to Assets. There are no Liens affecting
any of the Real Estate covered by Title Commitments other than
Existing Liens and Liens described in subsections (ii) and (v)
below. One or more of the Companies and the Partnership owns
good and valid title to the assets and properties reflected in
"Assets" in the 1997 Financial Statements and the related
fixed asset schedule previously delivered to Chiquita or
acquired since the date thereof, free and clear of any and all
Liens, except (i) the Existing Liens, (ii) Liens for current
taxes not yet due and payable, (iii) the properties subject to
real property leases, (iv) assets disposed of since the date
of the 1997 Financial Statements in the ordinary course of
business, (v) Liens imposed by law and incurred in the
ordinary course of business for obligations not yet due to
27<PAGE>
carriers, warehousemen, laborers and materialmen, (vi) Liens
in respect of pledges or deposits under workers' compensation
laws, and (vii) with respect to the Real Estate for which no
Title Commitment has been delivered to the Companies as of the
date hereof, Liens which would not have a Material Adverse
Effect. No Shareholder or Affiliate of a Shareholder (other
than the Companies) has any direct or indirect interest in any
material right, property or asset used or required by the
Companies or the Partnership in the conduct of their
respective businesses, except as disclosed in the Disclosure
Schedule.
4.7 Litigation. Except for the matters listed on
the Disclosure Schedule:
(a) there is no pending, or to the Knowledge
of the Companies, threatened suit, charge, audit inquiry of
which the Companies have received notice, worker compensation
claim, litigation, arbitration, proceeding, governmental
investigation, or citation against or, to the Knowledge of the
Companies, relating to any of the Companies or the Partnership
or their respective properties or any Employee Benefit Plan;
(b) there are no actions, suits or proceedings
pending, or to the Knowledge of the Companies threatened,
against any of the Companies or the Partnership or any
Employee Benefit Plan by any Person which question the
legality, validity or propriety of the transactions contem-
plated by this Agreement; and
(c) to the Knowledge of the Companies, there
is no factual basis which is likely to result in any material
litigation, arbitration, proceeding, governmental
investigation or citation against or relating to any of the
Companies or the Partnership or any Employee Benefit Plan.
4.8 Financial Statements. A true and complete
copy of each Historical Financial Statement has been furnished
to Chiquita. The Historical Financial Statements fairly
present, and the Closing Financial Statements will fairly
present, the financial condition of each of the Companies and
the Partnership as of the dates of each of such Financial
Statements and the results of operations and cash flows of
each entity for the periods indicated on each of such
Financial Statements in accordance with GAAP and accounting
policies and methods consistently applied throughout the
periods indicated, except as indicated therein or in the notes
thereto, and except that the Closing Financial Statements will
not contain prior period comparative data. The Historical
Financial Statements of the Partnership accurately reflect the
financial condition of the Partnership.
28<PAGE>
4.9 Absence of Certain Changes. Except as set
forth in the Disclosure Schedule or in the Historical
Financial Statements, since February 28, 1997 there has not
been any:
(a) Material Adverse Change (including but
not limited to damage, destruction or loss to physical
properties);
(b) transactions by any of the Companies or
the Partnership outside the ordinary course of business of
such entity, except for the transactions contemplated by this
Agreement;
(c) bonus or incentive compensation paid or
accrued by any of the Companies or the Partnership or any
salary or wage increases, except in the ordinary course of
business consistent with past practice and except for the
payment to Chadwick S. Lange of a bonus of approximately
$1,500,000 subsequent to March 1, 1997;
(d) declaration or payment of any dividend or
any distribution in respect to the capital stock of any of the
Companies or the partnership interests of the Partnership or
any direct or indirect redemption, purchase or other
acquisition of any such stock by any of the Companies or
partnership interests by the Partnership; or
(e) payments or distributions by any of the
Companies or the Partnership, other than salaries and rent
consistent with past practice, to Shareholders or Affiliates.
4.10 Buildings and Equipment. Except as set forth
in the Disclosure Schedule, the Buildings and the Equipment
are in good operating condition and repair for use in a manner
consistent with past practices, reasonable wear and tear
excepted and their use in a manner consistent with past
practices complies in all material respects with applicable
Laws. The Buildings and Equipment constitute all buildings
and equipment necessary for the operation of the business of
the Companies and the Partnership, as currently conducted. No
notice of any violation of any building, zoning or other Law
relating to such assets or their use has been received by any
of the Companies or the Partnership.
4.11 Existing Contracts. The Contracts listed on
the Disclosure Schedule, true, complete and correct copies of
which have been furnished to Chiquita, are the only Contracts
which constitute:
(a) a lease of, or agreement to purchase or
29<PAGE>
sell, any capital assets having an individual value in excess
of $25,000;
(b) union labor contracts;
(c) management, consulting, employment,
Migrant Worker, personal service, agency or other contracts or
contracts providing for employment or rendition of services
and which: (i) are in writing; or (ii) create other than an
at will employment relationship; or (iii) provide for any
commission, bonus, profit sharing, incentive, retirement,
consulting or additional compensation;
(d) an agreement with a migrant labor
contractor or other Person for recruitment or referral of any
Migrant Workers;
(e) agreements or notes evidencing any
Indebtedness;
(f) an agreement relating to the distribution
or marketing of the Companies' products with an agent, dealer,
distributor, sales representative or franchisee;
(g) an agreement for the storage,
transportation, treatment or disposal of any Hazardous
Substances;
(h) a power of attorney (whether revocable or
irrevocable) given to any Person by any one or more of the
Companies or the Partnership that is in force;
(i) an agreement by any one or more of the
Companies or the Partnership not to compete in any business or
in any geographical area;
(j) an agreement restricting the right of any
one or more of the Companies or the Partnership to use or
disclose any information in its possession;
(k) a partnership, joint venture or similar
arrangement;
(l) a license of Intangible Assets to another
party;
(m) a grower contract;
(n) an agreement or arrangement with any
Affiliate;
(o) an Employee Benefit Plan; or
30<PAGE>
(p) other agreement which: (i) involves
payments, commitments, obligations or liabilities to or from
the Companies in an amount in excess of $100,000, or (ii) is
not in the ordinary course of business of the Companies or the
Partnership.
4.12 Performance of Contracts. Except as set forth
in the Disclosure Schedule, the Companies and the Partnership
have fully performed in all material respects each term,
covenant and condition of each Existing Contract which is to
be performed by them at or before the date hereof. Except as
set forth in the Disclosure Schedule, each of the Contracts is
in full force and effect and constitutes the legal and binding
obligation of the Company or the Partnership which is a party
to it and, to the Knowledge of the Companies, constitutes the
legal and binding obligation of the other parties thereto.
There is no existing material breach of or default by any of
the Companies or the Partnership under any Existing Contract,
and, no state of facts exists or event has occurred, is
pending or is threatened, which, after the giving of notice,
or the lapse of time, or otherwise, could constitute or result
in a breach or default of any Existing Contract by any of the
Companies or the Partnership or to the Knowledge of the
Companies, any other person, firm or entity.
4.13 Contingent and Undisclosed Liabilities. Except
as set forth in the Disclosure Schedule and except for
liabilities that have arisen in the ordinary course of
business since June 30, 1997, neither any of the Companies nor
the Partnership has any liabilities or obligations of any
nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise), and will not have after the
Closing any such liabilities of any nature arising out of
events occurring prior to the Closing, except for liabilities
or obligations (a) which have been fully recorded or reserved
against in the Historical Financial Statements, or (b) which
arose in the ordinary course of business since February 28,
1997 and which will be fully recorded or reserved against in
the Closing Financial Statements; provided, however, that if
any such liability or obligation is of such a nature that its
existence or its non-disclosure on the Disclosure Schedule is
specifically and directly covered by another representation
and warranty in this Article 4 and would have resulted in a
breach of such other representation and warranty but for a
qualification for Knowledge or materiality or a minimum dollar
amount contained in such other representation and warranty,
then the representation and warranty contained in this Section
4.13 shall not be breached by the existence or non-disclosure
of such liability or obligation on the Disclosure Schedule,
and provided, further, that if a liability or obligation was
incurred by one of the Companies on or before June 30, 1997,
is related to the Companies' packing operations for the 1997
31<PAGE>
packing season and would not have reduced the Net Book Value
of the Companies if such liability or obligation had been
included in the Closing Balance Sheets in accordance with the
procedures set forth in Section 2.4(c) and the attached
Schedule 4, then the representation and warranty contained in
this Section 4.13 shall not be breached by the non-disclosure
of such liability or obligation on the Disclosure Schedule.
4.14 Existing Insurance Policies. All of the
Existing Insurance Policies are listed on the Disclosure
Schedule. The Existing Insurance Policies are in full force
and effect. Neither any of the Companies nor the Partnership
has received notice of and is not otherwise aware of any
cancellation or threat of cancellation of such insurance. The
Disclosure Schedule sets forth all property damage, personal
injury, bodily injury or products liability claims in excess
of $50,000 which have been made since March 1, 1997 or are
pending against any of the Companies or the Partnership or, to
the Knowledge of Companies, are threatened against any of the
Companies or the Partnership. Within the past two years, no
insurance company has canceled or materially increased the
premiums for, any insurance (of any type) maintained by any of
the Companies or the Partnership.
4.15 Employee Benefit Plans. (a) The Disclosure
Schedule contains a list of each Employee pension benefit plan
(within the meaning of section 3(2) of ERISA) to which any of
the Companies or the Partnership contributes or is required to
contribute on behalf of its employees, setting forth the names
and addresses of such plans and the trustees of such plans,
and the basis of the Companies' or the Partnership's
contributions thereto. True, correct and complete copies of
each of such plans and trusts, including all amendments
thereto, are attached to the Disclosure Schedule. The
Companies have previously delivered to Chiquita the most
recent summary plan description, Form 5500s and the most
recent IRS determination letter with respect to each such
plan. With respect to each of the plans listed in the
Disclosure Schedule and except as set forth on the Disclosure
Schedule:
(i) A determination letter has been
received to the effect that any such qualified plan is
qualified under Section 401 of the Code and the trusts
maintained pursuant thereto are exempt from the Federal income
taxation under Section 501 of the Code, and nothing has
occurred to cause the loss of such qualification or exemption
or to form the basis for imposition of an excise or penalty
tax under the Code on such plan or the sponsor or any employer
affiliated with the sponsor of the plan.
(ii) All contributions required by the
32<PAGE>
Code to be made for such plan for the plan year most recently
ended and for all prior plan years will have been made.
(iii) No reportable event, as such term is
defined in Section 4043(b) of ERISA, has occurred and is
continuing with respect to any of such plans which are subject
to Section 4043(b) of ERISA, other than those which might
arise as a result of the transactions contemplated by this
Agreement.
(iv) Any applicable ERISA or Code
requirements as to the filing of reports, returns, documents
and notices with the Secretary of Labor and the Secretary of
the Treasury, or the furnishing of such documents to
participants or beneficiaries of such plans, have been
complied with in all material respects by all of such plans,
or their administrators or sponsors.
(v) There are no pending or, to the
Knowledge of the Companies, threatened claims, lawsuits or
arbitrations which have been asserted or instituted against
such plans or any fiduciaries or sponsors thereof respecting
their duties to such plans or the assets of any of the trusts
under any of such plans.
(vi) Any amendments required to be adopted
effective as of the date hereof or effective as of an earlier
date to bring such plans into conformity with any of the
applicable provisions of ERISA or the Code have been timely
and duly adopted, and the amendments have been timely filed
under Section 401(b) of the Code for a favorable determination
letter thereon.
(vii) Any bonding required by applicable
provisions of ERISA with respect to any of such plans subject
to ERISA has been obtained and is in full force and effect.
(viii) All of such plans have been
maintained in all material respects in accordance with the
applicable terms and provisions of ERISA and the Code,
including rules and regulations thereunder.
(ix) In addition to the representation
made in (viii) above, the plan has been operated and
administered in accordance with all applicable law, including,
but not limited to, the Federal Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964 and
the Federal Equal Pay Act.
(x) Neither any of the Companies or the
Partnership nor any ERISA Affiliate of any of the Companies or
33<PAGE>
the Partnership has incurred any outstanding liability to the
Pension Benefit Guaranty Corporation (other than for the
payment of premiums) and will not incur any liability to the
Pension Benefit Guaranty Corporation as a result of the
transactions contemplated by this Agreement.
(xi) No "prohibited transactions" as such
term is defined in Section 4975 of the Code and Section 406 of
ERISA, has occurred with respect to such plans which could
subject such plans, or any of the Companies or the
Partnership, to a tax or penalty for such prohibited
transactions imposed by either Section 502 of ERISA or Section
4975 of the Code.
(xii) With respect to any plan that is
subject to Title IV OF ERISA, no such plan has an accumulated
funding deficiency, and the assets of such plan are sufficient
to discharge all liabilities of such plan on a termination
basis.
(xiii) As of the Closing Date, all
contributions to each multiemployer plan covering employees of
any of the Companies or the Partnership will have been made as
required by such plan and any collective bargaining agreement.
(xiv) Neither any of the Companies nor the
Partnership nor any ERISA Affiliate of any of the Companies or
the Partnership has incurred any withdrawal liability with
respect to any multiemployer plan under Section 4201 of ERISA
nor has received any notification that any multiemployer plan
is in reorganization or has terminated.
(b) The Disclosure Schedule contains a list of
each unfunded deferred compensation plan, each supplemental
death, disability, and retirement plan, each medical
reimbursement plan, and, to the extent not included in the
above, each employee welfare benefit plan (within the meaning
of Section 3(1) of ERISA) maintained by any of the Companies
or the Partnership. With respect to each of the plans listed
in the Disclosure Schedule and except as set forth on the
Disclosure Schedule:
(i) Each such plan that has been or is
required to be funded has been fully funded based on
reasonable actuarial assumptions.
(ii) No such plan provides for non-
terminable or non-alterable medical benefits for retirees or
irrevocably commits any of the Companies or the Partnership to
provide any such benefits for any person upon or following
retirement, except for health care continuation benefits
34<PAGE>
described in clause (iii) below.
(iii) The Companies and the Partnership
and their ERISA Affiliates have complied with the health care
continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, including rules
and regulations thereunder, and any applicable state law
governing health care continuation coverage.
(iv) Any applicable ERISA or Code
requirements as to the filing of reports, returns, documents
and notices with the Secretary of Labor and the Secretary of
the Treasury, or the furnishing of such documents to
participants or beneficiaries of such plans, have been
complied with in all material respects by all of such plans,
or their administrators or sponsors.
(v) There are no parachute payments
(within the meaning of Section 280G(b)(2) of the Code),
severance payments, or other payments to employees that will
result from any of the Companies or the Partnership entering
into or performing under this Agreement.
(c) Except as otherwise required pursuant to
Section 10.4, the Companies and the Partnership can terminate
any plan listed in the Disclosure Schedule at any time and
regain any assets remaining under such plans after all
liabilities to plan participants have been satisfied or
provided for. Entry into this Agreement and performing the
obligations hereunder will not violate any law, regulation, or
contract relating to any employee benefit plan (within the
meaning of Section 3(3) of ERISA) maintained by any of the
Companies or the Partnership or subject or expose any of the
Companies or the Partnership to any damages, excise tax, or
recapture of investment tax credit.
4.16 Existing Bank Accounts. All of the Existing
Bank Accounts are listed on the Disclosure Schedule.
4.17 Permits; Compliance with Law. The Companies
and the Partnership hold all of the material governmental
licenses, permits and authorizations that are required for the
ownership or occupancy of their properties and assets and the
operation of their businesses and to provide housing for
Migrant Workers, each of which is listed on the Disclosure
Schedule and is in full force and effect. There are no
proceedings pending or, to the Knowledge of the Companies,
threatened which may result in the revocation, cancellation,
suspension, or modification of any such licenses, permits or
authorizations. The Companies and the Partnership have in all
material respects at all times in the past, duly complied, and
are presently in all material respects duly complying, in
35<PAGE>
respect of the Companies' and the Partnership's businesses,
operations and properties, with all applicable Laws, and all
material required reports and filings with governmental
authorities (including, without limitation, occupational
safety and health laws and regulations) have been properly
made, except where a past failure to so comply or file would
not have a Material Adverse Effect. This representation and
warranty does not apply to (a) licenses, permits and
authorizations required by Environmental Laws, (b) compliance
with Environmental Laws, or (c) reports and filings required
under Environmental Laws, which matters are covered by Section
4.18.
4.18 Environmental Matters. Except as set forth in
the Disclosure Schedule:
(a) The Companies and the Partnership have
complied and are in compliance with all Environmental Laws
applicable to the ownership, condition and operation of the
Transferred Property and with respect to the ownership and
operation of the businesses of the Companies and the
Partnership (including the consent order which is or will be
entered in Peoria County Circuit Court, No. 95 CH 123,
regarding the Princeville Canning Company) and no written
action, demand or notice has been filed, issued or commenced
against any of them and is now pending or, to the Knowledge of
the Companies, is threatened alleging any such failure to
comply or alleging any injury or damage caused by a Hazardous
Substance;
(b) The Companies and the Partnership have not
Released any Hazardous Substances in violation of
Environmental Laws or so as to require response under
Environmental Laws nor to the knowledge of the Companies
caused any person to be injured or damaged by any Hazardous
Substance and, to the Knowledge of the Companies, there has
been no Release of any Hazardous Substance by any other person
beneath, above or into the environment from, onto, into or
surrounding any of the Transferred Property;
(c) The Companies and the Partnership have not
filed or received any written notice of a Release or
threatened Release of a Hazardous Substance or been notified
that they may be a potentially responsible party or received
any request for information regarding the shipment or disposal
of Hazardous Substances at any site;
(d) The Companies and the Partnership possess
(or have timely filed applications which are pending for) all
licenses and permits required by all Environmental Laws
applicable to the ownership and operation of the Transferred
Property and the Companies and the Partnership have complied
36<PAGE>
in all respects with the terms and conditions of such licenses
and permits;
(e) No underground storage tanks are present
on or under the Transferred Property which contain or, to the
Knowledge of the Companies, heretofore contained any Hazardous
Substances. The Companies and the Partnership hereby inform
Chiquita of the tank notification requirements set forth in
Minn. Stat. Section 116.48. This disclosure is intended to
satisfy Minn. Stat. Section116.48, Subd. 5;
(f) The Transferred Property is not subject to
any lien or other encumbrance arising from the operation or
violation of any Environmental Law;
(g) Except as set forth in this Section, the
Companies make no warranties or representations concerning
past or present compliance with Environmental Laws by the
Companies or the Partnership.
4.19 Brokers. Neither any of the Companies nor the
Partnership has any obligation to pay any brokers', finders'
or any similar fee in connection with the transactions
contemplated by this Agreement.
4.20 Tax and Other Returns and Reports.
(a) Filing of Tax Returns. Except as set
forth in the Disclosure Schedule, each of the Companies and
the Partnership (and any affiliated group of which any of the
Companies or the Partnership is now or has been a member) has
timely filed with the appropriate taxing authorities all
returns (including, without limitation, information returns
and other material information) in respect of Taxes required
to be filed through the date hereof and has paid the amount of
Taxes shown to be due on such returns. Except for adjustments
by governmental authorities, at the time they were filed and
as of the date hereof, all such returns were and are complete
and accurate in all Material respects. For purposes of this
Section 4.20, the term "Companies" or "Partnership" shall be
deemed to include any predecessor of the Companies or the
Partnership or any Persons from which the Companies or the
Partnership incurs a liability for Taxes as a result of
transferee liability. Except as specified in the Disclosure
Schedule, neither any of the Companies nor the Partnership nor
any group of which any of the Companies and/or their
Subsidiaries is now or was a member, has requested any
extension of time within which to file returns (including,
without limitation, information returns) in respect of any
Taxes.
(b) Payment of Taxes. Except as set forth in
37<PAGE>
the Disclosure Schedule: (i) all of the Companies' Taxes, in
respect of periods through and including June 30, 1997, have
been paid, or an adequate reserve on the Closing Financial
Statements has been established by the Companies therefor,
(ii) the Companies do not have any liability for Taxes, in
respect of periods through and including June 30, 1997, in
excess of the amounts so paid or reserves so established,
(iii) the Companies have paid or will have paid all Taxes due
on or prior to the Closing Date, and (iv) the Partnership has
paid or will have paid all Taxes due on or prior to the
Closing Date.
