SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 17, 1997
(Date of earliest event reported)
STOKELY USA, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 0-13943
Wisconsin 39-0513230
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification
No.)
1230 Corporate Center Drive
Oconomowoc, Wisconsin 53066
(Address of principal executive offices) (Zip Code)
(414) 569-1800
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
Prospective Merger
On September 17, 1997, Stokely USA, Inc., a Wisconsin corporation (the
"Registrant"), announced that it had entered into an Agreement and Plan of
Reorganization (the "Agreement") with Chiquita Brands International, Inc., a New
Jersey corporation ("Chiquita"), and Chiquita Acquisition Corp., a Wisconsin
corporation and wholly-owned subsidiary of Chiquita ("Merger Corp."), pursuant
to which Merger Corp. will merge with and into Registrant (the "Merger"), with
Registrant thereafter becoming a direct, wholly-owned subsidiary of Chiquita.
The Agreement provides, among other things, that as a result of the Merger, each
outstanding share of common stock of the Registrant will be converted into the
right to receive such fraction of a share of common stock of Chiquita as is
equal to $1.00 divided by the average of the last reported sales price per share
of Chiquita common stock on the New York Stock Exchange Composite Tape for the
fifteen consecutive trading days ending with the last trading day prior to the
Effective Date of the Merger. No fractional shares will be issued and cash,
without interest, will be paid in lieu thereof. As of the Effective Date, all
shares of common stock of the Registrant issued and outstanding immediately
prior to the Effective Date will no longer be outstanding and will be
automatically canceled, and each holder of a certificate or certificates which
immediately prior to the Effective Date represented outstanding shares of common
stock of the Registrant will cease to have any rights with respect thereto,
except the right upon the surrender of such certificate to receive (I)
certificate(s) of common stock of Chiquita representing the number of whole
shares of common stock of Chiquita into which such shares of common stock of the
Registrant shall have been converted, and (ii) any cash, without interest, to
be paid in lieu of any fractional share of common stock of Chiquita (subject,
however, to dissenters' rights, if any).
Prior to its execution, the Agreement was unanimously approved by the
Boards of Directors of the Registrant and Chiquita. The Registrant anticipates
the Merger will be consummated in January 1998. Consummation of the Merger is
subject to certain conditions, including: (I) approval of the Agreement by the
Registrant's shareholders; (ii) the receipt of all required regulatory and
contractual approvals for the Merger; (iii) the absence of any events,
circumstances or changes that have resulted in (or has a reasonable possibility
of resulting in) a Material Adverse Effect to Registrant due to the breach of
any representations, warranties or covenants by the Registrant or the occurrence
of events after September 17, 1997, with certain exceptions; (iv) the
Registrant's receipt of a fairness opinion from its financial advisor on the
date of mailing of the Proxy Statement for the meeting to be held at which the
Registrant's shareholders will vote on the Merger; (v) the effectuation of an
exchange of common stock of Chiquita for most of the Registrant's long-term
debt; (vi) the forgiveness of at least $1.0 million of accounts receivable by
certain of the Registrant's suppliers; and (vii) satisfaction of certain other
customary closing conditions.
The Agreement is attached hereto as an exhibit and is incorporated herein
by reference in its entirety. The foregoing summary of the Agreement does not
purport to be complete and is qualified in its entirety by reference to such
exhibit.
Consistent with the Company's previous statements about the need for
consolidation and structural change in the vegetable processing industry, the
Company had retained Donaldson, Lufkin & Jenrette Securities Corporation to
assist its Board of Directors in a review of all strategic alternatives,
including a sale of the Company. Although the Company has undergone multiple
restructurings over the past several years, the combination of high leverage and
difficult market conditions has continued to erode the value of the Company and
negatively impact its liquidity position. Over the last year, the Registrant,
with the help of its financial advisor, Donaldson, Lufkin & Jenrette, has
explored many strategic alternatives, including seeking to obtain substantial
capital or credit assistance, realizing proceeds from the sale of significant
assets and looking for a third party buyer or merger partner. In looking for a
third party buyer or merger partner, Donaldson, Lufkin & Jenrette solicited
offers from a number of prospective buyers. After completion of due diligence,
the best offer received, and best alternative available, was from Chiquita.
Throughout the negotiation process, the value to be received by Stokely
shareholders fluctuated between the final value to be received under the
Agreement and a significantly lower amount. It was only through the
Registrant's negotiations with its debtholders and some of its major trade
creditors, as well as with Chiquita, that the consideration to be paid by
Chiquita to the Stokely shareholders rose to the level now contained in the
Agreement. After a thorough review, the Company's Board of Directors concluded
this merger, which will give Stokely shareholders a stake in a larger, more
diversified food company, represents the most attractive strategic alternative
available.
Loan Covenants
In the Company's quarterly report on Form 10-Q for the period ended June
30, 1997, the Company indicated that while it was in compliance with its debt
covenants at June 30, 1997 it anticipated that it would be in violation of
certain financial covenants contained in its senior notes and its Industrial
Development Revenue Bonds (IDRB's) prior to the end of its quarter ended
September 30, 1997. The Company is now in violation of these financial
covenants due to subsequent operating losses incurred after the period ended
June 30, 1997. The senior note holders and an institutional holder of $12.2
million of the IDRB's have agreed to defer all required principal payments and
interest payments until the closing of the above mentioned prospective merger
under the condition the closing occurs on or before January 31, 1998.
The Company currently expects a quarterly loss for the period ended
September 30, 1997 to be slightly larger than the $2.8 million loss recorded in
the quarter ended June 30, 1997. The Company's implementation of its
restructuring initiatives and realization of the benefits continues to be
hampered by the extremely depressed market conditions that currently prevail in
the canned processed vegetable markets. The Company continues to be unable to
operate profitably under current market conditions. The Company anticipates
continuation of the significant margin pressure that currently exists at least
through the Company's third fiscal quarter. This margin pressure also reduces
the Company's borrowing availability and adversely affects its liquidity.