(c) Audit History. The Disclosure Schedule
sets forth all claims for deficiencies for Taxes including
description, amount, and with respect to resolved claims, the
resolution thereof asserted by any governmental authority
against any of the Companies or the Partnership which remain
unresolved as of the date hereof or which were resolved since
the date of the 1996 Historical Financial Statements. Except
as set forth in the Disclosure Schedule, no deficiencies for
Taxes have been claimed, proposed, or assessed by any taxing
or other governmental authority, which deficiencies have not
been paid. Except as set forth in the Disclosure Schedule,
there are no pending or, to the Knowledge of the Companies,
threatened audits, investigations or claims for or relating to
any liability in respect of Taxes, and there are no matters
under discussion with one or more governmental authorities
with respect to Taxes that will result in an obligation by the
Companies or the Partnership or their Subsidiaries to pay
additional Taxes, and no governmental authority is asserting
any claims for Taxes. Except as set forth in The Disclosure
Schedule, neither the Companies nor the Partnership have
received any notice that any taxing authority intends to audit
a return for any period. Except as set forth in The
Disclosure Schedule, no extension of a statute of limitations
relating to Taxes is in effect with respect to any of the
Companies or the Partnership.
(d) Affiliated Groups. Except as set forth in
the Disclosure Schedule, the Companies and the Partnership
have not been a member of any consolidated, combined or
unitary group for Tax purposes for any tax periods, which
remain subject to assessment.
(e) Joint Ventures, Etc. Except as set forth
in the Disclosure Schedule, since January 1, 1992, neither any
of the Companies nor the Partnership is nor has been a party
to any joint venture, partnership or other arrangement that
could be treated as a partnership for Tax purposes.
(f) Section 341(f). None of the Companies has
consented to the application of Code Section 341(f).
38<PAGE>
(g) Foreign Operations. Except as set forth
in the Disclosure Schedule, since February 28, 1994, neither
any of the Companies nor the Partnership has had a permanent
establishment in any foreign country and has not engaged in a
trade or business in any foreign country.
(h) Withholding Requirements. Neither the
Code or any other provision of Law requires Chiquita to
withhold Tax from any portion of the Purchase Price.
(i) Tax Sharing Agreement. The Disclosure
Schedule lists any Tax allocation or Tax sharing agreement or
arrangement which was since February 28, 1994, and prior to
the Closing is or was in existence.
(j) Intercompany Transactions. A list of all
intercompany transactions including deferred intercompany
transactions, both terms as defined in the Income Tax
Regulations Sec. 1.1502-13(a) of the Code, which will result
in the payment of any tax after the Closing Date and which
exist because of transactions between any of the Companies and
the Partnership are set forth in the Disclosure Schedule,
except those which arose in the ordinary course of business
from the intercompany sale of inventory.
(k) Withholding. Each of the Companies and
the Partnership has paid to the proper taxing authorities or
is withholding and will pay when due to the proper taxing
authorities all amounts required to be withheld or paid with
respect to all Taxes on income, unemployment, social security
(FICA) or other similar programs or benefits with respect to
salary and other compensation of its directors, officers and
employees and any other Tax required to be withheld.
(l) Independent Contractors. The Companies
have reported to the Federal Government on Form 1099 all
independent contractors of the Companies who have earned in
excess of $600 in any calendar year, and the Disclosure
Schedule sets forth all such independent contractors since
January 1, 1994.
(m) Regulation Section1-301.7701. No election
has been made under Regulation Section 1-301.7701 to treat any
of the Companies or the Partnership as a taxable entity other
than a Corporation in its own right.
4.21 Real Estate. The Disclosure Schedule lists and
briefly describes (i) all Real Estate covered by the Title
Commitments delivered to the Companies as of the date hereof,
and (ii) all real property or improvements leased or subleased
by or to any of the Companies. Except for Existing Liens or
as shown on the Surveys, the Real Estate covered by the Title
39<PAGE>
Commitments: (a) is not subject to any leases or tenancies of
any kind; (b) is not in the possession of any adverse posses-
sors; (c) has direct access to and from a public road or
street except for easements necessary to satisfy Section 7.19
below; (d) is used in a manner which is consistent with
applicable Law; (e) is in the peaceful possession of any one
or more of the Companies; and (f) is served by all water,
sewer, electrical, telephone, drainage and other utilities and
has all necessary easements therefor as is currently required
for the normal operations of the Buildings and the Real Estate
except for easements necessary to satisfy Section 7.19 below.
Except for Existing Liens or as shown on the Surveys, each of
the Companies enjoys and is entitled to peaceful possession of
all of the Real Estate owned or used by it except for leases
or easements necessary to satisfy Section 7.19 below and, in
the case of Real Estate leased by it, is entitled to peaceful
possession as lessee for the term of the lease and for any
renewal period provided for therein (upon exercise of any
renewal option) in accordance with the terms of such lease.
Except as set forth in the Disclosure Schedule or Title
Commitments, the Companies have no Knowledge of real property
owned by the Companies.
4.22 Other Approvals. No permission, approval,
determination, consent or waiver by, or any declaration,
filing or registration with, any Person is required in
connection with the execution, delivery and performance of
this Agreement, the Certificate and Articles of Merger and all
of the other documents and instruments required by this
Agreement by the Companies, except for compliance with the
requirements of the Hart-Scott-Rodino Act (15 U.S.C. Section
18A) and the regulations promulgated thereunder and the filing
of the Certificate of Merger with the State of New Jersey and
the Articles of Merger with the State of Minnesota.
4.23 Investments. All of the Existing Investments
are listed on the Disclosure Schedule. Except for the
Existing Investments, none of the Companies owns, nor has any
right or obligation to acquire, any Investment.
4.24 Labor Matters. (a) Except as set forth in the
Disclosure Schedule, there is no present or former employee of
any one or more of the Companies, who has made or filed any
claim against any one or more of the Companies (whether under
Law, under any employee agreement or otherwise) on account of
or for: (i) overtime pay, other than overtime pay for the
current payroll period; (ii) wages or salaries, other than
wages or salaries for the current payroll period; or (iii)
vacations, sick leave, time off or pay in lieu of vacation or
time off, other than vacation, sick leave or time off (or pay
in lieu thereof) earned in the period immediately preceding
June 30, 1997, which will be fully recorded as a liability in
40<PAGE>
the Closing Financial Statements, or incurred in the ordinary
course of business after June 30, 1997.
(b) Except as set forth in the Disclosure
Schedule: (i) there are no pending and unresolved claims by
any Person against any of the Companies arising out of any
statute, ordinance or regulation relating to discrimination to
employees or employee practices or occupational or safety and
health standards or Migrant Workers; (ii) there is no pending,
nor has any of the Companies experienced since January 1,
1992, any, labor dispute, strike or work stoppage which
adversely affects or is likely to adversely affect the
business of any of the Companies or which is likely to or
would interfere with the continued operation of any of the
Companies; and (iii) to the Knowledge of the Companies there
is no threatened labor dispute, strike or work stoppage which
is likely to or would adversely affect the business of any of
the Companies or which may or would interfere with the
continued operation of any of the Companies.
(c) Except as set forth in the Disclosure
Schedule: (i) there is not now pending or, to the Knowledge
of the Companies, threatened any charge or complaint against
any one or more of the Companies by or before the National
Labor Relations Board or any representative thereof, or any
comparable state agency or authority; (ii) none of the
Companies has committed any unfair labor practices which have
not heretofore been corrected and fully remedied; (iii) to the
Knowledge of the Companies, no union organizing activities are
in process or have been proposed or threatened involving any
employees of any of the Companies not presently organized; and
(iv) to the Knowledge of the Companies no petitions have been
filed, or have been threatened or proposed to be filed, for
union organization or representation of employees of any of
the Companies not presently organized.
4.25 Articles; Bylaws. True and correct copies of
(a) the Articles of Incorporation and Bylaws of each of the
Companies and (b) the Certificate of Partnership of the
Partnership, all as in effect on the date of this Agreement,
have been delivered to Chiquita.
4.26 Indebtedness. All of the Existing Indebtedness
is listed on the Disclosure Schedule.
4.27 Subsidiaries. Neither any of the Companies nor
the Partnership has any Subsidiaries.
4.28 Accounts. All of the Accounts of the Companies
and the Partnership reflected in the Closing Balance Sheets
will, in the aggregate, be collectable in full in the ordinary
course of their respective businesses at face value, except to
41<PAGE>
the extent of reserves for doubtful accounts and discounts
provided for in the Closing Balance Sheets.
4.29 Inventory. The Inventory of the Companies and
the Partnership reflected in the Closing Balance Sheets will,
in the aggregate, be of good, undamaged and merchantable
quality and condition and usable and saleable in the ordinary
course of business at an aggregate value at least equal to its
carrying value on the Closing Balance Sheets, except to the
extent of reserves for such matters reflected in the Closing
Balance Sheets.
4.30 Unemployment Compensation. Each of the
Companies has made all required payments to its unemployment
compensation reserve accounts with the appropriate
governmental departments. Except as set forth in the
Disclosure Schedule, all such unemployment compensation
accounts have positive balances.
4.31 Intangible Assets. (a) All of the patents,
trademark registrations, service mark registrations, copyright
registrations and applications therefor owned or used by any
of the Companies are listed on the Disclosure Schedule.
(b) Except as set forth in the Disclosure
Schedule, to the Knowledge of the Companies each of the
Companies owns the entire right, title and interest in and to
each of its Intangible Assets and has not licensed or granted
the right to use any of the Intangible Assets to any other
person.
(c) Except as set forth in the Disclosure
Schedule: (i) to the Knowledge of the Companies there are no
claims, demands or proceedings instituted or pending or
threatened by any Person contesting or challenging the right
of any one or more of the Companies to use any of the
Intangible Assets; (ii) to the Knowledge of the Companies
there are no patents, trademarks, trade names or copyrights
owned by a Person which any one or more of the Companies is
using without license or right to do so; (iii) to the
Knowledge of the Companies each of the Companies owns or
possesses adequate licenses or other rights to use all
patents, trademarks, trade names or copyrights necessary to
conduct its business as now conducted; and (iv) all patents,
patent applications, trademarks, trade names, copyrights and
rights to discoveries or inventions (whether or not
patentable) owned or held by any Affiliate or any Employee
used by the Companies in the conduct of their businesses have
been duly and effectively transferred to one of the Companies.
4.32 Customers. Since March 1, 1997, there has been
no termination, cancellation or material curtailment of the
42<PAGE>
business relationship of any one or more of the Companies with
any customer or group of affiliated customers whose purchases
individually or in the aggregate constituted more than five
percent (5%) of the consolidated sales of the Companies as a
whole for the fiscal year ended February 28, 1997, nor has any
notice of intent to so materially curtail been given either
(i) to any of the Companies in writing or (ii) orally to any
of the Persons listed in Schedule 1.
4.33 Disclosure. No statement of fact by the
Companies contained in this Agreement or in the Disclosure
Schedule contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein
contained, in the light of the circumstances under which they
were made, not misleading as of the date to which it speaks.
4.34 Ancillary Agreements. The Companies have
delivered to Chiquita true and complete copies of the
Consulting Agreement, the Employee and Equipment Leasing
Agreement, the Employment Agreement, the Partnership Amendment
and the Supply Agreement as executed on the date hereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CHIQUITA
Chiquita hereby represents and warrants to the
Companies that:
5.1 Organization. Chiquita is a corporation duly
and validly organized and existing and in good standing under
the Laws of the State of New Jersey.
5.2 Authorization; Enforceability. The execution,
delivery and performance by Chiquita of this Agreement, the
Related Documents and all of the other documents and
instruments required by this Agreement to be executed and
delivered by Chiquita are within the corporate power of
Chiquita and have been duly authorized by all necessary
corporate action by Chiquita. This Agreement is, and the
Related Documents and the other documents and instruments
required by this Agreement to be executed and delivered by
Chiquita are or will be, when executed and delivered by
Chiquita, the valid and binding obligations of Chiquita,
enforceable against Chiquita in accordance with their
respective terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws generally affecting the rights of
creditors and subject to general equity principles. Except
for the approval of the transactions contemplated by this
43<PAGE>
Agreement by the Board of Directors of Chiquita, no further
approvals of any kind are required for Chiquita to perform
this Agreement, the Related Documents and all documents and
instruments by Chiquita required by this Agreement.
5.3 No Violation or Conflict. The execution,
delivery and performance of this Agreement, the Related
Documents and all of the other documents and instruments
required by this Agreement by Chiquita do not and will not
conflict with or violate any Law, the Articles of
Incorporation or Bylaws of Chiquita or (except to the extent
that it would not affect the validity or enforceability of
this Agreement with respect to Chiquita) any contract or
agreement to which Chiquita is a party or by which it is
bound.
5.4 Brokers. Chiquita has no obligation to pay any
brokers', finders' or any similar fee in connection with the
transactions contemplated by this Agreement.
5.5 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of Chiquita,
threatened against Chiquita by any Person which question the
validity, legality or propriety of the transactions
contemplated by this Agreement.
5.6 Governmental Approvals. No permission,
approval, determination, consent or waiver by, or any
declaration, filing or registration with, any Person is
required in connection with the execution, delivery and
performance of this Agreement or the Related Documents by
Chiquita, except for compliance with the requirements of the
Hart-Scott-Rodino Act (15 U.S.C. Section 18A) and the
regulations promulgated thereunder and the filing of the
Certificate of Merger with the Secretary of State of the State
of New Jersey and the Articles of Merger with the Secretary of
State of the State of Minnesota.
5.7 Capitalization. (a) The entire authorized
capital stock of Chiquita consists of: (i) 150,000,000 shares
of Capital Stock, $.33 par value, of which 56,267,142 were
issued and outstanding on July 16, 1997; (ii) 4,000,000 shares
of Voting Cumulative Preference Stock, issuable in series,
without nominal or par value, none of which are issued and
outstanding; (iii) 10,000,000 shares of Non-Voting Cumulative
Preferred Stock, $1.00 par value, of which (A) 2,875,000
shares have been designated $2.875 Non-Voting Cumulative
Preferred Stock, Series A, all of which are issued and
outstanding, and (B) 2,300,000 shares have been designated
$3.75 Cumulative Convertible Preferred Stock, Series B, all of
which are issued and outstanding.
44<PAGE>
(b) All of the Chiquita Common and Preferred
Shares to be issued pursuant to this Agreement will be, when
issued: (i) duly authorized, validly issued and fully paid;
(ii) nonassessable, (iii) free of any preemptive rights or
other rights to purchase securities of Chiquita (except as set
forth in Exhibit C hereto), (iv) issued in full compliance
with applicable securities laws assuming the accuracy of the
information supplied and representations made by the
Shareholders in the Shareholders Certifications and the
Shareholder Agreements, and (v) in the case of the Chiquita
Common Shares to be issued pursuant to this Agreement, listed
on the New York Stock Exchange, the Pacific Stock Exchange and
the Boston Stock Exchange. As of the Effective Time of the
Merger, the Chiquita Preferred Shares will be entitled to the
rights and preferences described in the attached Exhibit C.
(c) As of the Effective Time, New Owatonna
will be a limited liability company organized under the laws
of the State of Delaware and wholly-owned by Chiquita,
Chiquita will have no intent to transfer any of its ownership
of New Owatonna to any Person, and New Owatonna will have no
intent to issue any ownership interest to any Person other
than Chiquita.
5.8 Securities Filings. Chiquita and its
Subsidiaries have filed all documents required to be filed by
them with the Commission as required by Law.
5.9 Disclosure. No statement of fact by Chiquita
contained in this Agreement or the Related Documents contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein
or therein contained, in the light of the circumstances under
which they were made, not misleading as of the date to which
it speaks. No statement of fact in the Disclosure Documents
will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading as of the date of the Disclosure
Documents and the Effective Time of the Merger.
5.10 Investment Intent. Chiquita is acquiring the
shares of Stock being acquired by it for investment for its
own account and not with a view to resale or distribution
within the meaning of the Act. Chiquita does not presently
intend to divide its participation with others or to resell or
otherwise dispose of all or any part of the shares of Stock
being acquired by it (other than possibly with or to an
Affiliate of Chiquita) unless and until Chiquita determines at
some future date that changed circumstances, not now
anticipated, make such disposition advisable. Chiquita
acknowledges that the shares of Stock being acquired by it
45<PAGE>
pursuant to this Agreement are not being registered under the
securities Laws of the United States or any state thereof in
reliance upon one or more exemptions from the registration
requirements made available under such Laws, and that the
statutory basis for such exemption(s).
ARTICLE 6
CERTAIN MATTERS PENDING THE CLOSING
From and after the date of this Agreement and until
the Closing Date or the termination of this Agreement pursuant
to Section 13.1, except as otherwise disclosed in the
Disclosure Schedule:
6.1 Full Access. (a) Chiquita and its authorized
agents, officers and representatives shall have full access to
all properties, books, records, contracts, information and
documents of the Companies to conduct such examination and
investigation of the Companies as Chiquita reasonably deems
necessary, provided that such examinations shall be during the
Companies' normal business hours and shall not unreasonably
interfere with the Companies' operations and activities. Such
examination and investigation will be subject to the
Confidentiality Agreement.
(b) Chiquita shall have the right to conduct
an environmental assessment at the Transferred Property prior
to the Closing Date. Chiquita's environmental assessment shall
be conducted by NES, Inc. Said environmental consultant shall
be licensed, bonded and insured in accordance with applicable
laws and regulations. Any such environmental assessment will
be subject to the Temporary Access Agreement and the
Confidentiality Agreement.
6.2 Carry on in Regular Course. The Companies
shall carry on their businesses in the regular course and
substantially in the same manner as past practices.
6.3 Use of Assets. The Companies shall use,
operate, maintain and repair all of their assets and
properties in the regular course and substantially in the same
manner as past practices.
6.4 Preservation of Relationships. The Companies
shall use their reasonable efforts to preserve their business
organizations intact, to retain the services of the Employees
and to conduct business with suppliers, customers, creditors
and others having business relationships with the Companies in
the regular course and substantially in the same manner as
past practices.
46<PAGE>
6.5 No Default. The Companies shall not do any act
or omit to do any act, or permit any act or omission to act,
which will cause a breach of any of the Contracts.
6.6 Publicity. Whether or not the transactions
contemplated by this Agreement are consummated, Announcements
made prior to the Closing Date or, with respect to
Announcements disclosing the aggregate value of the Total
Merger Consideration (or information from which that aggregate
value could be derived or calculated), on or after the Closing
Date, shall be made only at such times and in such manner as
may be mutually agreed upon by Chiquita and the Shareholders
Representatives (or in the case of an Announcement made prior
to the Closing Date, by Chiquita and the Companies), provided,
however, that any party shall be entitled to make an
Announcement if, in the opinion of its counsel, such
Announcement is required to comply with any Law, regulatory
authority or any rule or regulation of the Commission, any
state securities regulatory agency or any securities exchange
or securities quotation system without the consent of the
other parties but, in such event, such party shall use
reasonable efforts to provide the other parties with a copy of
such Announcement and the opportunity to comment on such
Announcement prior to its distribution or publication.
6.7 Existing Insurance Policies. The Companies
shall use reasonable efforts to maintain all of their
Insurance Policies in full force and effect.
6.8 Employment Matters. Without the prior consent
of Chiquita, the Companies shall not: (a) grant any increase
in the rate of pay of any of the Employees except for
increases in the ordinary course of business of the Companies,
consistent with past practice; (b) institute or amend any
Employee Benefit Plan except as set forth on the Disclosure
Schedule; or (c) enter into or modify any written employment
arrangement with any Person, except for agreements with
Migrant Workers entered into in the ordinary course of
business. Chiquita acknowledges and consents to the payment
of a bonus by the Companies to Chadwick S. Lange subsequent to
March 1, 1997 in the amount of approximately $1,500,000.
6.9 Contracts and Commitments. Without the prior
consent of Chiquita, the Companies shall not (a) enter into
any contract or commitment or engage in any transaction not in
the usual and ordinary course of business and consistent with
their normal business practices, or (b) purchase, lease, sell,
license or dispose of any capital asset or Intangible Asset
except for purchases, sales, leases or dispositions in the
ordinary course of business consistent with past practices.