This report on Form 8-K includes certain statements that may be deemed to
be "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements, other than statements of historical
facts, included in this report on Form 8-K that address activities, events or
developments that the companies expect, believe or anticipate will or may occur
in the future, are forward-looking statements. These statements are based on
certain assumptions and analyses made by the companies in light of their
experience and perception of historical trends, current conditions, expected
future developments and other factors they believe are appropriate in the
circumstances. Such statements are subject to a number of assumptions, risks
and uncertainties, many of which are beyond the control of the companies.
Investors are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ materially
from the projections in the forward-looking statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) No financial statements are required at this time.
(b) No pro forma financial information is required at this time.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization, dated September 17, 1997, by
and among Chiquita Brands International, Inc., Chiquita Acquisition
Corp. and Stokely USA, Inc.
99.1 Joint Press Release of the Registrant and Chiquita issued September
17, 1997
<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.
STOKELY USA, INC.
Date: September 19, 1997 By:
Stephen W. Theobald, President
and Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE
2.1 Agreement and Plan of Reorganization, dated
September 17, 1997, by and among Chiquita
Brands International, Inc., Chiquita
Acquisition Corp. and Stokely USA, Inc.
99.1 Joint Press Release of the Registrant and
Chiquita issued September 17, 1997
<PAGE>
EXHIBIT 2.1
Agreement and Plan of Reorganization,
dated September 17, 1997, by and among
Chiquita Brands International, Inc.,
Chiquita Acquisition Corp. and Stokely USA, Inc.<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Among
CHIQUITA BRANDS INTERNATIONAL, INC.,
CHIQUITA ACQUISITION CORP.
and
STOKELY USA, INC.
September 17, 1997<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
MERGER OF ACQUISITION SUB. . . . . . . . . . . . . . . . . 1
Section 1.01 Merger. . . . . . . . . . . . . . . . . 1
Section 1.02 The Surviving Corporation . . . . . . . 2
Section 1.03 Effect of Merger. . . . . . . . . . . . 2
ARTICLE II
STATUS AND CONVERSION OF SECURITIES. . . . . . . . . . . . 3
Section 2.01 Conversion of Securities. . . . . . . . 3
Section 2.02 Surrender and Payment.. . . . . . . . . 3
Section 2.03 Treatment of Stock Options. . . . . . . 5
Section 2.04 Treatment of Warrants.. . . . . . . . . 5
Section 2.05 Adjustment of Merger Consideration. . . 5
Section 2.06 Certain Definitions . . . . . . . . . . 5
Section 2.07 Stokely's Disclosure Schedule . . . . . 6
Section 2.08 Registration Statement; Proxy
Statement. . . . . . . . . . . . . . . . . . . . 7
Section 2.09 Dissenters' Rights. . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOKELY. . . . . . . . . 8
Section 3.01 Organization and Qualification. . . . . 8
Section 3.02 Capitalization. . . . . . . . . . . . . 9
Section 3.03 Authority and Validity of Agreement . . 9
Section 3.04 Consents and Approvals. . . . . . . . 10
Section 3.05 Securities Reports; Financial
Statements . . . . . . . . . . . . . . . . . . . 11
Section 3.06 Real Property; Leases . . . . . . . . . 11
Section 3.07 Personal Property . . . . . . . . . . . 13
Section 3.08 Receivables . . . . . . . . . . . . . . 13
Section 3.09 Inventory . . . . . . . . . . . . . . . 13
Section 3.10 Intellectual Property . . . . . . . . . 13
Section 3.11 Insurance . . . . . . . . . . . . . . . 14
Section 3.12 Compliance with Laws; Governmental
Authorizations . . . . . . . . . . . . . . . . . 14
Section 3.13 Material Contracts and Other
Descriptions and Lists.. . . . . . . . . . . . . 15
Section 3.14 Absence of Litigation . . . . . . . . . 17
Section 3.15 Environmental Matters . . . . . . . . . 18
Section 3.16 Taxes . . . . . . . . . . . . . . . . . 19
Section 3.17 Labor Contracts . . . . . . . . . . . . 21
Section 3.18 Employee Benefit Plans. . . . . . . . . 21
Section 3.19 Absence of Certain Changes or Events. . 23
Section 3.20 Customers and Suppliers . . . . . . . . 23
Section 3.21 Brokerage . . . . . . . . . . . . . . . 24
Section 3.22 Representations and Warranties True and
Correct. . . . . . . . . . . . . . . . . . . . . 24
Section 3.23 Information Supplied. . . . . . . . . . 24
Section 3.24 Debts to Employees for Services . . . . 24
Section 3.25 Leases, Permits, Etc. . . . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND ACQUISITION SUB . . . . . . . . . . . . . . . 25
Section 4.01 Organization. . . . . . . . . . . . . . 25
Section 4.02 Capitalization. . . . . . . . . . . . . 25
Section 4.03 Authority and Validity of Agreement . . 26
Section 4.04 Securities Reports; Financial
Statements.. . . . . . . . . . . . . . . . . . . 27
Section 4.05 Absence of Certain Changes or Events. . 27
Section 4.06 Ownership of Stokely's Common Stock . . 27
Section 4.07 Disclosure. . . . . . . . . . . . . . . 28
Section 4.08 Information Supplied. . . . . . . . . . 28
ARTICLE V
COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . 28
Section 5.01. Access and Information Regarding
Stokely. . . . . . . . . . . . . . . . . . . . . 28
Section 5.02 Access and Information Regarding
Acquiror.. . . . . . . . . . . . . . . . . . . . 29
Section 5.03 Operation of Stokely's Business . . . . 29
Section 5.04 Preservation of Business. . . . . . . . 31
Section 5.05 Insurance and Maintenance of Property . 31
Section 5.06 Compliance with Laws. . . . . . . . . . 31
Section 5.07 Update Stokely Disclosure Schedule. . . 31
Section 5.08 Acquiror Negative Covenants.. . . . . . 31
Section 5.09 Stokely Shareholder Approval;
Proxy/Registration Statement.. . . . . 32
Section 5.10 Indemnification and Insurance . . . . . 32
Section 5.11 No Solicitation . . . . . . . . . . . . 35
Section 5.12 Requisite Regulatory Approvals. . . . . 35
Section 5.13 Consultation and Notice of Actions and
Proceedings. . . . . . . . . . . . . . . . . . . 36
Section 5.14 Reasonable Best Efforts . . . . . . . . 36
Section 5.15 Public Announcements. . . . . . . . . . 36
Section 5.16 Subsequent SEC Filings. . . . . . . . . 36
Section 5.17 Further Assurances. . . . . . . . . . . 36
Section 5.18 Stokely Employment-Related Agreements . 37
Section 5.19 Stokely Benefit Plans . . . . . . . . . 38
Section 5.20 Merger as Change in Control.. . . . . . 39
Section 5.21 Severance Arrangements. . . . . . . . . 39
Section 5.22 Contribution of Cash by Acquiror;
Payment to Congress Financial Corporation
(Central). . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.23 Debt Exchange . . . . . . . . . . . . . 40
Section 5.24 Stock Exchange Listing. . . . . . . . . 40
<PAGE>
ARTICLE VI
CONDITIONS OF THE ACQUIROR'S AND
THE ACQUISITION SUB'S OBLIGATION TO CLOSE. . . . . . . . . 40
Section 6.01 Compliance by Stokely . . . . . . . . . 40
Section 6.02 Consents Under Agreements . . . . . . . 40
Section 6.03 Proceedings and Instruments
Satisfactory . . . . . . . . . . . . . . . . . . 41
Section 6.04 Opinion of Counsel. . . . . . . . . . . 41
Section 6.05 Absence of Certain Changes or Events. . 41
Section 6.06 Cancellation of Stock Options . . . . . 41
Section 6.07 Cancellation of Warrants. . . . . . . . 41
Section 6.08 Directors' Phantom Stock Plan . . . . . 42
Section 6.09 Treatment of Indebtedness.. . . . . . . 42
Section 6.10 Treatment of Certain Supplier
Indebtedness . . . . . . . . . . . . . . . . . . 42
Section 6.11 Dissenters' Rights. . . . . . . . . . . 42
Section 6.12 Updates and Amendments to
Stokely Disclosure Schedule. . . . . . 42
ARTICLE VII
CONDITIONS TO STOKELY'S OBLIGATION TO CLOSE. . . . . . . . 43
Section 7.01 Compliance by the Acquiror and the
Acquisition Sub. . . . . . . . . . . . . . . . . 43
Section 7.02 Delivery of Merger Consideration. . . . 43
Section 7.03 Fairness Opinion. . . . . . . . . . . . 43
Section 7.04 Opinion of Counsel for the Acquiror
and the Acquisition Sub. . . . . . . . 43
ARTICLE VIII
CONDITIONS TO THE RESPECTIVE OBLIGATIONS OF
THE ACQUIROR, THE ACQUISITION SUB AND STOKELY TO CLOSE . . 44
Section 8.01 Approval by Affirmative Vote of
Shareholders.. . . . . . . . . . . . . . . . . . 44
Section 8.02 Requisite Regulatory Approvals. . . . . 44
Section 8.03 Matters Relating to the Registration
Statement. . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.01 Reasons for Termination . . . . . . . . 44
Section 9.02 Effect of Termination . . . . . . . . . 45
Section 9.03 Fee.. . . . . . . . . . . . . . . . . . 45
Section 9.04 Amendment.. . . . . . . . . . . . . . . 46
Section 9.05 Extension; Waiver . . . . . . . . . . . 46
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.01 Notices. . . . . . . . . . . . . . . . 47
Section 10.02 Assignment . . . . . . . . . . . . . . 48
Section 10.03 Articles and Other Headings. . . . . . 48
Section 10.04 Entire Agreement . . . . . . . . . . . 48
Section 10.05 Governing Law. . . . . . . . . . . . . 48
Section 10.06 Counterparts . . . . . . . . . . . . . 48
Section 10.07 Closing. . . . . . . . . . . . . . . . 48
Section 10.08 Articles of Merger . . . . . . . . . . 49
Section 10.09 Further Acts . . . . . . . . . . . . . 49
Section 10.10 Expenses . . . . . . . . . . . . . . . 49
Section 10.11 Attorney's Fees. . . . . . . . . . . . 49
Section 10.12 Nonsurvival of Representations and
Warranties; Survival of Certain Agreements.. . . 49
Section 10.13 Parties in Interest. . . . . . . . . . 50
Section 10.14 Severability . . . . . . . . . . . . . 50
Section 10.15 Enforcement of Agreement.. . . . . . . 50
EXHIBITS:
Exhibit A: Agreement and Plan of Merger. . . . . . . A-1
Exhibit B: Form of Legal Opinion of Michael Best &
Friedrich LLP. . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C: Form of Legal Opinion of Acquiror's CounselC-1
Exhibit D: Designation, Rights and Preferences of
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E: Debt-Holder Letter Agreement. . . . . . . E-1<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is dated as of the 17th day of September, 1997, by and among
Chiquita Brands International, Inc., a New Jersey corporation
("Acquiror"), Chiquita Acquisition Corp., a Wisconsin
corporation ("Acquisition Sub") and Stokely USA, Inc., a
Wisconsin corporation ("Stokely").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Acquiror, Acquisition
Sub and Stokely deem it advisable, for the mutual benefit of
Acquiror, Acquisition Sub and Stokely and fair and in the best
interests of their respective shareholders, that Acquisition
Sub, a wholly-owned subsidiary of Acquiror, be merged with and
into Stokely (the "Merger"), in accordance with the terms of the
Wisconsin Business Corporation Law (the "WBCL") and the terms
and conditions of this Agreement and an Agreement and Plan of
Merger to be entered into among Acquiror, Acquisition Sub and
Stokely in substantially the form of Exhibit A to this Agreement
(the "Plan of Merger");
WHEREAS, the respective Boards of Directors of Acquiror,
Acquisition Sub and Stokely have each approved the Merger, upon
the terms and subject to the conditions set forth herein, and
adopted this Agreement;
WHEREAS, Acquiror, Acquisition Sub and Stokely desire to
make certain representations, warranties, covenants and
agreements in connection with such Merger and also to prescribe
various conditions to such Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and
subject to the terms and conditions set forth herein, the
parties hereto agree as follows:
ARTICLE I
MERGER OF ACQUISITION SUB WITH AND INTO STOKELY
Section 1.01 Merger. Acquisition Sub shall be merged with
and into Stokely in accordance with applicable provisions of the
WBCL and on the terms and subject to the conditions contained in
this Agreement and the Plan of Merger. Simultaneously with the
effectiveness of the Merger, (a) the separate existence of
Acquisition Sub shall cease, and (b) Stokely, as the surviving
corporation (the "Surviving Corporation"), shall continue to
exist under and be governed by the WBCL. Upon the effectiveness
of the Merger, the articles of incorporation and bylaws of
Acquisition Sub as in effect immediately prior to the Effective
Time shall be the articles of incorporation and bylaws of the
Surviving Corporation immediately after the Merger, until
thereafter changed or amended as provided therein or as provided
by the WBCL. Upon the effectiveness of the Merger, the
directors and officers of the Surviving Corporation shall be as
set forth in the Plan of Merger. The Merger shall be
consummated effective at the date and time specified in Section
10.07 of this Agreement (the "Effective Date" and "Effective
Time," respectively).<PAGE>
Section 1.02 The Surviving Corporation. After the
Effective Time, the name of the Surviving Corporation shall be
"Stokely USA, Inc." The Surviving Corporation shall continue
its existence under the laws of the State of Wisconsin as a
wholly-owned subsidiary of Acquiror.