6.10 Indebtedness; Investments. Without the prior
47<PAGE>
consent of Chiquita, the Companies shall not create, incur or
assume any Indebtedness except for trade accounts payable
incurred in the ordinary course of business or make any
Investment.
6.11 Certain Transactions. Except for the
transactions described in this Agreement, the Companies shall
not (a) merge or consolidate with, or acquire all or
substantially all of the properties and assets of, any other
Person, (b) sell, lease or exchange all or any part of its
assets and properties to any other Person except for sales of
inventory by the Companies in the ordinary course of business;
or (c) issue any Stock or other equity interests in the
Company; or enter into any agreement, negotiations or
discussions with, or encourage, solicit or accept any offers
or proposals from, any Person with respect to any of the
possible transactions referred to in clause (a), (b) or (c).
6.12 Duties Concerning Covenants and Repre-
sentations. Each party to this Agreement shall:
(a) use reasonable efforts, subject to the
satisfaction of such party's own conditions precedent set
forth in Articles 7 or 8, to take all actions and do all
things reasonably necessary, proper or advisable to consummate
the transactions described in this Agreement;
(b) to the extent within its control, use
reasonable efforts to cause all of its representations and
warranties contained in this Agreement to be true and correct
in all material respects on the Closing Date with the same
force and effect as if such representations and warranties had
been made on and as of the Closing Date; and
(c) use reasonable efforts to obtain any third
party consents or approvals required by this Agreement and to
cause all of the conditions precedent set forth in Articles 7
and 8 of this Agreement to be satisfied including without
limitation:
(i) the filing of all materials reasonably required to be
filed with (A) the Federal Trade Commission and the Department
of Justice under the Hart-Scott-Rodino Act and to request
early termination of the applicable waiting periods under such
Law, and (B) the New York Stock Exchange, the Pacific Stock
Exchange and the Boston Stock Exchange to request the listings
described in Sections 7.11 and 8.9 of this Agreement; and (ii)
obtaining the consents or other actions required for the
transfer, renewal or reissue to New Owatonna of all licenses,
permits, authorizations, contracts and other rights listed
under Sections 4.5(a) through 4.5(c) and Section 4.17 of the
Disclosure Schedule as requiring the same; provided, however,
that the Companies shall not be obligated to incur any
48<PAGE>
expenses in connection with such consents unless the funds
therefor are furnished by Chiquita.
6.13 Amendments. The Companies shall not amend
their respective Articles of Incorporation or Bylaws and the
Partnership not to amend its partnership agreement.
6.14 Dividends; Redemptions; Issuance of Stock.
Except as described in the Disclosure Schedule, the Companies
shall not (a) issue any additional shares of stock of any
class or grant any warrants, options or rights to subscribe
for or acquire any additional shares of stock of any class,
(b) declare or pay any dividend or make any capital or surplus
distributions of any nature, or (c) directly or indirectly
redeem, purchase or otherwise acquire, recapitalize or
reclassify any of their capital stock or (d) dissolve or
liquidate any of the Companies or the Partnership.
6.15 Reporting to Chiquita. The Companies and the
Partnership shall (a) promptly deliver to Chiquita interim
financial statements of the Companies and the Partnership
including such reports, projections and budgets relating to
the Companies and the Partnership as are prepared for internal
use, and (b) confer with representatives of Chiquita on a
regular and frequent basis to report on operational matters
and the general status of ongoing operations.
6.16 Blue Sky Approvals. Chiquita will file all
documents required to obtain, prior to the Effective Time of
the Merger, all necessary approvals under state securities
laws, if any, required to carry out the transactions
contemplated by this Agreement, will pay all expenses incident
thereto and will use its best efforts to obtain such
approvals.
6.17 Shareholders Meetings. Each Company shall take
all necessary action to convene a meeting of its Shareholders
on September 23, 1997 (or such later date as shall be mutually
agreed to by the parties hereto) to consider and vote upon the
approval of this Agreement and the Merger in compliance with
the Minnesota Business Corporation Act. Each Company will (a)
recommend by the affirmative vote of all members of its Board
of Directors that Shareholders vote in favor of approval of
this Agreement and the Merger; and (b) solicit from
Shareholders proxies in favor thereof. Chiquita and the
Companies will jointly prepare a Private Placement
Memorandum/Proxy Statement (the "Private Placement
Memorandum") for use in connection with the offering of
Chiquita Preferred and Common Shares to Shareholders in
connection with the Merger and the solicitation of proxies for
said meetings of Shareholders. The Companies will provide for
use in, or in connection with the preparation of, the Private
49<PAGE>
Placement Memorandum any and all information in their
possession concerning the Companies and the Shareholders
which is necessary or desirable, as determined by Chiquita, in
order to comply with federal and state securities and other
laws applicable to such offering and solicitation, including
financial statements of, and other financial information
pertaining to, the Companies. In addition, the Companies
shall provide for inclusion in the Private Placement
Memorandum a description of this Agreement, the transactions
contemplated hereby (including the terms of the Merger), the
tax and other consequences of the transactions contemplated
hereby for the Shareholders and information concerning the
meetings of Shareholders to vote on the Merger and the
solicitation of proxies for such meetings. Chiquita will
provide all other information to be included in the Private
Placement Memorandum, including a description of Chiquita's
capital stock and risk factors to be considered in making an
investment decision in connection with the Merger, Chiquita's
Annual Report on Form 10-K for the year ended December 31,
1996, a copy of Chiquita's 1996 Annual Report to Shareholders,
a copy of Chiquita's Proxy Statement for its Annual Meeting of
Shareholders held on May 14, 1997, a copy of Chiquita's
Quarterly Reports on Form 10-Q for the quarters and periods
ended on March 31, 1997 and June 30, 1997, and a copy of each
periodic or current report Chiquita files with the Securities
and Exchange Commission under the Securities Exchange Act of
1934 at any time between the date of this Agreement and the
Closing Date (collectively, the "Disclosure Documents"). The
Companies will cause the Private Placement Memorandum, the
form of Shareholder Agreement and, to the extent not
previously furnished, the form of Shareholders Certification
to be couriered to all Shareholders as promptly as practicable
after the date hereof, and will use all reasonable efforts to
obtain fully completed and signed Shareholder Agreements and
Certifications prior to the scheduled date of the
Shareholders' meetings to consider this Agreement and the
Merger. Chiquita shall be solely responsible for determining
whether the Private Placement Memorandum, including the extent
of information contained in the Private Placement Memorandum,
provides the disclosures necessary to satisfy Regulation D
under or Section 4(2) of the Act and applicable state "Blue
Sky" Laws in connection with the Merger.
6.18 Notice of Dissenting Shareholders. The
Companies shall (a) promptly notify Chiquita of all written
notices filed by Shareholders pursuant to Section 473 of the
Minnesota Business Corporation Act to demand the fair value of
Stock owned by them and (b) not enter into any negotiations or
settlement with, or make or agree to make any payment to, such
Shareholders without the prior written consent of Chiquita.
6.19 No Encouragement of Dissent. The Companies
50<PAGE>
will not, directly or indirectly, encourage or advise any of
the Shareholders to exercise, or recommend to the Shareholders
that they exercise, their right to dissent from the Merger and
demand payment for the value of such Shareholder's shares of
Stock pursuant to Section 471 of the Minnesota Business
Corporation Act.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
CHIQUITA
Each and every obligation of Chiquita to be
performed on the Closing Date shall be subject to the
satisfaction prior to or at the Closing of the following
express conditions precedent:
7.1 Compliance with Agreement. The Companies shall
have performed and complied with, in all material respects,
all of their obligations under this Agreement which are to be
performed or complied with by them prior to or on the Closing
Date.
7.2 Proceedings and Instruments Satisfactory;
Shareholders Approval. All proceedings, corporate or other,
to be taken in connection with the transactions contemplated
by this Agreement by the Companies and the Partnership, and
all documents incident thereto, shall be reasonably
satisfactory in form and substance to Chiquita. This
Agreement and the Merger shall have been approved by the
Shareholders of each Company.
7.3 No Litigation. (a) There shall not be
threatened, instituted or pending any action or proceeding,
before any court or governmental authority or agency, domestic
or foreign, (i) challenging or seeking to make illegal , or to
delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated by
this Agreement, the Articles of Merger or the Certificate of
Merger or seeking to obtain material damages in connection
with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement, the
Articles of Merger, the Certificate of Merger or any of the
Related Agreements, or (iii) otherwise relating to and
materially adversely affecting the transactions contemplated
hereby or thereby.
(b) There shall not be any action taken, or
any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated by this Agreement,
51<PAGE>
the Articles of Merger or the Certificate of Merger by any
federal, state or foreign court, government or governmental
authority or agency, which would reasonably be expected to
result, directly or indirectly, in any of the consequences
referred to in paragraph (a) above.
7.4 Representations and Warranties of the
Companies. The representations and warranties made by the
Companies in this Agreement shall be true and correct in all
material respects when made and as of the Closing Date with
the same force and effect as though said representations and
warranties had been made on the Closing Date.
7.5 Material Adverse Change. Between the date of
this Agreement and the Closing Date, there shall not have been
or occurred any Material Adverse Change.
7.6 Deliveries Prior to or At Closing. At or prior
to the Closing, the Companies shall have delivered to
Chiquita: (a) a copy of the Articles of Incorporation of each
of the Companies, as amended to date, each certified as of a
recent date by the Secretary of State of Minnesota; (b) all
corporate minute books, stock transfer books, blank stock
certificates and corporate seals of the Companies; (c) a
certificate of the Secretary of State of Minnesota as to the
existence and good standing of each of the Companies, each
dated as of a recent date; (d) certificates of the Secretary
of each of the Companies certifying to: (i) the accuracy of a
copy of the Bylaws of that Company, as amended to date,
attached thereto; and (ii) the names of all officers and
directors of that Company; (e) a completed and validly
executed Shareholders Certification from each of the
Shareholders; (f) the Companies Closing Certificates, the
Companies Counsel Opinion and the Companies Tax Counsel
Opinion; (g) such certificates of the officers of the Company
or public officials and other documents as shall be reasonably
requested by Chiquita to establish the existence and good
standing of the Companies, the due authorization of this
Agreement and the transactions contemplated hereby; (h) such
affidavits and certificates of the Companies as shall be
reasonably requested by the Title Company for it to issue the
Title Policy referred to in Section 7.7 in the form described
in Article 1, as well as an affidavit of Chadwick S. Lange and
Dean Christiansen in the form of the attached Exhibit K to the
extent required to issue a non-imputation endorsement with
respect to their knowledge concerning the Real Estate; and (i)
an Illinois property transfer form sufficient to facilitate
the transfer of all the Real Property located in Illinois; the
well disclosure statement required pursuant to Minnesota
Statues Section 103I.235, Subd. 1(a); the individual sewage
treatment system disclosure statement required pursuant to
Minnesota Statutes Section 115.55, Subd. 6, disclosing any
52<PAGE>
"individual sewage treatment system[s]" (as defined in
Minnesota Statutes Section 115.55, Subd. 1(g)) located on the
Real Property; any MPCA storage tank change in ownership
notification required pursuant to Minnesota Statutes Section
116.48, Subd. 3; Chiquita's acceptance of the deliveries
described in this clause (i) shall not be deemed a waiver by
Chiquita of any statutory rights Chiquita may have pursuant to
the statutes referred to in this clause (i).
7.7 Real Estate. On or prior to the Closing Date,
Chiquita shall have received a Title Commitment from the Title
Company on, and a Survey of, each parcel of the Real Estate
requested by Chiquita, in each case dated as of a date which
is no earlier than 30 calendar days prior to the Closing Date.
On the Closing Date, Chiquita shall receive from the Title
Company an irrevocable commitment to issue a Title Policy
based on a date down of the Title Commitment to the Closing
Date on the Real Estate, which shall: (i) be in the amount of
the fair market value of the Real Estate of Chiquita's choice
for which it has Title Commitments, as reasonably determined
by Chiquita; and (ii) insure the Companies' titles to the Real
Estate covered by Title Commitments in accordance with the
provisions set forth in this Agreement and the Title
Commitments. The Title Commitments, the Surveys and the date
down of the Title Commitments described in the foregoing shall
not disclose the existence of any Lien which is not an
Existing Lien as of the date of this Agreement and which would
have a Material Adverse Effect.
7.8 Escrow Agreement. The Escrow Agreement shall
have been executed by the Escrow Agent and the Shareholders
Representatives and delivered to Chiquita.
7.9 Affiliates. All Accounts owed as of June 30,
1997 by a Company or Farmco shall have been recorded in the
Closing Financial Statements, and all Accounts owed as of June
30, 1997 by an Affiliate, other than one of the Companies or
Farmco, shall have been paid in full.
7.10 Registration Rights Agreement. The
Shareholders Representatives shall have executed and delivered
to Chiquita the Registration Rights Agreement.
7.11 Listing; Blue Sky. Chiquita shall have
received advice from the New York Stock Exchange, the Pacific
Stock Exchange and the Boston Stock Exchange that the shares
of Chiquita Common Stock to be issued pursuant to this
Agreement are approved for listing on such exchanges subject
to notice of issuance. Chiquita shall have received all state
securities law and commission authorizations necessary to
carry out the transactions contemplated by this Agreement.
53<PAGE>
7.12 Amendment of Certificate of Incorporation. The
Board of Directors of Chiquita or its Executive Committee
shall have adopted an amendment to its Second Restated
Certificate of Incorporation as follows:
(a) Section IV of such certificate shall have
been amended to add a new Subsection F titled "Special
Provisions Applicable to Series C Preference Stock," in the
form attached hereto as Exhibit C;
(b) paragraph (g) of Subsection D of Section
IV of such certificate, titled "Equal Rank," shall have been
amended to read in its entirety as follows:
"(g) Equal Rank.
All shares of Series A Preferred Stock shall be
identical in all respects, andall shares of
Series A Preferred Stock shall be of equal rank
with (i) shares of $3.75 Convertible Preferred
Stock, Series B, and (ii) $2.50 Convertible
Preference Stock, Series C, in respect of the
preference as to dividends and to payments upon
the Liquidation of the Corporation."
(c) paragraph (g) of Subsection E of Section
IV of such certificate, titled "Equal Rank," shall have been
amended to read in its entirety as follows:
"(g) Equal Rank.
All shares of Series B Preferred Stock shall be
identical in all respects, and all shares of
Series B Preferred Stock shall be of equal rank
with (i) shares of $2.85 Non-Voting Cumulative
Preferred Stock, Series A, and (ii) $2.50
Convertible Preference Stock, Series C, in
respect of the preference as to dividends and
to payments upon the Liquidation of the
Corporation."
(d) Either a certificate of amendment or a
certificate of restatement of such certificate, reflecting the
amendments set forth in paragraphs (a) through (c), shall have
been filed in the office of the Secretary of State of the
State of New Jersey, pursuant to Section 14A:9-4(5) or Section
14A:9-5(5) of the New Jersey Business Corporation Act.
7.13 Ancillary Agreements. The Consulting
Agreement, the Employee and Equipment Leasing Agreement, the
Employment Agreement, the Partnership Amendment and the Supply
Agreement shall continue to be in full force and effect and
54<PAGE>
shall not have been amended in any respect from the copies
thereof delivered to Chiquita pursuant to Section 4.34.
7.14 No Shareholder Dissents. No Shareholder shall
have filed with the Companies, and not withdrawn, written
notice of intent to demand the fair value of his or her Stock
pursuant to Section 471 of the Minnesota Business Corporation
Act.
7.15 Receipt of Shareholder Agreements, Shareholders
Certifications, Investment Representative Agreements.
Chiquita shall have received (i) properly executed and
completed Shareholder Agreements and Shareholders
Certifications from all Shareholders, and (ii) properly
executed and completed Investment Representative Agreements
from each investment representative appointed in accordance
with a Shareholders Certification.
7.16 Nonoccurrence of Certain Conditions. The
following shall not have occurred and be continuing:
(a) in the sole judgment of Chiquita, based
upon advice of counsel, it would be appropriate to disclose in
an amendment or supplement to the Private Placement Memorandum
information not otherwise then required by law to be publicly
disclosed; and
(b) in the sole judgment of Chiquita, such
disclosure is likely to interfere with any existing or
prospective business situation, transaction or negotiation of
Chiquita or any of its subsidiaries or affiliates.
7.17 Consents. The Companies shall have obtained
all third party consents or other actions required for the
consummation of the transactions contemplated by this
Agreement, including the Drop-Down and including the consents
or other actions required for the transfer, renewal or reissue
to New Owatonna of all licenses, permits, authorizations,
contracts and other rights listed under Sections 4.5(a)
through 4.5(c) and Section 4.17 of the Disclosure Schedule as
requiring the same. Without limiting the generality of the
foregoing, Midwest shall have obtained a waiver from Geo. A.
Hormel & Company of its right, as a result of the transactions
contemplated hereby, to give notice of termination of its
Custom Manufacturing Agreement dated January 4, 1988 with
Midwest pursuant to the last sentence of the first paragraph 6
of Article XVII thereof.
7.18 Surveys. Chiquita shall be satisfied, in its
reasonable discretion, that none of the Surveys of the Real
Estate which it has reviewed disclose any matter which would
have a Material Adverse Effect.
55<PAGE>
7.19 Leases, etc. Chiquita shall be satisfied, in
its reasonable discretion, that it has all leases, licenses,
easements, operating agreements and other documents and
agreements reasonably necessary to continue to operate the
Real Estate in the ordinary course of business, including
without limitation the proper agreements with Farmco regarding
the real estate formerly owned by the Companies which has been
conveyed to Farmco.
7.20 Transfer of Certain Properties. Farmco shall
have acquired all of OCC's right, title and interest in, to
and under the properties listed on Schedule 5 hereto for an
aggregate consideration of $1.00, on a quitclaim basis without
any representation or warranty by OCC as to any matter
whatsoever and shall have agreed to indemnify OCC and hold it
harmless from and against any and all liabilities, including
environmental liabilities, associated with such properties or
the ownership thereof.
7.21 Real Estate Agreements. Farmco and OCC shall
have entered into the Real Estate Agreements.
7.22 Lease Agreement. OCC shall have exercised its
option in timely fashion to renew the Lease Agreement between
the Partnership and OCC dated November 1, 1977 for a period of
five years, commencing on November 1, 1997.
7.23 Fees of Dorsey & Whitney LLP: The Companies
shall have received a final statement of the fees and
disbursements of Dorsey & Whitney LLP incurred by or for the
benefit of the Companies in connection with the Merger or the
other transactions contemplated by this Agreement, which
statement shall indicate that as of the Closing Date no other
fees and disbursements of Dorsey & Whitney LLP have been
incurred by or for the benefit of the Companies in connection
with the Merger or the other transactions contemplated by this
Agreement. The fees and disbursements described in such final
statement shall have been recorded in the Closing Financial
Statements.
ARTICLE 8
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE COMPANIES
Each and every obligation of the Companies to be
performed on the Closing Date shall be subject to the
satisfaction prior to or at the Closing of the following
express conditions precedent:
56<PAGE>
8.1 Compliance with Agreement. Chiquita shall have
performed and complied with, in all material respects, all of
its obligations under this Agreement which are to be performed
or complied with by it prior to or on the Closing Date.
8.2 Proceedings and Instruments Satisfactory;
Shareholders Approval. All proceedings, corporate or other,
to be taken in connection with the transactions contemplated
by this Agreement by Chiquita, and all documents incident
thereto, shall be reasonably satisfactory in form and
substance to the Companies, and Chiquita shall have made
available to the Companies for examination the originals or
true and correct copies of all documents which the Companies
may reasonably request in connection with the transactions
contemplated by this Agreement. This Agreement and the Merger
shall have been approved by the Shareholders of each of the
Companies.
8.3 No Litigation. (a) There shall not be
threatened, instituted or pending any action or proceeding,
before any court or governmental authority or agency, domestic
or foreign, (i) challenging or seeking to make illegal , or to
delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated by
this Agreement, the Articles of Merger or the Certificate of
Merger or seeking to obtain material damages in connection
with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement, the
Articles of Merger, the Certificate of Merger or any of the
Related Agreements, or (iii) otherwise relating to and
materially adversely affecting the transactions contemplated
hereby or thereby.
(b) There shall not be any action taken, or
any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated by this Agreement,
the Articles of Merger or the Certificate of Merger by any
federal, state or foreign court, government or governmental
authority or agency, which would reasonably be expected to
result, directly or indirectly, in any of the consequences
referred to in paragraph (a) above.
8.4 Representations and Warranties. The
representations and warranties made by Chiquita in this
Agreement shall be true and correct in all material respects
when made and as of the Closing Date with the same force and
effect as though such representations and warranties had been
made on the Closing Date.
8.5 Deliveries at Closing. Chiquita shall have de-
livered to the Companies the following documents, each
57<PAGE>
properly executed and dated the Closing Date: (a) the
Chiquita Closing Certificate; and (b) the Chiquita Counsel
Opinion. Chiquita shall have also delivered to the Companies
such certificates and documents of officers of Chiquita and of
public officials as shall be reasonably requested by the
Companies to establish the existence and good standing of
Chiquita and the due authorization of this Agreement and the
transactions contemplated by this Agreement by Chiquita.
8.6 Escrow Agreement. The Escrow Agreement shall
have been executed by the Escrow Agent and Chiquita and
delivered to the Companies.
8.7 Registration Rights Agreement. Chiquita shall
have executed and delivered to the Shareholders
Representatives the Registration Rights Agreement.
8.8 Chiquita Common and Preferred Shares. Chiquita
shall have delivered to the Escrow Agent stock certificates
representing that number of Chiquita Common and Preferred
Shares having a Value equal to the Initial Merger
Consideration in accordance with the terms and conditions of
this Agreement.
8.9 Listing; Blue Sky. Chiquita shall have
delivered to the Shareholders Representatives evidence that
the shares of Chiquita Common and Preferred Stock to be issued
pursuant to this Agreement are approved for listing on the New
York Stock Exchange, the Pacific Stock Exchange and the Boston
Stock Exchange, subject to notice of issuance. Chiquita shall
have received all state securities law and commission
authorizations necessary to carry out the transactions
contemplated by this Agreement.
8.10 Amendment of Certificate of Incorporation. Not
later than September 10, 1997, the Board of Directors of
Chiquita or its Executive Committee shall have adopted an
amendment to its Second Restated Certificate of Incorporation
as follows:
(a) Section IV of such certificate shall have
been amended to add a new Subsection F titled "Special
Provisions Applicable to Series C Preference Stock," in the
form attached hereto as Exhibit C;
(b) paragraph (g) of Subsection D of Section
IV of such certificate, titled "Equal Rank," shall have been
amended to read in its entirety as follows:
58<PAGE>
"(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 (i) shares of $3.75 Convertible Preferred
Stock, Series B, and (ii) $2.50 Convertible
Preference Stock, Series C, in respect of the
preference as to dividends and to payments upon
the Liquidation of the Corporation."
(c) paragraph (g) of Subsection E of Section
IV of such certificate, titled "Equal Rank," shall have been
amended to read in its entirety as follows:
"(g) Equal Rank.
All shares of Series B Preferred Stock shall be
identical in all respects, and all shares of
Series A Preferred Stock shall be of equal rank
with (i) shares of $2.85 Non-Voting Cumulative
Preferred Stock, Series A, and (ii) $2.50
Convertible Preference Stock, Series C, in
respect of the preference as to dividends and
to payments upon the Liquidation of the
Corporation."
(d) Either a certificate of amendment or a
certificate of restatement of such certificate, reflecting the
amendments set forth in paragraphs (a) through (c), shall have
been filed in the office of the Secretary of State of the
State of New Jersey, pursuant to Section 14A:9-4(5) or Section
14A:9-5(5) of the New Jersey Business Corporation Act.
8.11 Companies Counsel Tax Opinion. The Companies
shall have received the executed Companies Counsel Tax
Opinion, dated the Closing Date.
8.12 Shareholder Dissents. No Shareholder shall have
filed with the Companies, and not withdrawn, written notice of
intent to demand the fair value of his or her Stock pursuant
to Section 471 of the Minnesota Business Corporation Act.
8.13 Real Estate Agreements. Farmco and OCC shall
have entered into the Real Estate Agreements.
8.14 Consulting Agreement. OCC and Stephens J.
Lange shall have entered into the Consulting Agreement.
8.15 Business Name. Farmco and OCC shall have
entered into an agreement (in a form reasonably acceptable to
counsel for the Companies and Chiquita) providing that Farmco
59<PAGE>
shall have a perpetual, royalty free right to use the name
"Festal Farms Co." as a business name.
8.16 Receipt of Shareholder Agreements. Chiquita
shall have received properly executed and completed
Shareholder Agreements from all Shareholders.
ARTICLE 9
INDEMNITIES
9.1 Rights Against Escrow. Subject to the
limitations set forth in this Article 9, and, except as set
forth in Section 9.3(a), solely by means of reimbursement from
the Escrow Funds, Chiquita shall be indemnified and held
harmless from and against any and all losses, damages, costs,
expenses (including, without limitation, reasonable attorneys'
fees and accounting fees and expenses, expenses incurred in
discovery proceedings, as witnesses or in preparation for any
judicial or administrative proceedings, and any other
reasonable costs and expenses such as costs of
investigations), liabilities, obligations, deficiencies and
claims of any kind after taking account of (i) any insurance
proceeds actually received (net of any expense incurred in
obtaining such proceeds) and (ii) any current tax benefit
actually realized (excluding any alleged benefit from
additions to tax loss carryforwards), it being understood that
no indemnified party shall have any obligation to claim any
such tax benefit or to contest its denial by any governmental
authority (collectively, "Losses") which Chiquita and the
Companies, or any one or more of them, may at any time suffer
or incur, or become subject to, as a result of or in
connection with or related to:
(a) any breach or inaccuracy of any of the
representations and warranties made by the Companies in or
pursuant to this Agreement;
(b) any failure by the Companies to carry out,
perform, satisfy and discharge any of their covenants, agree-
ments, undertakings or obligations in this Agreement or under
any of the documents and materials executed or to be executed
by the Companies pursuant to this Agreement;
(c) any disclosure made in Section 4.15 of the
Disclosure Schedule pertaining to the exclusion of certain
employees from participation in certain employee benefit plans
of the Companies; and
(d) any suit, action, order, inquiry letter or
other proceeding (including administrative proceedings)
brought by any Person arising out of, or in any way related
60<PAGE>
to, any of the matters referred to in Sections 9.1(a),9.1(b)
or 9.1(c) of this Agreement.
9.2 Indemnity by Chiquita. Subject to the
limitations set forth in this Article 9, Chiquita hereby
indemnifies and holds each of the Shareholders harmless from
and against, and agrees to promptly defend each of the
Shareholders from and reimburse each of the Shareholders for,
any and all Losses which each of the Shareholders may at any
time suffer or incur, or become subject to, as a result of or
in connection with or related to:
(a) any breach or inaccuracy of any of the
representations and warranties made by Chiquita in or pursuant
to this Agreement or the Related Documents;
(b) any failure by Chiquita to carry out,
perform, satisfy and discharge any of its covenants,
agreements, undertakings or obligations in this Agreement, the
Related Documents or under any of the documents and materials
executed and delivered or to be executed and delivered by
Chiquita pursuant to this Agreement; and
(c) any suit, action or other proceeding
brought by any Person arising out of, or in any way related
to, any of the matters referred to in Sections 9.2(a) or
9.2(b) of this Agreement.
9.3 Provisions Regarding Indemnity. (a) Except as
set forth in the next following sentence, the rights to
reimbursement from the Escrow Funds under this Article 9 and
the Escrow Agreement shall be Chiquita's sole and exclusive
remedy with respect to any Losses that Chiquita may suffer,
sustain or become subject to pursuant to the terms of this
Article 9, and Chiquita agrees that it shall not, and hereby
waives all rights to, institute or maintain any suit,
proceeding or action against the Shareholders or Shareholders
Representatives or utilize or exercise any other legal or
equitable remedy for the purpose of recovering damages or
other relief with respect to any such Losses (including,
without limitation, an action seeking to recover any portion
of the purchase price previously paid to the Company's
stockholders). The provisions of the preceding sentence shall
not apply, or restrict Chiquita's rights and remedies against
any Shareholder or Shareholders with respect to (a) any breach
or inaccuracy of any Shareholder's respective representations,
warranties, agreements (including the agreement to return such
Shareholder's proportionate share of any amount due to
Chiquita under Section 2.4(a)(ii)) or certifications set forth
in (i) a Shareholder Agreement, (ii) a Shareholders
Certification, (iii) a letter of transmittal for Certificates,
or (iv) a Principal Shareholders Agreement executed and
61<PAGE>
delivered by such Shareholder or (b) any intentional and
fraudulent breach or inaccuracy of any of the representations
and warranties made by the Companies in or pursuant to this
Agreement. Notwithstanding anything to the contrary in this
Article 9, Chiquita shall not have the right to recover Losses
directly from the Shareholders pursuant to the immediately
preceding sentence to the extent Chiquita has recovered such
Losses from the Escrow Funds, and Chiquita shall not have the
right to recover Losses from the Escrow funds to the extent
Chiquita has recovered such Losses directly from the
Shareholders pursuant to the immediately preceding sentence.
(b) If a claim or demand by a third party is
made against an indemnified party, the indemnified party shall
promptly notify the indemnifying party of such claim or
demand, specifying the nature of such claim or demand and the
amount or the estimated amount thereof to the extent then
feasibly determinable (which estimate shall not be conclusive
of the final amount of such claim and demand) (the "Claim
Notice"). The indemnifying party shall have 15 business days
from the personal delivery or mailing of the Claim Notice (the
"Notice Period") to notify the indemnified party, (A) whether
or not it disputes its liability to the indemnified party
hereunder with respect to such claim or demand and (B)
notwithstanding any such dispute, whether or not it desires,
at its sole cost and expense, to defend the indemnified party
against such claims or demand. If the indemnifying party
fails to undertake the defense of any claim or demand, the
indemnified party may undertake such matter at the expense of
the indemnifying party.
(c) If such claim, demand, action or
proceeding is a third party claim, demand, action or
proceeding, the indemnifying party will have the right at its
expense to assume the defense thereof using counsel reasonably
acceptable to the indemnified party. The indemnified party
shall have the right to participate, at its own expense, with
respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim,
demand, action or proceeding the parties shall cooperate with
each other and provide each other with access to relevant
books and records in their possession. No such third party
claims, demand, action or proceeding shall be settled without
the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed. It
shall be deemed not unreasonable if an indemnified party is
unwilling to consent to a settlement in the event that (i)
such settlement includes any nonmonetary relief against the
indemnified party or (ii) such settlement involves liability
to the indemnified party in excess of liability for which the
indemnified party is indemnified hereunder. Except in
instances where a settlement restricts or negatively impacts
62<PAGE>
the indemnified party or its business after such settlement or
results in liability to such party as a result of such
settlement in excess of liability for which the indemnified
party is indemnified hereunder, if a firm written offer is
made to settle any such third party claim, demand, action or
proceeding and the indemnifying party proposes to accept such
settlement, then: (i) the indemnifying party shall be excused
from, and the indemnified party shall be solely responsible
for, all further defense of such third party claim, demand,
action or proceeding; (ii) the maximum liability of the
indemnifying party relating to such third party claim, demand,
action or proceeding shall be the amount of the proposed
settlement if the amount thereafter recovered from the
indemnified party on such third party claims, demand, action
or proceeding is greater than the amount of the proposed
settlement; and (iii) the indemnified party shall pay all
attorneys' fees and legal costs and expenses incurred after
rejection of such settlement by the indemnified party.
Notwithstanding the foregoing, the provisions of Sections 12.1
and 12.2 shall control with respect to the defense of any Tax
audit or proceeding.
(d) In the event an indemnified party should
have a claim against the indemnifying party hereunder that
does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, the
indemnified party shall promptly send a Claim Notice with
respect to such claim to the indemnifying party. If the
indemnifying party does not notify the indemnified party
within the Notice Period that it disputes such claim, the
amount of such claim specified in a Claim Notice shall be
conclusively deemed a liability of the indemnifying party
hereunder.
(e) (i) Chiquita shall not have the right to
assert any claim for reimbursement from the Escrow Funds
pursuant to Section 9.1(a) or (d) of this Agreement in respect
of any breach or inaccuracy of any of the representations set
forth in this Agreement, unless and until the aggregate amount
of Losses suffered by Chiquita and the Companies is equal to
or exceeds $300,000, in which event Chiquita shall be entitled
to reimbursement from the Escrow Funds for all such Losses.
Solely for purposes of the indemnification sections of this
Agreement, the qualifications of certain representations and
warranties as to materiality shall be disregarded for purposes
of determining the amount of Losses suffered by Chiquita and
the Companies as a result of a breach.
(ii) Chiquita shall not have the right to
assert any claim for reimbursement from the Escrow Funds
pursuant to Section 9.1(a) or 9.1(d)(insofar as it relates to
Section 9.1(a)) in respect of any breach or inaccuracy of any
63<PAGE>
of the representations and warranties set forth in Section
4.18 or any breach or inaccuracy of any of the other
representations and warranties herein (including, without
limitation, Section 4.13) which breach or inaccuracy relates
to an environmental matter (collectively, "Environmental
Losses") unless such Environmental Losses exceed $100,000, in
which case Chiquita shall have the right to reimbursement only
to the extent Environmental Losses exceed $100,000. Chiquita
shall have no right to recover, in the aggregate,
Environmental Losses in excess of $2,500,000.
(f) All representations and warranties of the
parties contained in this Agreement or made pursuant to this
Agreement, and the right of an indemnified party to receive
indemnity provided for breach of representations and
warranties pursuant to Section 9.1(a) of this Agreement, shall
survive the Closing Date and the consummation of the
transactions contemplated by this Agreement, shall not be
affected by any examination made for or on behalf of Chiquita
or by the knowledge of any of Chiquita's officers, directors,
shareholders, employees or agents, and shall terminate and be
of no further force and effect at 11:59 P.M. Central Time on
the first anniversary of the Closing Date, except that (i) the
representations and warranties of the Companies in Section
4.18 and Chiquita's right to indemnification for a breach of
such representations and warranties shall survive the Closing
Date until 11:59 P.M. Central Time on the second anniversary
of the Closing Date, and (ii) the representations and
warranties of the Companies in Section 4.20 and Chiquita's
right to indemnification for a breach of such representations
and warranties shall survive the Closing Date in accordance
with Section 12.1.
(g) The termination of the rights of an indem-
nified party to receive indemnity as provided for in Section
9.3(f) of this Agreement shall not affect any Person's right
to prosecute to conclusion any Claim properly made by that
Person pursuant to this Article 9 prior to the time that the
relevant right of indemnity terminates.
(h) Any claim or demand hereunder with respect
to any environmental cleanup, remediation or removal activity
involving a matter for which the indemnified party has sent a
Claim Notice shall be limited to amounts reasonably related to
attainment of federal or state cleanup requirements
established pursuant to Environmental Laws. The indemnifying
party shall have the right, at its own expense, to be
consulted with regard to selection of any cleanup or removal
remedy, provided that its comments, if any, shall not be
unreasonably delayed.
(i) The provisions of this Section 9.3 shall
64<PAGE>
not apply to any claims Chiquita may have for reimbursement
from the Escrow Funds for or in respect of Taxes, which shall
be governed by the provisions of Article 12.
(j) For purposes of the provisions of this
Section 9.3, in the case of claims relating to the indemnity
of Chiquita pursuant to Section 9.1, the "indemnifying party"
shall mean Shareholders Representatives. Any notices required
to be delivered by Chiquita to the Shareholders
Representatives as the "indemnifying party" shall also be
delivered by Chiquita to the Escrow Agent. The parties agree
that such the identification of Shareholders Representatives
as the "indemnifying party" is solely for purposes of the
notice and other procedures regarding the indemnification of
Chiquita.
(k) The parties acknowledge and agree that in
exchange for a reduction of $800,000 in the Net Book Value of
the Companies used for purposes of determining Total Merger
Consideration, Chiquita has agreed to assume all liabilities
and obligations relating to the matters described under
Section 4.18 of the Disclosure Schedule and shall have no
right of indemnification under this Article 9 or reimbursement
from the Escrow Funds for any such matters.
ARTICLE 10
OBLIGATIONS OF CHIQUITA AFTER THE CLOSING DATE
10.1 Current Public Information. Chiquita shall
file with the Commission all reports required to be filed
therewith pursuant to the Securities Exchange Act of 1934, as
amended, including without limitation, all quarterly and
annual reports. Upon any request therefor by the Shareholders
Representatives, Chiquita shall provide the Shareholders
Representatives with copies thereof promptly after the filing
thereof.
10.2 Removal of Legend. The legend on the stock
certificates representing the shares of Chiquita Common and
Preferred Stock to be delivered to the Shareholders described
in Section 2.3 of this Agreement may be removed (a) upon a
sale of such shares pursuant to a registration effected as
described in the Registration Rights Agreement, (b) for
Persons who are not affiliates of Chiquita, as reasonably
determined by Chiquita under the Act, on and after a date
which is two years after the Closing Date, and (c) on and
after a date which is one year after the Closing Date if and
to the extent that such shares are sold in full compliance
with Rule 144 under the Act and if the Shareholder delivers to
Chiquita an opinion of Dorsey & Whitney LLP, or other counsel
reasonably acceptable to Chiquita, to the effect that such
65<PAGE>
shares may be sold by such Shareholder without registration
under the Act pursuant to Rule 144 promulgated under the Act.
10.3 Access to Books and Records. Chiquita agrees
that the Shareholders Representatives may have reasonable
access to, and the right to copy at their expense, the books
and records of the Companies and the Partnership relating to
the Companies and matters or events arising prior to the
Closing Date relating to the Companies or the Partnership or
the Shareholders. Such access shall be at the place where
such books and records are regularly maintained by New
Owatonna, shall be during normal business hours and shall not
unreasonably interfere with the normal business operations of
New Owatonna. Chiquita shall cause New Owatonna to maintain
such books and records for at least three years after the
Closing and thereafter to give the Shareholders
Representatives at least 90 days notice of any intent to
destroy or dispose of such books and records and provide the
Shareholders Representatives an opportunity to take custody
thereof during such 90 day period.
10.4 Employee Benefits. Chiquita shall directly or
indirectly cause each of the tax qualified defined benefit
pension plans and the tax qualified defined contribution
profit sharing plans maintained by any of the Companies for
the benefit of their employees to continue in existence for a
period of two years after Closing (or for the shorter maximum
period that such plans can so operate and retain their tax
qualified status) for the benefit of those employees
participating in such plans at the time of the Closing for so
long as they continue to be employed by the Companies during
such period. During such period, participants shall continue
to accrue benefits to such defined benefit plans and the
employers shall continue to contribute to such defined
contribution plans on a basis substantially consistent with
past practice. Nothing in this Section 10.4 shall be deemed
to confer upon any employee a right of continued employment or
to restrict the right of the Companies to make amendments to
such plans after the Closing that are not inconsistent with
the provisions of this Section 10.4.
10.5 Further Issuances of Chiquita Preferred Shares.
Chiquita shall not issue or reissue any Chiquita Preferred
Shares other than pursuant to the terms of this Agreement.
ARTICLE 11
INTERCOMPANY ARRANGEMENTS
Any Tax allocation agreement or arrangement which, prior
to the date of this Agreement, may have existed between any of
66<PAGE>
(i) the Companies, (ii) the Partnership, (iii) any of the
Shareholders, (iv) any Affiliates of the Companies, the
Partnership or any of the Shareholders, or (v) any other
person shall be terminated prior to the date of this
Agreement, without further obligation or liability (including,
but not limited to, any obligation or liability for Taxes) of
any of the Companies or the Partnership or Chiquita.