Section 1.03 Effect of Merger. Upon the Merger becoming
effective:
(a) The separate existence of Acquisition Sub shall
cease and be merged into the Surviving
Corporation, which shall possess all of the
rights, privileges, immunities, powers and
franchises of a public as well as of a private
nature, and shall be subject to all of the
restrictions, disabilities and duties of each of
Stokely and Acquisition Sub; and all singular
rights, privileges, immunities, powers and
franchises of each of Stokely and Acquisition
Sub, and all property, real, personal and mixed,
and all debts due to either Stokely or
Acquisition Sub in whatever amount, including
subscriptions to shares, and all other things in
action or belonging to each of Stokely and
Acquisition Sub shall be vested in the Surviving
Corporation; and all property, rights,
privileges, immunities, powers and franchises,
and all and every interest, shall be thereafter
as effectually the property of the Surviving
Corporation as they were of Stokely and
Acquisition Sub and the title to any real
estate, or interest therein, vested by deed or
otherwise, in either of Stokely or Acquisition
Sub shall not revert or be in any way impaired
by reason of the Merger.
(b) All rights of creditors and all liens upon any
property of Stokely or Acquisition Sub shall be
preserved unimpaired and all debts, liabilities
and duties of Stokely or Acquisition Sub shall
thenceforth attach to the Surviving Corporation
and may be enforced against the Surviving
Corporation to the same extent as if said debts,
liabilities and duties had been incurred or
contracted by it.
(c) Any action or proceeding, whether civil,
criminal or administrative, instituted, pending
or threatened by or against either Stokely or
Acquisition Sub or relating to their assets,
liabilities or shares of common stock shall be
prosecuted as if the Merger had not taken place,
and the Surviving Corporation may be substituted
as a party in such action or proceeding in place
of Stokely or Acquisition Sub.<PAGE>
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
Section 2.01 Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part
of the Acquiror, Acquisition Sub, Stokely or the holder of any
of the following securities, the shares of Acquisition Sub and
Stokely shall be converted as follows:
(a) Each of the shares of common stock of
Acquisition Sub, $0.01 par value per share
("Acquisition Common Stock"), issued and
outstanding immediately prior to the Effective
Time shall be converted into and become one
validly issued, fully paid and non-assessable
share of common stock of the Surviving
Corporation; and
(b) Each share of the common stock, $0.05 par value
per share ("Stokely Common Stock"), of Stokely
issued and outstanding immediately prior to the
Effective Time (other than any shares held by
Stokely or any of its wholly-owned subsidiaries,
which shall be canceled, and other than
Dissenting Shares, if any, as defined in Section
2.09) shall cease to be outstanding and shall be
converted into and become the right to receive
such fraction of a share of Common Stock of
Acquiror, $.33 par value per share ("Acquiror
Stock"), as is equal to $1.00 divided by the
average of the last reported sales price per
share of Acquiror Stock on the New York Stock
Exchange Composite Tape for the fifteen
consecutive trading days ending with the last
trading day prior to the Effective Time, subject
to the provisions of Section 2.02 (c) with
regard to the nonissuance of fractional shares
(the "Merger Consideration").
(c) The Merger Consideration shall be distributed as
soon as possible after the Effective Time
pursuant to the procedure set forth in Section
2.02.
Section 2.02 Surrender and Payment.
(a) As of the Effective Time, Acquiror shall
deposit, or shall cause to be deposited with a
bank or trust company designated by Acquiror and
satisfactory to Stokely (the "Exchange Agent"),
for the benefit of the holders of Stokely Common
Stock for exchange in accordance with this
Article II, the amount of cash payable in the
Merger (for fractional shares) and certificates
representing the shares of Acquiror Stock
payable and issuable in exchange for outstanding
shares of Stokely Common Stock.
<PAGE>
(b) Within three business days after the Effective
Time, Acquiror shall cause the Exchange Agent to
request (in the form of a letter of transmittal
and instructions for effecting the surrender)
each registered holder of a certificate or
certificates which immediately prior to the
Effective Time evidenced outstanding shares of
Stokely Common Stock (the "Certificates") to
surrender such Certificates for exchange. Upon
such surrender, Acquiror shall cause the
Exchange Agent to promptly issue to the holder
of such Certificates the number of whole shares
of Acquiror Stock which such holder is entitled
to receive pursuant to Section 2.01, and cash in
payment of any fractional shares, and the
Certificates so surrendered shall be canceled.
Until so surrendered, such Certificates shall
represent solely the right to receive the
applicable number of shares of Acquiror Stock
with respect to the number of shares of Stokely
Common Stock evidenced thereby. No dividends or
other distributions declared or made after the
Effective Time with respect to shares of
Acquiror Stock with a record date after the
Effective Time shall be paid to the holder of an
unsurrendered Certificate with respect to the
shares of Acquiror Stock represented thereby and
no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to
Section 2.02(c) hereof until the holder of
record of such Certificate shall surrender such
Certificate. Subject to the effect of unclaimed
property, escheat and other applicable laws,
following surrender of any such Certificate,
there shall be paid to the registered holder of
the certificates representing whole shares of
Acquiror Stock issued in exchange therefore,
without interest, (i) at the time of such
surrender, the amount of any cash payable in
lieu of a fractional share of Acquiror Stock to
which such holder is entitled pursuant to
Section 2.02 (c) hereof and the amount of
dividends or other distributions with a record
date after the Effective Time theretofore paid
with respect to such whole shares of Acquiror
Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions
with a record date after the Effective Time but
prior to surrender and a payment date subsequent
to surrender payable with respect to such whole
shares of Acquiror Stock, as the case may be.
If any cash or certificate evidencing shares of
Acquiror Stock is to be paid to or issued in a
name other than that in which the Certificate
surrendered in exchange therefor is registered,
it shall be a condition of such exchange that
the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for
transfer and that the person requesting such
exchange shall pay to Acquiror any transfer or
other taxes required by reason of the issuance
of certificates for such shares of Acquiror
Stock in a name other than that of the
registered holder of the Certificate
surrendered, or shall establish to the
satisfaction of Acquiror that such tax has been
paid or is not applicable.<PAGE>
(c) Notwithstanding any other provision of this
Agreement, no certificates or scrip representing
fractional shares of Acquiror Stock shall be
issued upon the surrender for exchange of
Certificates. Any holder of Stokely Common
Stock who would otherwise have been entitled to
a fractional share of Acquiror Stock shall be
entitled to receive a cash payment in lieu of
such fractional share in an amount equal to the
product of such fraction multiplied by the
average of the last reported sales price per
share of Acquiror Stock on the New York Stock
Exchange Composite Tape for the fifteen
consecutive trading days ending with the last
trading day prior to the Effective Time, without
any interest thereon. Any such holder shall not
be entitled to vote or to any other rights of a
holder of Acquiror Stock in respect of such
fractional share.
Section 2.03 Treatment of Stock Options. Stokely shall
use its best efforts to ensure that, at the Effective Date, all
options to purchase Stokely Common Stock that are outstanding on
the Effective Date or that are granted under any
Employment-Related Agreements or any Stokely Benefit Plan (each,
a "Stokely Stock Option"), shall be canceled and of no force or
effect on the Effective Date, including any Stokely Stock
Options whose vesting is accelerated due to a change of control.
Section 2.04 Treatment of Warrants. Stokely shall use its
best efforts to ensure that, at the Effective Date, all warrants
to purchase Stokely Common Stock that are outstanding on the
Effective Date or that are granted under any Employment-Related
Agreements or in any Stokely Benefit Plan (each, a "Stokely
Warrant"), shall be canceled and of no force or effect on the
Effective Date.
Section 2.05 Adjustment of Merger Consideration. If,
subsequent to the date of this Agreement but prior to the
Effective Time, the outstanding shares of Stokely Common Stock
shall have been changed into a different number of shares or a
different class as a result of a stock split, reverse stock
split, stock dividend, subdivision, reclassification, split,
combination, exchange, recapitalization or other similar
transaction, the Merger Consideration shall be appropriately
adjusted.
Section 2.06 Certain Definitions.
(a) As used in this Agreement, the term "Material
Adverse Effect" means, with respect to the
Acquiror or Stokely, as the case may be, any
effect that (a) is, or is reasonably likely to
result in an effect that would be, material and
adverse to the business, assets, liabilities,
results of operations or financial condition of
Stokely and the Stokely Subsidiaries taken as a
whole or the Acquiror, the Acquisition Sub and
the other consolidated subsidiaries of the
Acquiror taken as a whole, or (b) materially
impairs the ability of the Acquiror or Stokely
to consummate the transactions contemplated
hereby; provided, however, that a Material
Adverse Effect as it relates to Stokely and the
Stokely Subsidiaries shall not be deemed to
include the impact of (i) actions contemplated
by this Agreement, (ii) expenses incurred in
connection with the transactions contemplated
hereby, (iii) any changes in Law (as hereinafter
defined), generally accepted accounting
principles or economic or other changes, in each
case which affect the vegetable processing
industry generally; or (iv) the violation of any
covenants or agreements set forth in any Stokely
indebtedness documents.
(b) "To Stokely's knowledge" or "to Acquiror's
knowledge" or words of similar import mean the
actual knowledge of any executive officer or
director of Stokely or any Stokely Subsidiary,
in the case of Stokely's knowledge, or of the
Acquiror, in the case of Acquiror's knowledge,
in each case after making due inquiry.
(c) Any references in this Agreement to generally
accepted accounting principles means United
States generally accepted accounting principles.
Section 2.07 Stokely's Disclosure Schedule.
Contemporaneously with the execution and delivery of this
Agreement, Stokely is delivering to Acquiror the Stokely
Disclosure Schedule, which is accompanied by a certificate
signed by the Chief Executive Officer and Secretary of Stokely
stating that the Stokely Disclosure Schedule is being delivered
pursuant to this Agreement and is the Stokely Disclosure
Schedule referred to in this Agreement. The Stokely Disclosure
Schedule is deemed to constitute an integral part of this
Agreement and to modify the representations, warranties,
covenants or agreements of Stokely contained in this Agreement
to the extent that such representations, warranties, covenants
or agreements expressly refer to the Stokely Disclosure
Schedule. All capitalized terms used in the Stokely Disclosure
Schedule shall have the definitions specified in this Agreement.