ARTICLE 12
TAX MATTERS
12.1 Chiquita's Right to Reimbursement. Solely by
means of reimbursement from the Escrow Funds, Chiquita shall
be indemnified and held harmless from and against all Taxes
(including, without limitation, audits by any governmental
authorities) (a) with respect to any periods ending on or
prior to June 30, 1997 ( each a "Pre-Cutoff Period"), (b) with
respect to any period beginning before June 30, 1997 and
ending after June 30, 1997, but only with respect to the
portion of such period up to and including June 30, 1997 (such
portion, a "Pre-Cutoff Partial Period"), or (c) with respect
to any period up to and including the Closing Date, of any
entity, other than the Companies and the Partnership, which is
or has been affiliated with the Companies or the Partnership,
as a result of Treasury Regulation Section1.1502-6(a) or
otherwise due to the affiliated relationship. Chiquita's right
to reimbursement under this Section (whether arising before,
on or after the Closing and whether paid with returns when due
or as the result of audits or assessments) shall be after the
application (only if required to be applied to the Tax being
indemnified) of all applicable credits, net operating or
capital loss deductions related to any of the Companies or the
Partnership, which credits, net operating or capital loss
deductions arose in the period ending on or prior to June 30,
1997 or in the Pre-Cutoff Partial Period and are available to
reduce the Tax deficiency for which Chiquita has a right to
reimbursement. In addition to the foregoing, Chiquita shall
have the right to reimbursement from the Escrow Funds for any
and all attorneys' fees and expenses incurred by Chiquita with
respect to the matters covered by such indemnity and/or
enforcement thereof. Notwithstanding any provision to the
contrary to this Article 12, Chiquita shall have no right to
reimbursement to the extent of any Tax provided for in the
Closing Financial Statements.
Chiquita's right to reimbursement from the Escrow Funds
shall be Chiquita's sole and exclusive remedy with respect to
any Taxes described in the foregoing paragraph. Chiquita
agrees that it shall not, and hereby waives all rights to,
institute or maintain any suit, proceeding or action against
67<PAGE>
the Shareholders or Shareholders' Representatives or utilize
or exercise any other legal or equitable remedy for the
purpose of recovering damages or other relief with respect to
any such Taxes (including, without limitation, an action
seeking to recover any portion of the purchase price
previously paid to the Shareholders). Chiquita shall have no
right to reimbursement from the Escrow Funds with respect to
Taxes unless it notifies the Shareholders Representatives and
the Escrow Agent on or before the date of expiration of the
applicable statute of limitations of a claim for reimbursement
relating to actual liability for such Taxes.
12.2 Chiquita Indemnity. Chiquita and the Companies
will indemnify and hold harmless the Shareholders from and
against (i) all Taxes with respect to periods beginning after
June 30, 1997; (ii) all taxes with respect to any period
beginning before June 30, 1997 and ending after June 30, 1997,
but only with respect to Taxes attributable to the period
after June 30, 1997; (iii) all Taxes attributable to and
arising out of any transaction directed to occur by Chiquita
after Closing even if such transaction occurs on the Closing
Date; and,(iv) all Taxes for which adequate provision was made
in the Closing Financial Statements.
12.3 Allocation Between Partial Periods. For
purposes of this Agreement, any Taxes for a period beginning
before June 30, 1997 and ending after June 30, 1997 shall be
apportioned between the Pre-Cutoff Partial Period and the
period following June 30, 1997 (a "Post-Cutoff Partial
Period"), based, in the case of real and personal property
Taxes, on a per diem basis with respect to Taxes payable in
the respective periods, and, in the case of other Taxes, on
the actual activities, taxable income or taxable loss of the
Companies and the Partnership during such Pre-Cutoff Partial
Period and such Post-Cutoff Partial Period.
12.4 Filing of Tax Returns. To the extent permitted
by Law, the Shareholders shall include the Companies and the
Partnership in the federal and state income tax returns of the
Shareholders and the consolidated or unitary state income tax
returns filed by the Shareholders or the Companies or the
Partnership, consistent with past practices, for periods prior
to and including the Closing Date and shall include the
activity of the Companies and the Partnership up through and
including the Closing Date in such returns. The returns shall
be prepared by the Shareholders' Representatives and Hutton
Nelson & McDonald LLP, on a basis consistent with past
practices and shall not make or change any election applicable
to any of the Shareholders or the Partnership without
Chiquita's written consent (which shall not be unreasonably
withheld or delayed). The Companies shall pay fees in the
amount of $15,000 to Hutton Nelson & McDonald LLP on the
68<PAGE>
Closing Date as full payment for the engagement of Hutton
Nelson & McDonald LLP to prepare such returns. The
Shareholders Representatives shall provide Chiquita with
separate pro forma returns for the Companies and the
Partnership not less than thirty (30) days prior to the filing
date or the expiration of any permissible extension thereof
and accommodate reasonable comments made by Chiquita within
fifteen (15) days after the delivery of such proforma returns
to the Shareholders. Chiquita shall sign and timely file such
Tax returns with the appropriate taxing authorities. The
Shareholders Representatives, with the assistance of the
Shareholders, shall prepare books and working papers
(including a closing of the books) which will clearly
demonstrate the income and activities of each Company for the
period ending on the Closing Date and any partial period
ending on the Closing Date. Chiquita shall include the
activity of the Companies for periods beginning after the
Closing Date in the consolidated federal income tax return
filed by Chiquita.
As set forth in this Agreement in more detail below, the
Shareholders Representatives shall prepare any and all final
Tax Returns of the Companies and the Partnership for taxable
periods which ended on or prior to the Closing Date (other
than federal and state income tax returns) (hereinafter the
"Final Pre-Closing Period Other Tax Returns"). The
Shareholders Representatives shall prepare and file all such
Final Pre-Closing Period Other Tax Returns on a basis
consistent with the Tax returns of the Companies and the
Partnership for all previous years.
Notwithstanding the foregoing, with respect to the Final
Pre-Closing Period Other Tax Returns, to the extent there are
any new elections to be made by any of the Companies or the
Partnership or tax return positions with respect to new issues
to be taken by any of the Companies or the Partnership which
have not been previously addressed in any of the Companies' or
the Partnership's prior tax returns, the Shareholders
Representatives shall give Chiquita notice of such event and
Chiquita shall be entitled to instruct the Shareholders as to
whether or not to make any such elections or take any such tax
return position in the Final Pre-Closing Period Other Tax
Returns that the Shareholders Representatives are preparing.
The Shareholders Representatives shall deliver each Final
Pre-Closing Period Other Tax Return to Chiquita no later than
thirty (30) days prior to the due date of such return or any
permissible extension thereof for Chiquita's review. Chiquita
shall review, approve (which approval may not be unreasonably
withheld), sign and timely file such Tax return with the
appropriate taxing authority. Chiquita or the Companies shall
be responsible for and shall make the payment of any remaining
69<PAGE>
taxes due with the return, if any; provided, however, if
Chiquita shall object to the return as prepared, Chiquita
shall so notify the Shareholders Representatives in writing no
later than fifteen (15) days after such return has been
delivered to Chiquita as to the nature of such objection. If
the parties are unable to resolve their differences regarding
the preparation of the return, the Companies' accountants
shall review the returns and any related workpapers and
position papers of the parties and decide how the tax return
should properly be filed, provided that the Companies'
accountants shall take into account that such returns must be
prepared on a basis consistent with prior tax returns subject
to any elections by Chiquita pursuant to the immediately
preceding paragraph. The determination of the Companies'
accountants shall be binding on the parties. Notwithstanding
anything in this Agreement to the contrary, if Chiquita or any
of the Companies or the Partnership files any return which is
inconsistent with the return as prepared by the Shareholders
Representatives, as mutually agreed by the Shareholders
Representatives and Chiquita, or as determined by the
Companies' accountants, as the case may be, Chiquita shall no
longer have any right to reimbursement pursuant to this
Agreement with respect to any Taxes or other damages arising
out of, or related to, the item or issues so altered on such
tax return.
Chiquita shall prepare and file all other Tax returns of
the Companies and the Partnership which have not yet been
filed prior to the Closing Date and shall be responsible for
and make any remaining tax payments due with such returns, if
any.
Any expenses incurred by the parties in connection with
the use of the Companies' accountants in connection with a
resolution of a dispute under this Article shall be shared
equally by Chiquita and the Shareholders. The portion of
those expenses payable by the Shareholders shall be paid
initially by Chiquita, subject to a right of Chiquita to
reimbursement for such expenses thereafter: first from the
Expenses Funds; second, in the event the Expenses Funds are
exhausted, from the Initial Payment Funds; and third, in the
event the Initial Payment Funds are exhausted, from the
Shareholders in accordance with their respective Shareholder's
Shares.
12.5 Post-Closing Audits. (a) Notwithstanding
anything in this Agreement to the contrary, Chiquita shall
have the right to assume the defense of any tax audit,
proposed adjustment or claim made by the IRS or other taxing
authority which will or could affect the tax liabilities of
the Companies or the Partnership ("Tax Claims"). If Chiquita
receives a notice or written inquiry from the IRS or other
70<PAGE>
taxing authority as to a Tax Claim, notice of such fact shall
be promptly communicated to the Shareholders Representatives.
Conversely, if one or more Shareholders receive a notice or
written inquiry from the IRS or other taxing authority as to a
Tax Claim, notice of such fact shall be promptly communicated
to Chiquita.
(b) Notwithstanding the provisions of
subsection (a) of this Section, the Shareholders
Representatives shall have the right, at their expense, to
appoint such counsel and accountants deemed necessary by the
Shareholders Representatives to consult with and remain
advised by Chiquita in any contest of a Tax Claim and, to the
extent requested by Chiquita and at the expense of the
Shareholders Representatives, they shall cooperate with and
assist Chiquita in the contest of any such Tax Claim. In
connection therewith, Chiquita shall consider, in good faith,
the written advice of such counsel and accountants together
with the risk to which following such advice may result in an
adverse judgment or decision. Notwithstanding the foregoing,
Chiquita shall have the final authority to determine all
matters in connection with the contest of any such Tax Claim;
provided, however, that (i) Chiquita shall not settle any Tax
Claim and thereafter seek reimbursement from the Escrow Funds
unless the Shareholders Representatives shall have jointly
consented to such settlement, which consent shall not be
unreasonably withheld, and (ii) if (1) Chiquita determines not
to accept a monetary settlement of any such Tax Claim
following Chiquita receipt of written notice from the
Shareholders' Representatives requiring Chiquita's acceptance
of such a settlement for an amount (the "Tax Settlement
Amount") acceptable to the Shareholders and the IRS or any
other taxing authority, (2) such determination by Chiquita is
not based, at least in part, on Chiquita's good faith decision
that such a settlement may be prejudicial as a precedent to
the general affairs, business, prospects, properties,
financial position, results of operation or net worth of
Chiquita or the Companies or the Partnership, and (3) a
settlement or judgment in excess of the Tax Settlement Amount
is thereafter rendered against Chiquita, the Company or any of
the respective officers or directors, no claim for
reimbursement from the Escrow Funds under Section 12.1 may
thereafter be made with respect to such Tax Claim against the
Shareholders in excess of the Tax Settlement Amount consented
to by the Shareholders Representatives and Chiquita shall
indemnify and hold the Shareholders Representatives harmless
with respect to any such excess amount and any other costs
associated therewith.
(c) After the Closing, Chiquita will not (nor
will Chiquita cause any of the Companies or the Partnership
to) file any amended Tax returns or claims for refunds for the
71<PAGE>
Companies or the Partnership for any Tax periods ending on or
before the Closing Date without the prior written consent of
the Shareholders Representatives, which consent will not be
unreasonably withheld; provided, however, that if the
Shareholders Representatives consent to the filing of an
amended return, and such amended return creates additional tax
liability for the Shareholders, Chiquita shall seek
reimbursement from the Escrow Funds only if in Chiquita's good
faith judgment the failure to file such an amended return
could cause a penalty under federal or state laws or
regulations to be imposed on any of the Companies or the
Partnership, and in all other cases, the Companies shall be
responsible for such additional tax liability and will
indemnify and hold the Shareholders harmless with respect
thereto and any other costs associated therewith.
12.6 Closing Date Tax Balance Sheets. No later than
thirty (30) days after the Companies file their federal income
tax return for the tax period ending on the Closing Date, the
Shareholders shall deliver to Chiquita copies of the
respective federal income tax balance sheets of each of the
Companies and the Partnership as of the Closing Date setting
forth (a) the tax bases of the Companies' and the
Partnership's assets and liabilities which were used in the
preparation of the Shareholders', the Companies' and the
Partnership's federal and state income tax returns for the tax
period ending on or including the Closing Date; (b) the
deferred tax workpapers reflecting the conversion of the book
balance sheets of the Companies and the Partnership as of such
date to such tax balance sheets; and (c) such other schedules
and information used in the preparation of the state, and
federal income tax returns of the Companies and the
Partnership for such period.
12.7 Cooperation. The Shareholders Representatives,
on the one hand, and Chiquita, the Companies and the
Partnership, on the other hand, agree to furnish or cause to
be furnished to each other upon request, as promptly as
practicable, such information, records and assistance
(including access to books and records) relating to any of the
Companies and the Partnership as is reasonably necessary for
the preparation of any return for Taxes, audit, examination or
claim for refund, and the prosecution or defense of any claim,
suit or proceeding relating to any proposed Tax adjustment.
Such assistance shall include making employees available
on a mutually convenient basis to provide additional
information and explanation of any material to be provided
hereunder and shall include furnishing to or permitting the
copying by the requesting party of any records, returns,
schedules, documents, workpapers or other relevant materials
which might reasonably be expected to be of use in connection
72<PAGE>
with such return, audit, examination or proceedings. The
party requesting assistance hereunder shall reimburse the
party whose assistance is requested for the reasonable out-of-
pocket expenses incurred by it in providing such assistance,
but shall not be required to reimburse the party providing
such assistance with respect to time of employees made
available pursuant to this Section.
12.8 Refunds. Any Tax refunds received by Chiquita
or the Companies after the Closing Date for which accruals
were made on the Closing Balance Sheets shall be the property
of Chiquita and the Companies. All other Tax refunds received
by Chiquita or the Companies that relate to Tax periods or
portions thereof ending on or before the Closing Date shall be
deposited in the Escrow Funds, net of expenses incurred in
securing said refunds.
ARTICLE 13
TERMINATION; MISCELLANEOUS
13.1 Termination; Termination Fee.
(a) This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned
at any time prior to the Closing whether before or after
approval of the Merger by the Shareholders of the Companies,
as follows: (a) by mutual written agreement of the Companies
and Chiquita; (b) by either the Companies or Chiquita if the
Closing has not occurred on or before October 15, 1997;
provided, however, that if a condition contemplated by Section
7.16 occurs and is continuing, none of the parties shall have
the right to terminate this Agreement until the earlier of (x)
November 15, 1997, or (y) the date which is seven days after
such condition ceases to exist in the event that no amendment
or supplement is made to the Private Placement Memorandum as a
result of the circumstances giving rise to such condition and
until the date which is 21 days after such condition ceases to
exist and the parties have finalized such amendment or
supplement in the event that such an amendment or supplement
is made.
(b) If: (i) all of the conditions precedent to
the Companies' obligations set forth in Article VIII are
satisfied except the condition set forth in Section 8.12
and/or the condition set forth in Section 8.16, (ii) Chiquita
is willing to waive in writing the conditions set forth in
Section 7.14 and 7.15(i), and (iii) this Agreement terminates
because the Companies do not waive the conditions set forth in
Section 8.12 and/or Section 8.16, as the case may be, then:
73<PAGE>
(A) if a Change of Control (as defined below)
occurs within one year after the termination of this
Agreement, the Companies will immediately after such
Change of Control pay to Chiquita an aggregate amount of
$3,000,000 in immediately available funds, or
(B) if a Change of Control occurs more than one
year, but less than two years, after the termination of
this Agreement, the Companies will immediately after such
Change of Control pay to Chiquita an aggregate amount of
$1,000,000 in immediately available funds.
Any payments required by this Section 13.1(b) will be the
joint and several obligation of the Companies.
For the purposes of this Section 13.1(b), "Change of
Control" means any transaction or series of transactions
resulting in: (1) the acquisition by any person (other than a
Shareholder or one of the Companies), or any affiliated group
of persons (other than one or more Shareholders or Companies),
of the beneficial ownership of more than 50% of the voting
Stock of one or more of the Companies or more than 50% of the
voting and non-voting Stock of one or more of the Companies,
(2) any merger of one or more of the Companies with or into,
or any consolidation of one of more of the Companies with,
another corporation or other entity (other than a merger or
consolidation in which at least 80% of the equity of the
resulting corporation or entity is owned by the Shareholders
of the merging or consolidating Company or Companies), or (3)
the sale by one or more of the Companies of all or
substantially all of its or their assets (other than sales of
assets between or among the Companies).
13.2 Rights on Termination; Waiver. If this
Agreement is terminated pursuant to Section 13.1 of this
Agreement, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further
liability of any party to the others, provided that: (a) the
obligations of the parties under the Confidentiality
Agreement, the Temporary Access Agreement and Section 13.4 of
this Agreement shall survive any such termination; and (b)
notwithstanding any other provision in this Agreement to the
contrary, each party to this Agreement shall retain any and
all remedies which it may have for breach of contract provided
by Law based on another party's failure to comply with the
terms of this Agreement. If any of the conditions set forth
in Article 7 of this Agreement have not been satisfied,
Chiquita may nevertheless elect to proceed with the consumma-
tion of the transactions contemplated by this Agreement and if
any of the conditions set forth in Article 8 of this Agreement
have not been satisfied, the Companies may nevertheless elect
to proceed with the consummation of the transactions
74<PAGE>
contemplated by this Agreement. Any such election to proceed
shall be evidenced by a certificate signed by the waiving
party which shall include an express waiver of such condition.
13.3 Entire Agreement; Amendment. This Agreement
and the documents referred to in this Agreement and required
to be delivered pursuant to this Agreement constitute the
entire agreement among the parties pertaining to the subject
matter of this Agreement, and supersede the Letter of Intent
and all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other
agreements between the parties in connection with the subject
matter of this Agreement, except as specifically set forth in
this Agreement. No amendment, supplement, modification,
waiver or termination of this Agreement shall be binding
unless executed in writing by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of
this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly
provided.
13.4 Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Chiquita, the
Companies and the Shareholders shall pay the costs, fees and
expenses of their respective counsel, accountants, brokers,
consultants, investment bankers and other experts incident to
the negotiation and preparation of this Agreement and
consummation of the transactions contemplated by this
Agreement.
Notwithstanding the foregoing, Chiquita shall be
responsible for expenses incurred as a result of, filing fees
related to compliance with the Hart-Scott-Rodino Act (15
U.S.C. Section 18A) and the regulations promulgated
thereunder, the expenses of obtaining the Surveys, the Title
Commitment and the Title Policy, the fees of Hutton Nelson &
McDonald LLP in connection with preparing the Closing
Financial Statements, actuarial fees not to exceed $8,000 for
reviews of the Employee Benefit Plans required in order for
Hutton Nelson and McDonald LLP to render its opinion with
respect to the Closing Financial Statements, and the fees of
the Escrow Agent. Except for the fees and expenses described
in the immediately preceding sentence, all other fees,
expenses or transaction costs incurred by or for the benefit
of the Companies on or before the Closing Date, including the
attorneys fees of Dorsey & Whitney LLP and the accountants
fees of Hutton Nelson and McDonald LLP for representation on
or before the Closing Date, shall be recorded in the Closing
Financial Statements. Any such fees, expenses and transaction
costs incurred by or for the benefit of any of the Companies
75<PAGE>
on or before the Closing Date and not recorded in the Closing
Financial Statements shall be considered expenses of the
Shareholders and shall be paid out of the Expenses Funds.
13.5 Indemnification. Chiquita agrees to cause New
Owatonna to agree, effective as of the Closing Date, to
indemnify each and every person who is at the date hereof a
director or officer of OCC against any and all liabilities
arising out of such person's service in such capacity or
capacities prior to the Closing Date to the extent set forth
in Subdivision 2 and Subdivision 3 of Section 521 of the
Minnesota Business Corporation Act, regardless of whether
Section 521 of the Minnesota Business Corporation Act is by
its terms applicable to such director or officer after the
Closing Date.
13.6 Governing Law. This Agreement shall be
construed and interpreted according to the Laws of the State
of Ohio.