All descriptions or listings of documents contained in the
Stokely Disclosure Schedule are qualified in their entirety by
reference to the documents so described, to the extent that true
copies of such documents heretofore have been delivered by
Stokely to Acquiror. Except as expressly stated to the contrary
in the Stokely Disclosure Schedule, disclosure of a matter or
document in the Stokely Disclosure Schedule shall not be deemed
to be an acknowledgment that such matter is material or outside
the ordinary course of business of Stokely. Disclosure of any
matter or event in any of the schedules included in the Stokely
Disclosure Schedule shall be deemed disclosure for purposes of
other schedules included therein without the need of specific
cross reference or duplication where it is reasonably evident
that disclosure in the initial schedule makes the disclosure
called for in the other schedule or schedules.<PAGE>
Section 2.08 Registration Statement; Proxy Statement. The
parties shall, as promptly as practicable, prepare and file with
the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 (the "Registration
Statement") and proxy and information statement (the "Proxy
Statement") (the Proxy Statement and the Registration Statement
being, collectively, the "Proxy/Registration Statement") in
connection with (a) the registration under the Securities Act of
1933, as amended (the "Securities Act"), of the Acquiror Stock
issuable in connection with the Merger and (b) the meeting of
the shareholders of Stokely described in Section 5.09. Each of
Acquiror and Stokely shall use its best efforts to have or cause
the Proxy/Registration Statement declared effective and cleared
as promptly as practicable, shall take any and all other action
required to be taken under federal or state securities laws in
connection therewith, and shall use its best efforts to cause
the Proxy/Registration Statement to be mailed to the Stokely
shareholders at the earliest practicable date. Acquiror shall
comply fully with the requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended ("Exchange Act") and
the rules and regulations of the SEC under such acts applicable
to the offering and sale of Acquiror Stock in connection with
the Merger. Acquiror also shall take all action required to be
taken under any applicable state blue sky or securities laws in
connection with the offering and sale of Acquiror Stock in
connection with the Merger.
Section 2.09 Dissenters' Rights.
"Dissenting Shares" means any shares held by any holder who
becomes entitled to payment of the fair value of such shares
under the WBCL. Notwithstanding any provision of this Agreement
to the contrary, if required by the WBCL but only to the extent
required thereby, shares of Stokely Common Stock which are
issued and outstanding immediately prior to the Effective Date
and which are held by holders of such shares of Stokely Common
Stock who have properly exercised dissenters' rights with
respect thereto in accordance with the WBCL will not be
exchangeable for the right to receive the Merger Consideration,
and holders of such Dissenting Shares will be entitled to
receive payment of the fair value of such Dissenting Shares in
accordance with the WBCL unless and until such holders fail to
perfect or effectively withdraw or lose their rights to direct
and receive payment of fair value under the WBCL. If, after the
Effective Date, any such holder fails to perfect or effectively
withdraws or loses such right, such Dissenting Shares will
thereupon be treated as if they had been converted into and have
become exchangeable for, at the Effective Date, the right to
receive the Merger Consideration, without any interest thereon.
Notwithstanding anything to the contrary contained in this
Section 2.09, if the Merger is rescinded, abandoned or not
effectuated, then the right of any shareholder to be paid the
fair value of such shareholders' Dissenting Shares pursuant to
the WBCL shall cease. Stokely shall give Acquiror prompt notice
of any demands and withdrawals of such demands received by
Stokely relating to the exercise of, or of Stokely's learning of
the intent to exercise, dissenters' rights. Stokely shall not,
without the prior consent of Acquiror, make any payment with
respect to any demands for payment of fair value or offer to
settle or settle any such demands.<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOKELY
Except as set forth in the disclosure schedule delivered by
Stokely to the Acquiror and Acquisition Sub contemporaneously
with the execution of this Agreement (the "Stokely Disclosure
Schedule"), Stokely hereby represents and warrants to the
Acquiror and Acquisition Sub that:
Section 3.01 Organization and Qualification; Subsidiaries.
(a) Stokely is a corporation duly incorporated,
validly existing and in active status under the
laws of the State of Wisconsin. Each subsidiary
of Stokely ("Stokely Subsidiary" or,
collectively, "Stokely Subsidiaries") is a
corporation duly incorporated, validly existing
and in good standing (or the equivalent thereof)
under the laws of the jurisdiction of its
incorporation. Each of Stokely and the Stokely
Subsidiaries have the requisite corporate power
and authority to carry on its business as it is
now conducted and to own, lease and operate its
assets, properties and business.
(b) Stokely and each Stokely Subsidiary is duly
qualified or licensed as a foreign corporation
to conduct business in each jurisdiction where
the character of the properties it owns, leases
or operates or the nature of the activities it
conducts make such qualification or licensing
necessary, except where such failures to be so
duly qualified or licensed would not, either
individually or in the aggregate, have a
Material Adverse Effect on Stokely and the
Stokely Subsidiaries.
(c) A true and complete list of all of the Stokely
Subsidiaries, together with (I) Stokely's
percentage of ownership of each Stokely
Subsidiary (including the number of authorized
shares, the par value of the authorized shares,
and the number of shares issued and outstanding
of each Stokely Subsidiary), and (ii) the laws
under which the Stokely Subsidiary is
incorporated is set forth on Schedule 3.01.
Except as set forth on Schedule 3.01, Stokely
owns beneficially and of record all of the
outstanding shares of capital stock of each of
the Stokely Subsidiaries, free of any liens,
claims or encumbrances. Except for the
subsidiaries set forth on Schedule 3.01, Stokely
does not own any equity or similar interests in,
or any interests convertible into or
exchangeable or exercisable for any equity or
similar interest in, any corporation,
partnership, joint venture or other business
association or entity.<PAGE>
(d) Stokely has heretofore furnished to the Acquiror
a complete and correct copy of the Articles of
Incorporation and Bylaws, as amended or
restated, of Stokely ("Stokely Articles" and
"Stokely Bylaws") and each Stokely Subsidiary.
Such Articles of Incorporation and Bylaws of
Stokely and each Stokely Subsidiary are in full
force and effect.
Section 3.02 Capitalization. The authorized capital stock
of Stokely consists of 20,000,000 shares of Common Stock having
a par value of $0.05 per share and 1,000,000 shares of preferred
stock having a par value of $0.10 per share ("Preferred Stock").