13.7 Assignment. (a) Prior to the Closing, this
Agreement may not be assigned by the Companies, except with
the prior written consent of Chiquita.
(b) Prior to the Closing, this Agreement may
not be assigned by Chiquita, except:
(i) with the prior written consent of the
Companies; or
(ii) if the assignee is a wholly-owned
Subsidiary of Chiquita and Chiquita remains fully liable to
the Companies and the Shareholders under this Agreement and
Chiquita delivers a copy of the assignment to the Shareholders
Representatives.
13.7 Notices. All communications or notices
required or permitted by this Agreement shall be in writing
and shall be deemed to have been given at the earlier of the
date when actually delivered to an officer of a party by
personal delivery or telephonic facsimile transmission or when
deposited in the United States mail, certified or registered
mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the
others in accordance with this Section of a change of address:
If to the Companies: Owatonna Canning Company
900 North Cedar Avenue
Owatonna, MN 55060
Attention: Chadwick S. Lange
76<PAGE>
Fax No. 507-451-5607
with a copy to:
Phillip H. Martin, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402-1498
Fax No. 612-340-8827
If to Chiquita: Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, OH 45202
Attention: Steven G. Warshaw
President and Chief Operating Officer
Fax No. 513-784-8856
with a copy to:
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, OH 45202
Attention: Robert W. Olson, Esq.
Senior Vice President, General
Counsel and Secretary
Fax No. 513-784-6691
If to the Shareholders
Representatives: (at the address set forth below his
or her name on this List of
Shareholders attached to this
Agreement as Schedule 1)
13.8 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be
deemed an original, but such counterparts shall together
constitute but one and the same Agreement. The Table of
Contents and Article and Section headings in this Agreement
are inserted for convenience of reference only and shall not
constitute a part hereof.
13.9 Interpretation. Unless the context requires
otherwise, all words used in this Agreement in the singular
number shall extend to and include the plural, all words in
the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all
genders. The phrase "relevant date of reference" shall refer
77<PAGE>
to either the date of this Agreement or the Closing Date, as
the case may be, or any other date as of which an inquiry
regarding the subject matter of the relevant provision of this
Agreement is made.
13.10 Severability. If any provision, clause, or
part of this Agreement, or the application thereof under
certain circumstances, is held invalid, the remainder of this
Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby
unless such invalidity materially impairs the ability of the
parties to consummate the transactions contemplated by this
Agreement.
13.11 Specific Performance. The parties agree that
the assets and business of the Companies and the Partnership
as a going concern constitute unique property. There is no
adequate remedy at Law for the damage which any party might
sustain for failure of the other parties to consummate the
transactions contemplated by this Agreement, and accordingly,
each party shall be entitled, at its option, to the remedy of
specific performance to enforce the consummation of the
transactions described in this Agreement.
13.12 No Reliance. Except for the parties to this
Agreement and any assignees permitted by Section 13.7 of this
Agreement: (a) no Person is entitled to rely on any of the
representations, warranties and agreements of the parties
contained in this Agreement; and (b) the parties assume no
liability to any Person because of any reliance on the repre-
sentations, warranties and agreements of the parties contained
in this Agreement.
78<PAGE>
13.13 Further Assurances. The parties agree (a) to
furnish upon request to each other such further information,
(b) to execute and deliver to each other such other documents,
and (c) to do such other acts and things, all as the other
parties may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in
this Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement and Plan of Merger to be duly executed as of the day
and year first above written.
CHIQUITA BRANDS INTERNATIONAL, INC.
By /s/ Robert W. Olson
Robert W. Olson
Senior Vice President, General
Counsel and Secretary
Attest:
/s/ Donna K. Leonard
Donna K. Leonard,
Assistant Secretary
OWATONNA CANNING COMPANY
By /s/ Chadwick S. Lange
Chadwick S. Lange
President
OLIVIA CANNING COMPANY
By /s/ Chadwick S. Lange
Chadwick S. Lange
President
MIDWEST FOODS, INC.
By /s/ Stephens J. Lange
Stephens J. Lange
President
79<PAGE>
GOODHUE CANNING COMPANY
By /s/ Stephens J. Lange
Stephens J. Lange
President
/s/ Chadwick S. Lange
Chadwick S. Lange*
/s/ Karen E. Lange
Karen E. Lange*
/s/ Richard Jackson
Richard Jackson*
/s/ Ann Jackson
Ann Jackson*
*Solely in their capacities as Shareholder Representatives.
<PAGE>
80<PAGE>
EXHIBIT 3.1
FILED SEPTEMBER 23, 1997
LONNA R. HOOKS
SECRETARY OF STATE
SECOND CERTIFICATE OF AMENDMENT
TO THE
SECOND RESTATED CERTIFICATE OF INCORPORATION
OF
CHIQUITA BRANDS INTERNATIONAL, INC.
To: Secretary of State
State of New Jersey
Pursuant to the provisions of N.J.S. 14A:7-2(2) and 14A:9-1, the
undersigned corporation, Chiquita Brands International, Inc. (the
"Corporation"), executes the following Second Certificate of Amendment to
its Second Restated Certificate of Incorporation (the "Certificate of
Incorporation").
1. The name of the corporation is Chiquita Brands International, Inc.
2. The following resolutions, establishing and designating a new series
of shares and fixing and determining the relative rights and preferences
thereof, were duly adopted by the Executive Committee of the Board of
Directors of the Corporation as of the 5th day of September, 1997,
pursuant to the authority vested in the Board of Directors by the
Certificate of Incorporation, exercised on behalf of the Board of
Directors by the Executive Committee pursuant to resolutions of the Board
of Directors so authorizing it to act:
RESOLVED, that pursuant to the authority expressly vested in the Executive
Committee by resolution of the Board of Directors dated May 16, 1990 and
pursuant to the Corporation's Second Restated Certificate of
Incorporation, as amended, the Executive Committee hereby classifies One
Hundred Thousand (100,000) shares of the Corporation's Voting Cumulative
Preference Stock, without nominal or par value, as a new series designated
"$2.50 Convertible Preference Stock, Series C" (the "Series C Preference
Stock").
RESOLVED, that the terms and conditions of the Series C Preference Stock,
including its rights, preferences, privileges, voting powers,
restrictions, qualifications, limitations, and other terms and conditions
shall be as set forth in Exhibit 1 attached hereto.
RESOLVED, that the Corporation's Second Restated Certificate of
Incorporation, as amended, is further amended as follows:
(a) Section IV of such certificate is amended to add a new Subsection F
titled "Special Provisions Applicable to Series C Preference Stock," in
the form attached hereto as Exhibit 1;
(b) Paragraph (g) of Subsection D of Section IV of such certificate<PAGE>
titled "Special Provisions Applicable to Series A Preferred Stock" is
amended to read in its entirety as follows:
"(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 and on a parity with shares of $3.75 Convertible Preferred Stock,
Series B, and $2.50 Convertible Preference Stock, Series C, in respect
of the preference as to dividends and to payments upon the Liquidation
of the Corporation."
(c) Paragraph (g) of Subsection E of Section IV of such certificate
titled "Special Provisions Applicable to Series B Preferred Stock" is
further amended to read in its entirety as follows:
"(g) Equal Rank.
All shares of Series B Preferred Stock shall be identical in all
respects, and all shares of Series B Preferred Stock shall be of equal
rank and on a parity with shares of $2.875 Non-Voting Cumulative
Preferred Stock, Series A, and $2.50 Convertible Preference Stock,
Series C, in respect of the preference as to dividends and to payments
upon the Liquidation of the Corporation."
and the officers of the Corporation are authorized to execute and file, as
necessary, any documents or certificates with the New Jersey Secretary of
State to effect such amendments.
4. The resolutions set forth in numbered paragraph 2 were adopted by
unanimous written consent of the Executive Committee of the Board of
Directors as of September 5, 1997.
5. The Certificate of Incorporation is further amended so that the
designation and number of shares of each class and series acted upon in
the resolutions, and the relative rights, preferences and limitations of
each such class and series are as stated in Exhibit 1 attached hereto,
which is the same exhibit referred to in the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has signed this Second Certificate of
Amendment to the Certificate of Incorporation this 5th day of September,
1997.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ Robert W. Olson
Robert W. Olson
Senior Vice President, General Counsel and
Secretary
<PAGE>
SUBSECTION F. SPECIAL PROVISIONS APPLICABLE TO SERIES C
PREFERENCE STOCK<PAGE>
There is hereby established a series of the Corporation's Voting
Cumulative Preference Stock, without nominal or par value, which shall be
designated "$2.50 Convertible Preference Stock, Series C" ("Series C
Preference Stock") and shall consist of One Hundred Thousand (100,000)
shares, and no more. The relative, participating, optional and other
special rights and the qualifications, limitations and restrictions of the
Series C Preference Stock shall be as follows:
(a) Dividends.
(i) The holders of outstanding shares of the Series C Preference Stock
shall be entitled to receive (subject to the rights of holders of shares
of (a) $2.875 Non-Voting Cumulative Preferred Stock, Series A, (b) $3.75
Convertible Preferred Stock, Series B, or (c) any other 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 senior to or on a parity
with the Series C Preference 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
$0.6250 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 "Series C Preferential
Dividend Payment Date") commencing December 7, 1997; provided, however,
that the Series C Preferential Dividend payable on December 7, 1997 (the
"Initial Series C Preferential Dividend") with respect to any share of
Series C Preference Stock outstanding on the record date for the Initial
Series C Preferential Dividend shall be computed in accordance with
Subsection F(a)(iv). If December 7, 1997 or any other Series C
Preferential Dividend Payment Date shall not be a business day, then the
Series C 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 Series C
Preferential Dividend Payment Date, as shall be fixed by the Board of
Directors. Dividends on the Series C Preference Stock shall accrue from
June 30, 1997, and dividends accrued as of each Series C Preferential
Dividend Payment Date shall accumulate to the extent not paid on such
date. Accumulated unpaid dividends shall not bear interest. All payments
of Series C Preferential Dividends to holders of Series C Preference Stock
shall be rounded up to the nearest whole cent.
(ii) So long as any shares of Series C Preference 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 C Preference 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 C Preference Stock as to
3<PAGE>
dividends,
(B) nor shall any Capital Stock nor any other stock of the
Corporation ranking junior to or on a parity with the Series C
Preference 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 C Preference
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 C Preference Stock), or convert in part, but
not in whole, into shares of Capital Stock at the option of the
Corporation pursuant to Subsection F(c)(ii) outstanding shares of Series
C Preference Stock,
unless, in each case, the full Series C Preferential Dividends, if any,
accumulated on all outstanding shares of the Series C Preference Stock
through the most recent Series C 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 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 and paid per share on the Series C Preference 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 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 accumulated unpaid dividend
due with respect to shares of Series C Preference 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 four 90-day quarters or 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 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
4<PAGE>
of shares of any class or series of preferred or preference stock which
the Corporation may issue in the future 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 $50 per share (appropriately adjusted to
reflect stock splits, stock dividends, reorganizations, consolidations and
similar changes hereafter effected), plus an amount equal to all
accumulated unpaid Series C Preferential Dividends thereon to the date of
Liquidation, and no more. If upon any Liquidation the assets of the
Corporation are insufficient to pay in full 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, 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 the extent not distributed, 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 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 F(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 C Preference Stock
remains outstanding and holders of Series C Preference 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 C
Preference Stock (at the option of the Corporation pursuant to clause (ii)
of this Subsection F(c) or at the option of the holder pursuant to clause
(iii) of this Subsection F(c), whichever is greater) immediately prior to
the effectiveness of the Merger or Consolidation, each outstanding share
of Series C Preference Stock shall automatically convert into the maximum
number of shares of Capital Stock which such holders would have received
5<PAGE>
(other than in payment of accumulated unpaid dividends) upon conversion of
their shares of Series C Preference Stock (at the option of the
Corporation pursuant to clause (ii) of this Subsection F(c) or at the
option of the holder pursuant to clause (iii) of this Subsection F(c),
whichever is greater), plus the right to receive an amount of cash equal
to the accumulated unpaid dividends on such share of Series C Preference
Stock to and including the immediately preceding Series C Preferential
Dividend Payment Date.
(ii) Conversion at the Option of the Corporation. At any time and from
time to time on and after June 30, 2000, and upon notice given as provided
herein, the Corporation may convert, in whole or in part, the outstanding
shares of Series C Preference Stock. On the date fixed for conversion,
each outstanding share of Series C Preference Stock to be converted
pursuant to this Subsection F(c)(ii) shall convert into:
(A) the lesser of (x) that number of shares of Capital Stock as shall
equal the applicable amount set forth in the table below divided by the
Current Market Price (as defined in Subsection F(c)(viii)(C)) per share
of Capital Stock on the date of conversion:
<TABLE>
<CAPTION>
If Converted During Current Market Value
The 12-month Period of Common Stock
Beginning June 30: To Be Issued
<S> <C>
2000 $51.50
2001 50.75
2002 and thereafter 50.00
</TABLE>
or (y) 10 shares of Capital Stock, subject to adjustment as provided
below (the "Maximum Conversion Rate"); plus
(B) the right to receive an amount of cash equal to the accumulated
unpaid dividends on such share of Series C Preference Stock to and
including the immediately preceding Series C Preferential Dividend
Payment Date; plus
(C) the right to receive an amount of cash equal to dividends accrued
since the immediately preceding Series C Preferential Dividend Payment
Date to and including the effective date of conversion of the shares,
calculated in accordance with Subsection F(a)(iv); provided, however,
that no amount shall be due and payable pursuant to this clause (C) if
the conversion date follows a record date for the payment of a Series C
Preferential Dividend and precedes the next succeeding Series C
Preferential Dividend Payment Date (which date shall be considered the
immediately preceding Series C Preferential Dividend Payment Date for
purposes of Subsection F(c)(ii)(B)).
The Maximum Conversion Rate shall be proportionately adjusted when, as and
if the Conversion Rate (as defined in Subsection F(c)(iv)) shall be
adjusted pursuant to Subsection F(c)(iv).
6<PAGE>
(iii) Conversion at the Option of the Holder. At any time and from
time to time after the date of issuance of Series C Preference Stock, each
holder of Series C Preference Stock shall have the right to convert, in
whole or in part, the outstanding shares of Series C Preference Stock;
provided, however, that if the shares of Series C Preference 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 C Preference 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 date
upon which the certificates representing shares of Series C Preference
Stock are surrendered for conversion, plus the right to receive an amount
of cash equal to the accumulated unpaid dividends on such share of Series
C Preference Stock to be converted to and including the immediately
preceding Series C Preferential Dividend Payment Date. In order to
convert shares of Series C Preference 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 C Preference Stock surrendered for conversion after the
close of business on a record date for payment of Series C Preferential
Dividends and before 9:00 A.M., New York time, on the next succeeding
Series C Preferential Dividend Payment Date must be accompanied by payment
of an amount equal to the Series C Preferential Dividend thereon which is
to be paid on such Series C Preferential Dividend Payment Date. Shares of
Series C Preference 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 F(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 C Preference Stock into shares of Capital Stock
pursuant to Subsection F(c)(iii) shall be initially 2.922 shares of
Capital Stock for each share of Series C Preference Stock; provided,
however, that such Conversion Rate shall be subject to adjustment from
time to time as provided below in this Subsection F(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
7<PAGE>
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 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 the maximum number of shares of Capital
Stock into which such share of Series C Preference Stock shall then be
convertible at the option of the Corporation pursuant to Subsection
F(c)(ii) or at the option of the holder pursuant to Subsection
F(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 issue rights or warrants to all holders of
its outstanding shares of Capital Stock entitling them to subscribe for
or purchase shares of Capital Stock at a price per share less than the
Current Market Price on the record date fixed for determination of
stockholders entitled to receive such rights or warrants (in each case
other than instances when such rights or warrants are also issued to
holders of shares of Series C Preference Stock in which such holders
shall receive, with respect to each share of Series C Preference Stock,
the same rights or warrants as shall be issued with respect to the
maximum number of shares of Capital Stock into which each share of Series
C Preference Stock shall then be convertible at the option of the
Corporation pursuant to Subsection F(c)(ii) or at the option of the
holder pursuant to Subsection F(c)(iii), whichever is greater), then the
Conversion Rate shall be adjusted by multiplying the Conversion Rate in
8<PAGE>
effect at the opening of business on the date after such record date by a
fraction, of which the numerator shall be the number of shares of Capital
Stock outstanding at the close of business on such record date plus the
total number of additional shares of Capital Stock issuable upon exercise
of such rights or warrants, and of which the denominator shall be the
number of shares of Capital Stock outstanding on the close of business on
such record date plus the number of shares that the aggregate exercise
price of the total number of rights or warrants so issued would purchase
at such Current Market Price. Such adjustment shall become effective
immediately after the opening of business on the day following the record
date fixed for determination of stockholders entitled to receive such
rights or warrants. To the extent that shares of Capital Stock are not
delivered after the expiration or termination of such rights or warrants,
the Conversion Rate shall be readjusted to the Conversion Rate that would
then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number
of shares of Capital Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such
date fixed for the determination of stockholders entitled to receive such
rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase
shares of Capital Stock at less than such Current Market Price, and in
determining the aggregate exercise price of such rights or warrants,
there shall be taken into account any consideration received for such
rights or warrants, the value of such consideration, if other than cash,
to be determined by the Board of Directors.
(C) If the Corporation shall pay a dividend or make a distribution to
all holders of its Capital Stock of evidences of its indebtedness or
other assets (including securities of the Corporation but excluding
dividends or other distributions paid exclusively in cash, and excluding
any portion of distributions and dividends to the extent referred to in
clauses (A) or (B) above), (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 evidences of indebtedness or other
assets as shall be paid or distributed with respect to the maximum number
of shares of Capital Stock into which each share of Series C Preference
Stock shall then be convertible at the option of the Corporation pursuant
to Subsection F(c)(ii) or at the option of the holder pursuant to
Subsection F(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 applicable to one share of Capital Stock. Such adjustment
shall become effective on the opening of business on the business day
9<PAGE>
next following the record date for the determination of shareholders
entitled to receive such distribution.
(D) If the Corporation shall pay a dividend or make a distribution
consisting exclusively of cash (excluding any cash portion of
distributions referred to in Subsection F(c)(iv)(C)) (collectively, "All-
Cash Distributions") to all holders of Capital Stock, then, to the
extent such All-Cash Distribution, combined with (A) all other All-Cash
Distributions made within the preceding 12 months in respect of which no
adjustment has been made, plus (B) any cash and the fair market value of
other consideration payable in respect of any Corporation Tender Offer
(as defined in Subsection F(c)(viii)) concluded within the preceding 12
months in respect of which no adjustment has been made, exceed ten
percent (10%) of the product of (x) the Current Market Price of the
Capital Stock, times (y) the number of issued and outstanding shares of
Capital Stock (assuming the conversion into Capital Stock of each
outstanding security or debt instrument which is by its terms convertible
into Capital Stock at the option of the holder, without the payment of
additional consideration therefor, regardless of whether or not such
security or debt instrument shall be so convertible on such date), each
as measured on the record date for such All-Cash Distribution (such
excess being herein called the "Excess Distribution"), then the
Conversion Rate shall be adjusted by multiplying the Conversion Rate in
effect immediately prior to the date of such All-Cash Distribution by a
fraction, of which the numerator shall be the Current Market Price of the
Capital Stock, and of which the denominator shall be the Current Market
Price of the Capital Stock less the quotient of the Excess Distribution
divided by the number of issued and outstanding shares of Capital Stock
(measured as described in clause "(y)" above), each as measured on the
record date. 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 All-Cash
Distribution (provided, however, that no such adjustment shall be made in
respect of any All-Cash Distribution described in this Subsection which
was also paid or made to holders of shares of Series C Preference Stock
in which such holders shall receive, with respect to each share of Series
C Preference Stock, the same All-Cash Distribution as shall be paid or
made with respect to the maximum number of shares of Capital Stock into
which each share of Series C Preference Stock shall be convertible at the
option of the Corporation pursuant to Subsection F(c)(ii) or at the
option of the holder pursuant to Subsection F(c)(iii), whichever is
greater).
(E) If the Corporation shall make payment of any cash or other
consideration payable in respect of any Corporation Tender Offer, then,
to the extent such Corporation Tender Offer involves payment of an
aggregate consideration that combined with (A) All-Cash Distributions
made within the preceding 12 months in respect of which no adjustment has
been made, plus (B) any cash and the fair market value of other
consideration payable in respect of any Corporation Tender Offer
concluded within the preceding 12 months in respect of which no
adjustment has been made, exceeds ten percent (10%) of the product of (x)
10<PAGE>
the Current Market Price of the Capital Stock, times (y) the number of
issued and outstanding shares of Capital Stock (assuming the conversion
into Capital Stock of each outstanding security or debt instrument which
is by its terms convertible into Capital Stock at the option of the
holder, without the payment of additional consideration therefor,
regardless of whether or not such security or debt instrument shall be so
convertible on such date), each as measured on the expiration date of
such Corporation Tender Offer (such excess being herein called the
"Excess Consideration"), then the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior to the
expiration date of such Corporation Tender Offer by a fraction, of which
the numerator shall be the Current Market Price of the Capital Stock, and
of which the denominator shall be the Current Market Price of the Capital
Stock less the quotient of the Excess Consideration divided by the number
of issued and outstanding shares of Capital Stock (measured as described
in clause "(y)" above), each as measured on such expiration date
(provided, however, that no such adjustment shall be made in respect of
any Corporation Tender Offer described in this Subsection which was also
made to holders of shares of Series C Preference Stock in which such
holders shall receive, with respect to each share of Series C Preference
Stock, the same payment in respect of a Corporation Tender Offer with
respect to the maximum number of shares of Capital Stock into which each
share of Series C Preference Stock shall then be convertible at the
option of the Corporation pursuant to Subsection F(c)(ii) or at the
option of the holder pursuant to Subsection F(c)(iii), whichever is
greater).
(F) From time to time, to the extent permitted by law, the Corporation
may make temporary upward adjustments to the Conversion Rate by any
amount for any period of at least 20 days, in which case the Corporation
shall give not less than 15 nor more than 60 days' notice of such
adjustment, if the Board of Directors has made a determination that such
adjustment would be in the best interests of the Corporation, which
determination shall be conclusive.
(G) Anything in this Subsection F(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
F(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 C Preference
Stock, on the other hand, as such rights are set forth in this
Certificate of Incorporation.
11<PAGE>
(H) In any case in which this Subsection F(c)(iv) shall require that an
adjustment as a result of any event become effective at the opening of
business on the business day next following a record date, and the date
fixed for conversion pursuant to Subsection F(c)(i), (ii) or (iii) occurs
after such record date, but before the occurrence of such event, the
Corporation may in its sole discretion elect to defer the following until
after the occurrence of such event:
(1) issuing to the holder of any shares of the Series C Preference
Stock surrendered for conversion the additional shares of Capital Stock
issuable upon such conversion over and above the shares of Capital Stock
issuable upon such conversion on the basis of the 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 F(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 F(c)(iv) and the adjusted Maximum Conversion Rate in
accordance with Subsection F(c)(ii) 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 and the Maximum Conversion Rate and 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 Conversion Rate and the Maximum
Conversion Rate have been adjusted, the facts requiring such adjustment
and upon which such adjustment is based and setting forth the adjusted
Conversion Rate and the Maximum Conversion Rate to the holders of record
of the outstanding shares of the Series C Preference Stock at or prior to
the time the Corporation mails a financial statement to its shareholders
covering the quarterly fiscal period during which the facts requiring
such adjustment occurred, but in any event within 120 days after a fourth
quarter/fiscal year-end period or 60 days after the end of any other
quarterly fiscal 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, 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 C
Preference 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.
12<PAGE>
(vi) No Fractional Shares. No fractional shares of Capital Stock shall
be issued upon conversion of shares of 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 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 C Preference Stock which
shall have been converted into shares of Capital Stock or which shall have
been purchased or otherwise acquired by the Corporation may not be
reissued as Series C Preference Stock and shall assume the status of
authorized but unissued shares of Non-Voting Cumulative Preference Stock
undesignated as to series.
(viii) Definitions. As used in this Subsection F:
(A) The term "business day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of New York
or Ohio are authorized or obligated by law or executive order to close.
(B) The term "Corporation Tender Offer" shall mean a tender offer (as
such term has been defined by the applicable rules, regulations and
interpretations of the Securities and Exchange Commission and by courts
interpreting the relevant provisions of the Securities Exchange Act of
1934, as amended) by the Corporation and/or any of its subsidiaries for
Capital Stock.
(C) The term "Current Market Price" per share of Capital Stock on any
date shall mean the average of the daily Market Prices for the fifteen
consecutive Trading Dates ending on the second Trading Date immediately
preceding such date (appropriately adjusted to take into account the
occurrence during such fifteen-day period, or following such fifteen-day
period and prior to such date, of any event that results in an adjustment
of the Conversion Rate).
(D) The term "Market Price" for any day shall mean (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
13<PAGE>
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.
(E) 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 date of
mailing of such notice to the holders of Series C Preference Stock.
(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 Nasdaq
Stock Market 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 C Preference Stock to
holders of record of the Series C Preference Stock to be converted by
mailing a notice of conversion 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 C Preference Stock
14<PAGE>
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 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,
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 C Preference 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 F(c) 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
F(c) upon the occurrence of such 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 F(c)(ii)(C),
if applicable, on the shares to be converted as required by this
Subsection F(c), in trust for the account of the holders of the shares to
be converted, 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 of Series C Preference
Stock represented by any such surrendered certificate are converted, a new
certificate shall be issued at the expense of the Corporation representing
15<PAGE>
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 after the effective date
of the conversion, dividends with respect to the shares of Series C
Preference Stock subject to conversion shall cease to accrue after such
date 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 C Preference Stock so to be
converted 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. No holder of a certificate of
shares of Series C Preference 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 C
Preference Stock. 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, 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 C Preference Stock.
(x) Corporation's Option to Pay Accumulated Unpaid Dividends in Common
Stock Upon Conversion on or after June 30, 2000. Notwithstanding
anything to the contrary contained herein, if the effective date of any
conversion is on or after June 30, 2000 and if on such date there are
accumulated unpaid dividends with respect to the Series C Preference 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 F(c)(ii)(C), 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.
16<PAGE>
(xi) No Interest on Accumulated Unpaid Dividends. Any payment with
respect to accumulated unpaid dividends upon conversion of shares of
Series C Preference Stock, whether such payment is made in cash or,
pursuant to Subsection F(c)(x), in shares of Capital Stock, shall not
provide for any interest on such accumulated unpaid dividends.
(d) Voting Rights.
(i) Except as otherwise provided in Subsection F(d)(ii), (iii) or (iv)
of this Certificate of Incorporation or by applicable law, each
outstanding share of Series C Preference Stock is entitled to one vote on
all matters submitted to a vote of shareholders of the Corporation.
Except as otherwise provided in Subsection F(d)(ii), (iii) or (iv) of this
Certificate of Incorporation or by applicable law, the Series C Preference
Stock and the Capital Stock shall vote together as a single class on all
matters submitted to a vote of shareholders of the Corporation.
(ii) In addition to the voting rights set forth in Subsection F(d)(i),
whenever, at any time, Series C Preferential Dividends payable on the
Series C Preference Stock shall be in arrears with respect to six (6) or
more Series C Preferential Dividend Payment Dates, whether or not
consecutive, the holders of shares of Series C Preference 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 C Preference 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 F(d). 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 (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 and upon which
like voting rights have been conferred and are exercisable) as set forth
herein. The right of the holders of shares of Series C Preference 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 C Preference Stock shall have been paid or deposited for payment in
full, 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, in trust for the account of the holders of the shares of
Series C Preference Stock on which dividends are payable, with irrevocable
instructions and authority to such bank or trust company that such cash
(and shares, if applicable) be delivered to such holders, 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
17<PAGE>
character above mentioned.
(iii) 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 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 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 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 C Preference 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 C Preference 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 F(d)(iii)
shall have expired, the number of directors shall become such number as
may be provided for in the By-Laws, or resolution of the Board of
Directors thereunder, irrespective of any increase made pursuant to the
provisions of this Subsection F(d)(iii).
(iv) While any Series C 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 votes entitled to be
exercised by holders of all affected series of Series Preference Stock
then outstanding (provided that each other series shall have voting rights
similar or identical to the voting rights set forth in this Subsection
F(d)(iv)): (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 C Preference Stock (hereinafter in this Subsection
F(d)(iv) referred to as "Senior Stock"); provided, however, that no such
approval of holders of Series C Preference Stock (or other affected series
of Series Preference 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
18<PAGE>
manner that would adversely affect the terms of Series C Preference Stock.
(v) With respect to any matter upon which holders of Series C Preference
Stock shall be entitled to vote pursuant to Subsection F(d)(ii), (iii) or
(iv), 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 C Preference Stock held by such holder shall then be
convertible at the option of the Corporation pursuant to Subsection
F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii),
whichever is greater, on the record date for determining the shareholders
of the Corporation entitled to vote.
(e) No Increase in Shares.
The number of shares of Series C Preference Stock may not be increased.
(f) Exclusive Rights.
Each holder of shares of Series C Preference Stock shall hold such
Series C Preference Stock subject to the right of the Corporation to
effect a conversion in accordance with the provisions of Subsection F(c)
hereof and, in the event of such a conversion, shall have the right to
receive, as full payment, discharge and satisfaction of the obligations of
the Corporation with respect to such Series C Preference Stock, only those
shares of Capital Stock and cash, if applicable, delivered as provided in
accordance with Subsection F(c) hereof.
(g) Equal Rank.
All shares of Series C Preference Stock shall be identical in all
respects, and all shares of Series C Preference Stock shall be of equal
rank and on a parity with shares of $2.875 Non-Voting Cumulative Preferred
Stock, Series A, and $3.75 Convertible Preferred Stock, Series B, in
respect of the preference as to dividends and to payments upon the
Liquidation of the Corporation.
19<PAGE>
EXHIBIT 3.2
FILED SEPTEMBER 24, 1997
LONNA R. HOOKS
SECRETARY OF STATE
CERTIFICATE OF MERGER
OF
OWATONNA CANNING COMPANY
OLIVIA CANNING COMPANY
MIDWEST FOODS, INC.
AND
GOODHUE CANNING COMPANY
together the "Constituent Corporations"
INTO
CHIQUITA BRANDS INTERNATIONAL, INC.
the "Surviving Corporation"
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of Section 14A:10-7 Corporations,
General, of the New Jersey Statutes, the undersigned corporations hereby
execute the following Certificate of Merger.
ARTICLE ONE
The names of the corporations proposing to merge and the names of
the states under the laws of which such corporations are organized, are as
follows:
Name of Corporation
State of Incorporation
Owatonna Canning Company
Minnesota
Olivia Canning Company
Minnesota
Midwest Foods, Inc. Minnesota
Goodhue Canning Company<PAGE>
Minnesota
Chiquita Brands International, Inc. New Jersey
ARTICLE TWO
The laws of Minnesota, the state under which the Constituent
Corporations are organized, permit such merger and the applicable
provisions of the laws of said jurisdiction under which the Constituent
Corporations are organized have been, or upon compliance with filing and
recording requirements will have been, complied with.
ARTICLE THREE
The name of the surviving corporation shall be Chiquita Brands
International, Inc. and it shall be governed by the laws of the State of
New Jersey.
The aggregate number of shares which the Surviving 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 address of the Surviving Corporation's registered office in the
State of New Jersey is 820 Bear Tavern Road, West Trenton, County of
Mercer, New Jersey 08628 and the name of the registered agent at such
address is The Corporation Trust Company.
ARTICLE FOUR
The Plan of Merger, attached as Exhibit A, was approved by the
2<PAGE>
directors of the undersigned Surviving Corporation in the manner
prescribed by the New Jersey Business Corporation Act, and no vote of the
shareholders of the Surviving Corporation was required because of the
applicability of the provision of Section 14A:10-3(4) of the New Jersey
Business Corporation Act. The merger was approved by the shareholders of
the undersigned Constituent Corporations in the manner prescribed by the
laws of the State of Minnesota on September 23, 1997.
ARTICLE FIVE
As to each corporation whose shareholders are entitled to vote on
the merger, the number of shares entitled to vote thereon, and if the
shares of any class or series are entitled to vote thereon as a class, the
designation and number of shares of each such class or series, is as
follows:
<TABLE>
<CAPTION>
Designation of
Total Number Class or Series
of Shares Entitled To Vote Number of Shares
Entitled To as a Class of Such Class or
Name of Corporation Vote (if any) Series (if any)
<S> <C> <C> <C>
Owatonna Canning Company 4,500 Class A Stock 450
Class B Stock 4,050
Olivia Canning Company 121 Capital Stock 121
Midwest Foods, Inc. 1,500 Common Shares 1,000
Participating
Non-Voting Shares 500
Goodhue Canning Company 140 Common Shares 140
</TABLE>
ARTICLE SIX
3<PAGE>
As to each corporation whose shareholders are entitled to vote, the
number of shares that voted for and against the merger, respectively, and
the number of shares of any class or series entitled to vote as a class that
voted for and against the merger are:
<TABLE>
<CAPTION>
Total Shares
Total Shares Voted Shares Shares
Voted For Against Class Voted Voted
Name of Corporation For Against
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Owatonna Canning Company 4,500 0 Class A Stock 450 0
Class B Stock 4,050 0
Olivia Canning Company 121 0 Capital Stock 121 0
Midwest Foods, Inc. 1,500 0 Common 1,000 0
Shares
Participating
Non-Voting
Shares 500 0
Goodhue Canning Company 140 0 Common 140 0
Shares
</TABLE>
ARTICLE SEVEN
The effective date of this Certificate shall
be the date of filing hereof.
IN WITNESS WHEREOF each of the undersigned
corporations has caused this Certificate of Merger to be executed
in its name as of the 24th day of September, 1997.
CHIQUITA BRANDS INTERNATIONAL, INC.
By: /s/ Robert W. Olson
Title: Robert W. Olson
Senior Vice President, General
Counsel and Secretary
4<PAGE>
OWATONNA CANNING COMPANY
By: /s/ Chadwick S. Lange
Title: President
OLIVIA CANNING COMPANY
By: /s/ Chadwick S. Lange
Title: President
MIDWEST FOODS, INC.
By: /s/ Stephens J. Lange
Title: President
GOODHUE CANNING COMPANY
By: /s/ Stephens J. Lange
Title: President
<PAGE>
SCHEDULE A
PLAN OF MERGER
OF
OWATONNA CANNING COMPANY
OLIVIA CANNING COMPANY
MIDWEST FOODS, INC.
GOODHUE CANNING COMPANY
INTO
CHIQUITA BRANDS INTERNATIONAL, INC.
FIRST: (a) The name of each constituent corporation is as
follows:
1. Owatonna Canning Company, a corporation organized under
the laws of the State of Minnesota ("Owatonna");
2. Olivia Canning Company, a corporation organized under
the laws of Minnesota ("Olivia");
3. MidWest Foods, Inc., a corporation organized under the
laws of Minnesota ("MidWest");
4. Goodhue Canning Company, a corporation organized under
5<PAGE>
the laws of Minnesota ("Goodhue" and, together with
Owatonna, Olivia and MidWest, the "Owatonna
Companies"); and
5. Chiquita Brands International, Inc., a corporation
organized under the laws of the State of New Jersey.
(b) The name of the surviving corporation is Chiquita
Brands International, Inc., a New Jersey corporation, and
following the merger its name shall be Chiquita Brands
International, Inc. (hereinafter sometimes referred to as
"Chiquita" or as the "Surviving Corporation").
SECOND: The terms and conditions of the merger, including
the manner and basis of converting the shares of the Owatonna
Companies into shares of the Surviving Corporation, are as
follows:
1. Effective Date. The effective date of the merger (the
"Effective Date") shall be upon the later of the filing of the
Certificate of Merger with the Secretary of State of the State of
New Jersey and the filing of Articles of Merger with the
Secretary of State of the State of Minnesota.
2. Conversion of Shares. As of the Effective Date, by
virtue of the Merger and without any action on the part of any
Shareholder of the Surviving Corporation or any of the Owatonna
Companies, except as provided below, the shares of stock of each
of the Owatonna Companies issued and outstanding immediately
prior to the Effective Date shall be converted into Capital
Stock, par value $.33 per share ("Capital Stock"), of the
Surviving Corporation or $2.50 Convertible Preference Stock,<PAGE>
Series C ("Series C Preference Stock") of the Surviving
Corporation (or a combination thereof). The number of shares of
Capital Stock and\or Series C Preference Stock into which each
share of stock of the Owatonna Companies shall be converted shall
be determined in accordance with the election of each Shareholder
of each of the Owatonna Companies, which election shall be made
in accordance with that certain Agreement and Plan of Merger (the
"Agreement"), dated as of August 22, 1997, by and among Chiquita
Brands International, Inc., Owatonna Canning Company, Olivia
Canning Company, MidWest Foods, Inc. and Goodhue Canning Company
and the Shareholder Representatives (as defined in the
Agreement). Notwithstanding the foregoing, any shares of its own
stock held in treasury of any of the Owatonna Companies and any
shares of stock of Olivia owned by Owatonna shall be canceled and
retired as of the Effective Date.
3. Governing Documents; Directors and Officers. The
Certificate of Incorporation and By-Laws of the Surviving
Corporation as in effect immediately prior to the Effective Date
shall from and after the Effective Date be the Certificate of
Incorporation and By-Laws of the Surviving Corporation. All
persons who are directors and officers of the Surviving
Corporation immediately prior to the Effective Date shall be the
directors and officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and
the By-Laws of the Surviving Corporation.
4. Succession. On the Effective Date, the separate
7<PAGE>
corporate existence of the Owatonna Companies shall cease, the
Owatonna Companies shall be merged into the Surviving
Corporation, and the Surviving Corporation, without further
action, shall succeed to and shall possess all the rights,
privileges, powers and franchises of the Owatonna Companies, and
all property, real, personal and mixed, and all debts due to the
Owatonna Companies on whatever account, and all other things in
action or belonging to the Owatonna Companies, shall be vested in
the Surviving Corporation; and all property, rights, privileges,
powers and franchises of the Owatonna Companies and all and every
other interest of the Owatonna Companies shall be thereafter
effectively the property of the Surviving Corporation as they
were of the Owatonna Companies; and the title to any real estate
whether by deed or otherwise, under the laws of any jurisdiction,
vested in the Owatonna Companies shall not revert or be in any
way impaired by reason of the merger in accordance with the laws
of the States of Minnesota or New Jersey providing therefor; but
all rights of creditors and all liens upon any property of the
Owatonna Companies shall be preserved unimpaired, and all debts,
liabilities and duties of the Owatonna Companies shall
thenceforth attach to the Surviving Corporation. All corporate
acts of the Owatonna Companies which were valid and effective
immediately prior to the Effective Date shall be as effective and
binding on the Surviving Company as the same were with respect to
the Owatonna Companies.
5. Further Assurances. At any time, or from time to time,
8<PAGE>
after the Effective Date, the last acting officers of the
Owatonna Companies or the officers of the Surviving Corporation
may, in the name of the Owatonna Companies, execute and deliver
all such proper deeds, assignments and other instruments and take
or cause to be taken all such further or other action as the
Surviving Corporation may deem necessary or desirable in order to
vest, perfect or confirm the Surviving Corporation's title to and
possession of all of the property, rights, privileges, powers,
and franchises of the Owatonna Companies and otherwise to carry
out the purposes of this Plan of Merger.
9<PAGE>
EXHIBIT 3.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of this 24th day of September, 1997 between CHIQUITA BRANDS
INTERNATIONAL, INC., a New Jersey corporation ("Chiquita"), and Ann
Jackson and Richard Jackson, acting in their capacity as shareholders
representatives ("Shareholders Representatives") for the individuals
listed on the attached Exhibit A ("Shareholders").
Premises:
The Shareholders are entitled to receive shares (the "Common
Shares") of Chiquita's issued and outstanding capital stock, par value
thirty-three cents ($.33) per share ("Common Stock") and shares (the
"Preferred Shares") of Chiquita's issued and outstanding $2.50 Convertible
Preferred Stock, Series C (liquidation preference of $50.00 per share)
("Preferred Stock")in connection with the merger of each of Owatonna
Canning Company, Olivia Canning Company, Midwest Foods, Inc. and Goodhue
Canning Company (collectively the "Companies") into Chiquita.