As of the date of this Agreement, (I) 11,390,871 shares of
Common Stock are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable, except
as otherwise provided by Section 180.0622(2)(b) of the WBCL
(such section, including judicial interpretations thereof and of
Section 180.40(6), its predecessor statute, are referred to
herein as "Section 180.0622(2)(b) of the WBCL"), and (ii) 44,324
shares of Common Stock are held in the treasury of Stokely. As
of the date of this Agreement, no shares of Preferred Stock are
issued and outstanding. The shares of capital stock of each
Stokely Subsidiary are duly authorized, validly issued, fully
paid and nonassessable, except with respect to those
Subsidiaries incorporated under the laws of Wisconsin which are
subject to potential assessment as provided in Section
180.0622(2)(b) of the WBCL. Except as set forth on Schedule
3.02, as of the date of this Agreement, neither Stokely nor any
Stokely Subsidiary has granted any options, warrants or other
rights, agreements, arrangements or commitments of any
character, including without limitation, voting agreements or
arrangements, relating to the issued or unissued capital stock
of Stokely or any Stokely Subsidiary or obligating Stokely or
any Stokely Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, Stokely or any Stokely
Subsidiary. All shares of Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, shall be
duly authorized, validly issued, fully paid and nonassessable,
except as otherwise provided in Section 180.0622(2)(b) of the
WBCL. Except as described on Schedule 3.02, there are no
obligations, contingent or otherwise, of Stokely or any Stokely
Subsidiary to repurchase, redeem or otherwise acquire any shares
of Common Stock or the capital stock of any Stokely Subsidiary
or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Stokely
Subsidiary or any other entity. Each of the outstanding shares
of capital stock of each Stokely Subsidiary is duly authorized,
validly issued, fully paid and nonassessable, except, where
applicable, as provided in Section 180.0622(2)(b) of the WBCL.
Section 3.03 Authority and Validity of Agreement. Stokely
has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated
herein. The execution, delivery and performance of this
Agreement by Stokely have been duly authorized by all requisite
corporate action, including without limitation, approval by
Stokely's Board of Directors, subject to obtaining the approval
of the holders of not less than two-thirds of the outstanding
shares of Common Stock with respect to the Merger. Subject to
such approval of the Merger by the shareholders of Stokely and
obtaining the necessary consents and approvals noted on Schedule
3.04, this Agreement will constitute a valid and binding
obligation of Stokely, enforceable in accordance with its terms,
except as such terms may be affected by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights
and general principles of equity.
Section 3.04 Consents and Approvals.
(a) Except as set forth on Schedule 3.04, the
execution and delivery of this Agreement by
Stokely does not, and the performance of this
Agreement and the transactions contemplated
hereby by Stokely will not, (i) conflict with or
violate the Stokely Articles or the Stokely
Bylaws or the Articles of Incorporation or
Bylaws of any Stokely Subsidiary, (ii) conflict
with or violate any domestic (federal, state or
local) or foreign law, statute, ordinance, rule,
regulation, order, judgment or decree
(collectively, "Laws") applicable to Stokely or
any Stokely Subsidiary or by which its or any of
their respective properties is bound or
affected, or (iii) result in any breach of or
constitute a default (or an event that with
notice or lapse of time or both would become a
default) under, or give to others any put rights
with respect to, or any rights of termination,
amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance
on any of the properties or assets of Stokely or
any Stokely Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other
instrument or obligation to which Stokely or any
Stokely Subsidiary is a party or by which
Stokely or any Stokely Subsidiary or its or any
of their respective properties is bound or
affected, except in the case of clauses (ii) and
(iii) for any such conflicts, violations,
breaches, defaults or other occurrences that
would not, individually or in the aggregate,
have a Material Adverse Effect on Stokely and
the Stokely Subsidiaries.
(b) The execution and delivery of this Agreement by
Stokely does not, and the performance of this
Agreement by Stokely shall not, require any
consent, approval, authorization or permit of,
or filing with or notification to, any
governmental or regulatory authority, domestic
or foreign, or with or from any third party,
except for (i) the filing of applications,
notices or other documents necessary to obtain,
and the receipt of, approval under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), (ii) applicable filing
requirements, if any, under the Securities Act,
state securities or "blue sky" laws and the
rules and regulations of NASDAQ, (iii) the
approval of this Agreement by the holders of not
less than two-thirds of the outstanding shares
of Common Stock with respect to the Merger, (iv)
the filing and recordation of appropriate merger
or other documents as required by the WBCL, and
(v) such additional consents, filings,
authorizations or approvals as may be set forth
on Schedule 3.04.
Section 3.05 Securities Reports; Financial Statements.
(a) Stokely has filed all material required to be
filed by Sections 13 and 14 of the Exchange Act
since March 31, 1995 and has delivered to the
Acquiror (I) its Annual Reports on Form 10-K for
the fiscal years ended March 31, 1995, 1996 and
1997, (ii) all proxy statements relating to
Stokely's meetings of shareholders (whether
annual or special) held since March 31, 1995,
(iii) all Reports on Form 8-K filed by Stokely
since March 31, 1995, and (iv) all other reports
or registration statements filed by Stokely with
the Securities and Exchange Commission ("SEC"),
since March 31, 1995 (collectively, the "Stokely
SEC Reports"). The Stokely SEC Reports (I) were
prepared in all material respects in accordance
with the requirements of applicable Laws, and
(ii) did not at the time they were filed,
contain any untrue statement of a material fact
or omit to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes
thereto) contained in the Stokely SEC Reports
("Financial Statements") have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis
throughout the periods involved (except as may
be indicated in the notes thereto) and each
fairly presents the consolidated financial
position of Stokely and the Stokely Subsidiaries
as of the respective dates thereof and the
consolidated results of its operations and
changes in financial position for the periods
indicated, except that any unaudited interim
financial statements were or are subject to
normal and recurring year-end adjustments. In
the opinion of management, all adjustments
(which include only normal recurring
adjustments) necessary for a fair statement of
the results of the interim period shown have
been made.
Section 3.06 Real Property; Leases.