In connection with the issuance of the Common Shares and the
Preferred Shares to the Shareholders, Chiquita agreed to provide the
Shareholders with certain rights to require Chiquita to register with the
Securities and Exchange Commission (the "Commission") and applicable state
securities law agencies the sale by the Shareholders of Common Shares and
shares of Common Stock into which the Preferred Shares are converted
(collectively the "Registrable Shares").
Pursuant to Section 3.1 of the Agreement and Plan of Merger between
Chiquita and the Companies dated as of August 22, 1997 ("Plan of Merger"),
Ann Jackson and Richard Jackson have been designated the representatives
of the Shareholders for the purposes of this Agreement. Section 3.1 of
the Plan of Merger provides for and describes the authority, rights and
responsibilities of the Shareholders Representatives and gives the
Shareholders Representatives the authority to execute this Agreement on
behalf of each Shareholder.
Based on these premises, the parties agree as follows:
Agreement:
1. Demand Registration Rights.
1.1.On one occasion, after completion of the process set forth in
Section 2 to determine which Registrable Shares are to be included in the
request and upon the written request of the Shareholders Representatives
given no later than 45 days before the first anniversary of the Closing
Date, as that term is defined in the Plan of Merger, Chiquita will prepare
and file with the Commission and any state securities law agencies as the
Shareholders Representatives may reasonably request, promptly after such
request and in no case more than thirty (30) days after receipt of such
1<PAGE>
request, and thereafter use its best efforts to cause to become effective
a registration statement (the "Registration Statement") on Form S-3 (or
such other form then available for such registration) under and complying
with the Securities Act of 1933, as amended (the "Act"), covering such
number of Registrable Shares as shall be specified in the Shareholders
Representatives' request; provided, however, that such request shall not
include more than 500,000 or less than 200,000 Registrable Shares,
appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes hereafter effected.
The right to request the preparation and filing of the Registration
Statement is limited to one (1) request to Chiquita by the Shareholders
Representatives on behalf of all of the Shareholders collectively, whether
or not all the Shareholders participate in the request. For the purposes
of this Agreement, all Shareholders whose Registrable Shares are covered
by the Registration Statement shall be referred to as "Selling
Shareholders" and all such Registrable Shares shall be referred to as
"Registration Shares".
1.2.Chiquita does not guarantee or provide any assurance that the
Selling Shareholders will be able to sell any Registration Shares nor, if
sold, at what price they may be sold. Moreover, Chiquita has no
obligation to provide an underwriter to assist the Selling Shareholders in
selling Registration Shares. However, Chiquita will cooperate with a
managing underwriter engaged by the Shareholders Representatives or the
Selling Shareholders for the purpose of selling the Registration Shares,
provided the managing underwriter is a nationally recognized investment
banking firm and is consented to by Chiquita, which consent will not be
unreasonably withheld.
1.3.Chiquita shall be entitled to postpone the filing with the
Commission of the Registration Statement, or any pre-effective amendment
thereto, or a request for the acceleration of the effectiveness of the
Registration Statement for a period to be specified by Chiquita in a
notice to the Shareholders Representatives if: (a)(i) in the sole judgment
of Chiquita, based on advice of counsel, it would be appropriate to
disclose in the prospectus forming a part of the Registration Statement
information not otherwise then required by law to be publicly disclosed,
and (ii) in Chiquita's sole judgment, such disclosure or the filing of the
Registration Statement, or any amendment thereto, is likely to interfere
with any existing or prospective business situation, transaction or
negotiation of Chiquita or any of its subsidiaries or affiliates, or (b)
Chiquita or any of its subsidiaries would be required, as a result of the
filing of the Registration Statement, to prepare any financial statements
other than those which it or they customarily prepare in the ordinary
course of its or their business, or (c) in Chiquita's sole judgment, it
would be detrimental to a pending or proposed material equity financing by
Chiquita to proceed with the filing of the Registration Statement;
provided, that the duration of all such postponements shall not exceed, in
the aggregate, ninety (90) days; and provided further, that Chiquita shall
promptly make such filing as soon as the conditions which permit it to
postpone such filing no longer exist (or the 90-day aggregate postponement
period shall have otherwise expired); and provided further, that in the
event of any such postponement, the requesting Shareholders shall have the
right to withdraw their request for registration at any time prior to five<PAGE>
business days before the end of the postponement period specified in
Chiquita's notice to the Shareholders Representatives, and such withdrawn
request shall not be considered the request for registration provided for
under Section 1.1 hereof.
1.4. If the method of distribution of the Registration Shares
proposed to be used is not reflected in the prospectus (including any
supplements thereto) forming a part of the Registration Statement, the
Shareholders Representatives shall promptly provide Chiquita with a
description of such method of distribution contemplated by the Selling
Shareholders, and Chiquita shall file any and all amendments and
supplements necessary to include such description in the Registration
Statement.
2. Covenants of the Shareholders.
2.1If a Shareholder wishes the Shareholders Representatives to
request a registration as provided for under Section 1.1 hereof, that
Shareholder shall notify the Shareholders Representatives who shall
promptly give notice of such request to Chiquita and to all Shareholders
at the last address known to such Shareholders Representatives. No later
than 15 days after the Shareholders Representatives send such notice to
Chiquita and the Shareholders, each Shareholder who desires to sell
Registrable Shares pursuant to such request shall notify the Shareholders
Representative in writing indicating the number of Registrable Shares such
Shareholder desires to sell. If the aggregate number of Registrable
Shares requested to be registered exceeds the limit provided for in
Section 1.1 hereof, the Shareholders Representatives shall allocate the
number of Registrable Shares to be sold on a basis proportionate to the
number of Registrable Shares owned by the requesting Shareholders on the
date of the notice (the "Notice Date") from the Shareholders
Representatives; provided, that, in the event the Adjustment Date (as
defined in the Plan of Merger) occurs after the Notice Date and before the
effective date of the Registration Statement, such allocation shall be on
a basis proportionate to the number of Registrable Shares owned by the
requesting Shareholders on the date immediately following the Adjustment
Date.
2.2.The request for registration made by the Shareholders
Representatives pursuant to Section 1.1 shall specify the number of
Registrable Shares included in the request, express the requesting
Shareholders' present intention to offer such Registrable Shares for
distribution and contain an undertaking by the Shareholders
Representatives on behalf of the requesting Shareholders to provide all
such information and materials and take all such actions and execute all
such documents as may be required in order to permit Chiquita to comply
with its obligations under this Agreement and all applicable requirements
of the Commission and to obtain acceleration of the effective date of the
Registration Statement.
2.3 If Chiquita gives the Shareholders Representatives a notice as
provided for in Section 3.4, the Shareholders Representatives and the
3<PAGE>
Selling Shareholders will immediately cease any disposition of
Registration Shares pursuant to the Registration Statement until Chiquita
notifies the Shareholders Representatives pursuant to Section 3.5 that a
prospectus supplement has been filed or an amendment to the Registration
Statement has been declared effective by the Commission or that any stop
order or other suspension has been lifted, provided that, if such
supplement or amendment relates to a misstatement or omission relating to
any information included in the Registration Statement by or about
Chiquita, then the effectiveness period required under Section 3.1 shall
be deemed tolled from the date of Chiquita's notice pursuant to Section
3.4 through the date of Chiquita's notice pursuant to Section 3.5 that
such amendment or supplement has been declared effective by the
Commission.
2.4 If the Shareholders Representatives believe, or receive
information to the effect that, the prospectus (including any supplements
thereto) forming part of the Registration Statement contains an untrue
statement of material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, to the extent
such facts or statements relate to information provided to Chiquita by, or
on behalf of, the Shareholders for inclusion in the Registration
Statement, then the Shareholders Representatives will promptly notify
Chiquita in writing.
3.Covenants of Chiquita.
So long as Chiquita is under an obligation pursuant to the
provisions of Section 1 hereof:
3.1.Chiquita will prepare and file with the Commission such amend-
ments and supplements to the Registration Statement and the prospectus
forming part of the Registration Statement as may be necessary to keep the
Registration Statement effective for such period as shall be necessary to
complete the distribution of the Registration Shares, but in no event for
longer than the earlier to occur of 90 days after the Registration
Statement has been declared effective by the Commission (subject to
extensions as are contemplated by Section 2.3) and one year after the
Closing Date;
3.2.Once the Registration Statement has been declared effective by
the Commission, Chiquita will cause copies of the prospectus forming a
part of the Registration Statement, and any supplement thereto, to be
mailed or delivered to the New York Stock Exchange so that the Selling
Shareholders may rely on Rule 153 under the Act. Notwithstanding the
immediately preceding sentence, Chiquita will furnish to the Shareholders
Representatives such number of copies of the prospectus forming a part of
the Registration Statement, including, without limitation, a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as the Shareholders Representatives may reasonably request in
order to facilitate the sale of the Registration Shares;
4<PAGE>
3.3.Chiquita will use reasonable efforts: (a) to register or
qualify, not later than the effective date of the Registration Statement,
the Registration Shares under the securities or Blue Sky laws of such
jurisdictions within the United States as the Shareholders Representatives
may reasonably request, and (b) to do any and all other reasonable acts or
things which may be necessary or advisable to enable the Selling
Shareholders to consummate the public sale or other disposition in such
jurisdictions of such Registration Shares; provided, however, that
Chiquita will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or taxation in any
jurisdiction where it is not then so subject;
3.4.Chiquita will promptly notify the Shareholders Representatives
in writing if (a) a stop order has been issued by the Commission or any
other suspension of effectiveness of the Registration Statement has
occurred or (b) Chiquita believes the prospectus (including any
supplements thereto) forming part of the Registration Statement may
contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
3.5 As soon after the occurrence of an event specified in Section
3.4 or 2.4 as may be practicable, at the request of the Shareholders
Representatives, Chiquita will, in the case of an event specified in
Section 3.4(a), use reasonable efforts to cause the withdrawal of any
order suspending the effectiveness of the Registration Statement to be
obtained and, in the case of an event specified in Section 3.4(b) or 2.4,
prepare and file with the Commission and the New York Stock Exchange, and
provide copies to the Shareholders Representatives of, a supplement to the
prospectus or an amendment to the Registration Statement as may be
necessary to meet the requirements of the Act. After any order suspending
the effectiveness of the Registration Statement has been withdrawn or any
supplement to the prospectus has been filed or any amendment to the
Registration Statement has been declared effective, Chiquita will
immediately notify the Shareholder Representatives.
3.6.Chiquita will use reasonable efforts to furnish, at the request
of the Shareholders Representatives or any underwriter of the Registration
Shares, an opinion of legal counsel to Chiquita, covering such matters as
are typically covered by opinions of issuer's counsel in underwritten
offerings under the Act; and
3.7.Chiquita will enter into an underwriting agreement with a
managing underwriter retained by the Shareholders Representatives or the
Selling Shareholders in connection with an offering pursuant to the
Registration Statement, which agreement will contain representations,
warranties and agreements customarily included by an issuer in
underwriting agreements with respect to a secondary distribution.
4. Costs and Expenses.
5<PAGE>
4.1.With respect to the registration request under Section 1.1
hereof, Chiquita shall bear all Preparation Costs and Registration Costs
(as defined below) and the Selling Shareholders shall bear all Selling
Shareholder Costs (as defined below).
4.2.For purposes hereof, (a) "Preparation Costs" means the entire
cost and expense of preparing the Registration Statement, including,
without limitation, all printing expenses, the fees and expenses of
Chiquita's counsel and its independent accountants, the fees and expenses
of counsel and accountants of the Selling Shareholders in an amount up to
$7,500, all other out-of-pocket expenses incident to the preparation and
printing of the Registration Statement and all amendments and supplements
thereto, the cost of furnishing copies of each preliminary prospectus,
each final prospectus and each amendment or supplement thereto to
underwriters, brokers and dealers and other purchasers of the Registration
Shares, and the costs and expenses incurred in connection with the
qualification of the Registration Shares under Blue Sky or other state
securities laws of such jurisdictions within the United States as the
Shareholders Representatives reasonably request, (b) "Registration Costs"
means all registration and filing fees payable to the Commission or any
state securities law agency, and (c) "Selling Shareholder Costs" means the
fees and expenses of counsel and accountants of the Selling Shareholders
in excess of $7,500 and all transfer taxes, underwriting discounts and
commissions attributable to Registration Shares.
5.Indemnification.
5.1.Chiquita will indemnify the Shareholders Representatives, the
Selling Shareholders and each underwriter of Registration Shares, as well
as any persons, if any, who control such Selling Shareholders or
underwriters, against all claims, losses, damages, liabilities, costs and
expenses (including reasonable attorney and accountant fees and all
reasonable expenses incurred in discovery proceedings, as witnesses or in
preparation for any judicial or administrative proceedings) incurred by
any such indemnified party arising out of or related to any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the prospectus forming a part of the Registration
Statement or any related notification or similar filing under the
securities laws and the rules and regulations thereunder of any
jurisdiction or from any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, except insofar as the same may have been based upon information
furnished in writing to Chiquita by the Selling Shareholders, the
Shareholders Representatives or such underwriter expressly for use therein
and used in accordance with such writing.
5.2.The Selling Shareholders will: (a) furnish to Chiquita, through
the Shareholders Representatives, such information concerning them as may
be requested by Chiquita and which, Chiquita is advised by its legal
counsel, is necessary or required by then applicable securities laws and
the rules and regulations thereunder in connection with the Registration
6<PAGE>
Statement or qualification of the Registration Shares, and (b) indemnify
Chiquita, its officers and directors and each underwriter of the
Registration Shares (and any persons who control Chiquita or any such
underwriter) against all claims, losses, damages, liabilities, costs and
expenses (including reasonable attorney and accountant fees and all
reasonable expenses incurred in discovery proceedings, as witnesses or in
preparation for any judicial or administrative proceedings) incurred by
any such indemnified party arising out of or related to any untrue
statement or alleged untrue statement of material fact contained in such
information or from any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances
then existing, but only to the extent such information is furnished in
writing to Chiquita by the Selling Shareholders or the Shareholders
Representatives or, on behalf of the Selling Shareholders or the
Shareholders Representatives, by an underwriter of Registration Shares, in
any event expressly for use in the Registration Statement, the prospectus
forming a part of the Registration Statement or any related notification
or similar filing under the securities laws and the rules and regulations
thereunder of any jurisdiction and such information is used in accordance
with such writing.
5.3.If any action is brought or any claim is made against any party
entitled to be indemnified pursuant to this Section 5 in respect of which
indemnity may be sought against the indemnitor pursuant to this Section 5,
such party shall promptly notify the indemnitor in writing of the
institution of such action or the making of such claim and the indemnitor
shall assume the defense of such action or claim, including the employment
of counsel and payment of expenses. Any such indemnified party shall have
the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party, unless the employment of such counsel shall have been authorized in
writing by the indemnitor in connection with the defense of such action or
claim or such indemnified party shall have reasonably concluded that there
may be defenses available to it which are different from or additional to
those available to the indemnitor (in which case the indemnitor shall not
have the right to direct any different or additional defense of such
action or claim on behalf of such indemnified party), in either of which
events such fees and expenses of not more than one additional counsel for
such indemnified party shall be paid by the indemnitor. The failure to
deliver written notice to the indemnitor within a reasonable time of the
commencement of any such action or the making of any such claim, if
materially prejudicial to the indemnitor's ability to defend such action,
shall relieve such indemnitor of any liability to the indemnified party
under this Section 5.3, but the failure to deliver any such written notice
to the indemnitor will not relieve it of any liability that it may have to
any indemnified party otherwise than pursuant to this Section 5.3 of this
Agreement. Anything in this Section 5 to the contrary notwithstanding,
the indemnitor shall not be liable for any settlement of any such claim or
action effected without its written consent, which consent will not be
unreasonably withheld.
7<PAGE>
5.4.If the indemnification provided for in this Agreement is
unavailable or insufficient to hold harmless an indemnified party in
respect of any claims, losses, damages, liabilities or expenses referred
to herein, as determined by a court of competent jurisdiction, then each
indemnitor shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such claims, losses, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnitor, on the one hand, and the indemnified party, on the other, in
connection with the statements or omissions which resulted in such claims,
losses, damages, liabilities or expenses as well as any other relevant
equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the indemnitor, on the
one hand, or the indemnified party on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Chiquita and the
Shareholders agree that it would not be just and equitable if
contributions pursuant to this Section 5.4 were determined by pro rata
allocation or by any other method of allocation which would not take
account of the equitable considerations referred to in this Section 5.4.
The amount paid or payable by an indemnitor as a result of the claims,
losses, damages, liabilities or expenses referred to in this Section 5.4
shall include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentations
(within the meaning of Section ll(f) of the Act) shall be entitled to
contribution from any person who is not also guilty of such fraudulent
misrepresentation.
6. Miscellaneous.
6.1.Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if: (a) delivered personally or by
courier, or (b) sent by registered or certified mail, postage prepaid, or
(c) sent by confirmed facsimile with the original to follow by first-class
mail, postage prepaid, as follows:
If to Chiquita:
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attention: General Counsel
Facsimile No.: 513-784-6691
If to the Shareholders Representatives:
Ann Jackson
2415 Addison
8<PAGE>
Houston, Texas 77030
and
Richard Jackson
6648 Rutgers
Houston, Texas 77005
or to such other address as the addressee may have specified in a notice
duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to
have been given as of the date it is delivered, received by facsimile
transmission or three days after it has been mailed.
6.2.This Agreement shall be binding upon, and shall inure to the
benefit of, Chiquita and the Shareholders Representatives and their
respective permitted successors and assigns.
6.3.This Agreement shall be governed by and construed under the laws
of the State of Ohio.
6.4.The rights granted to the Shareholders under this Agreement: (a)
apply only to the Registrable Shares and the Preferred Shares, (b) are
personal to the Shareholders and shall not be assignable in whole or in
part by any of the Shareholders, except by will or applicable law in the
event of death, (c) shall terminate as to any Registrable Shares or
Preferred Shares which are sold, assigned or otherwise transferred by the
Shareholders, except as permitted by Section 6.4(b), and (d) shall
terminate in full on the first anniversary of the Closing Date.
6.5.This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
6.6 The Shareholders Representatives shall be entitled to
reimbursement for out-of-pocket expenses incurred by them in acting on
behalf of the Shareholders pursuant to this Agreement from the Expenses
Fund (as defined in the Plan of Merger). Section 3.1 of the Plan of
Merger (which sets forth, among other things, the authority of the
Shareholders Representatives and limitations on the liability of the
Shareholders Representatives) shall be deemed incorporated into this
Agreement by reference.
Intending to be legally bound, the parties have executed this
Agreement as of the date first above written.
CHIQUITA BRANDS INTERNATIONAL,INC.
By: /s/ Robert W. Olson
Title: Senior Vice President, General
Counsel and Secretary
9<PAGE>
/s/ Ann Jackson
Ann Jackson
Shareholders Representative
/s/ Richard Jackson
Richard Jackson
Shareholders Representative
10<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
Registration Statements and related prospectuses of Chiquita Brands
International, Inc. of our report dated March 26, 1997, with respect to
the financial statements of Owatonna Canning Company for the years ended
February 28, 1997, February 29, 1996 and February 28, 1995 included on
pages 6 through 21 of this Current Report on Form 8-K dated September 15,
1997.
<TABLE>
<CAPTION>
Registration
Form No. Description
<S> <C> <C>
S-3 33-58424 Dividend Reinvestment Plan
S-3 33-41057 Common Stock issuable upon conversion of Convertible
Subordinated Debentures
S-3 333-00789 Debt Securities, Preferred Stock, Preference Stock,
Depositary Shares, Common Stock and Securities Warrants
S-8 33-2241 Chiquita Savings and Investment Plan
33-16801
33-42733
33-56572
S-8 33-14254 1986 Stock Option and Incentive Plan
33-38284
33-41069
33-53993
S-8 33-25950 Individual Stock Option Plan
S-8 33-38147 Associate Stock Purchase Plan
</TABLE>
/s/ Hutton, Nelson & McDonald LLP
Oakbrook Terrace, Illinois
October 3, 1997<PAGE>