(a) Good Title; Condition. Schedule 3.06 sets forth
a true and correct legal description of all real
properties owned by Stokely or any Stokely
Subsidiary (the "Owned Real Estate") and an
accurate summary description of all real
properties leased or rented by Stokely or any
Stokely Subsidiary (the "Leased Real Estate").
Stokely or a Stokely Subsidiary, as applicable,
in accordance with the information provided on
Schedule 3.06, has good and marketable title to
all Owned Real Estate (including buildings,
structures and fixtures thereon or attached
thereto), and has good and marketable leasehold
title to all Leased Real Estate (including
buildings, structures and fixtures thereon or
affixed thereto), in each case free and clear of
all mortgages, liens, security interests,
charges, encumbrances and/or equities of any
kind, except as set forth on Schedule 3.06 and
except for liens for taxes not yet due and
payable and such minor imperfections of title,
if any, as do not materially detract from the
value of or interfere with the present use of
the property affected thereby or which
individually or in the aggregate, would not have
a Material Adverse Effect on Stokely and the
Stokely Subsidiaries. The use and operation of
the Owned Real Estate and Leased Real Estate
conform in all material respects to all
applicable building, zoning, safety, and other
laws, statutes, ordinances, rules, regulations,
codes, licenses, permits, and all other
restrictions and conditions. Except as set
forth on Schedule 3.06, there currently is no
permitted nonconforming use of any of the Owned
Real Estate or Leased Real Estate. Except as
set forth on Schedule 3.06, no portion of any of
the Owned Real Estate or Leased Real Estate is
located in a flood plain, flood hazard area or
designated wetlands area. Stokely has not
received any written or oral notice of, nor does
Stokely know of any, assessments for public
improvements against the Owned Real Estate or
Leased Real Estate or any written or oral notice
or order by any governmental, regulatory or
administrative authority that: (I) relates to
violations of building, safety or fire
ordinances or regulations; or (ii) claims any
defect or deficiency with respect to any of such
properties; or (iii) requests the performance of
any repairs, alterations or other work to or in
any of such properties. There is no
condemnation, expropriation, eminent domain or
similar proceeding affecting all or any portion
of the Owned Real Estate or Leased Real Estate
pending or, to the knowledge of Stokely,
threatened. Those public utilities (including
water, gas, electric, storm and sanitary sewage,
and telephone utilities) required to operate the
facilities of Stokely and any Stokely Subsidiary
are available to such facilities.
(b) Leased Real Estate. Each parcel of the Leased
Real Estate is the subject of a written lease
agreement. All such leases are valid and
binding agreements, enforceable in accordance
with their respective terms, and are in full
force and effect. Stokely or, as applicable,
the Stokely Subsidiary that is party to such
lease, has performed all material obligations
required to be performed by it to date under
each such lease and there are not any existing
material defaults or events of default under
such leases.
Section 3.07 Personal Property. Except as set forth on
Schedule 3.07, and except for such personal property as has been
disposed of in the ordinary course of Stokely's or a Stokely
Subsidiary's business, as applicable, since March 31, 1997,
Stokely and the Stokely Subsidiaries own good and marketable
title, free and clear of any liens, claims or encumbrances, to
all property which they together or individually purport to own,
except such minor imperfections of title, if any, as do not
materially detract from the value of or interfere with the
present use of the property affected thereby or which,
individually or in the aggregate, would not have a Material
Adverse Effect on Stokely and the Stokely Subsidiaries.
Section 3.08 Receivables. All of the accounts receivable
of Stokely and the Stokely Subsidiaries reflected on Stokely's
audited consolidated balance sheet for the fiscal year ended
March 31, 1997, and all other accounts receivable arising from
and after such date through the Effective Date (collectively,
the "Receivables") arose and will arise solely from bona fide
transactions in the ordinary course of business. All of the
Receivables are and as of the Effective Time will be good and
collectible (less a $1,200,000 allowance for doubtful accounts
receivable).
Section 3.09 Inventory. The inventory of Stokely and the
Stokely Subsidiaries consists solely of raw materials, supplies,
work-in-process and finished goods and has been valued at the
lower of cost or market. The values at which inventory is
reflected on the Financial Statements have been determined
pursuant to the average cost method in accordance with generally
accepted accounting principles consistently applied for all
periods, with appropriate write downs for slow-moving, obsolete
and damaged merchandise. Except as set forth on Schedule 3.09,
no inventory has been consigned to others, nor is any inventory
consigned to Stokely or any Stokely Subsidiary.
Section 3.10 Intellectual Property. Schedule 3.10 lists
(or, in the case of trade secrets and secret processes,
generally describes) all of the (a) patents and patent
applications, (b) trademarks, trade names and applications
therefor and service marks and applications therefor, (c)
copyrights and copyright registrations, and (d) trade secrets
and secret processes used, employed or intended to be used or
employed by Stokely or any Stokely Subsidiary (hereinafter
referred to as the "Intellectual Property"). Stokely or a
Stokely Subsidiary, as indicated on Schedule 3.10, owns (or has
valid and enforceable rights to use) all of the Intellectual
Property listed on Schedule 3.10. The Intellectual Property
constitutes all of the intellectual property required for or
incident to the production or marketing of all products
presently produced, marketed or being developed by Stokely or
any Stokely Subsidiary. Schedule 3.10 lists for each item of
Intellectual Property owned by Stokely or any Stokely Subsidiary
and which is registered with any foreign, federal or state
agency or office, the registration number thereof, the date of
registration and the agency or office where so registered.
Except as indicated on Schedule 3.10, the registrations set
forth on Schedule 3.10 are in full force and effect. Except as
otherwise described on Schedule 3.10, Stokely, or a Stokely
Subsidiary, is the sole owner of all right, title and interest
in Intellectual Property which it purports to own free and clear
of any liens, claims, shop rights, licenses or other
encumbrances and, with respect to Intellectual Property licensed
by Stokely, or a Stokely Subsidiary, Stokely or such Stokely
Subsidiary has valid, binding and enforceable rights to use such
Intellectual Property. Stokely has provided to Acquiror
complete and correct copies of all licenses or other agreements
pursuant to which Stokely or any Stokely Subsidiary has the
right to utilize Intellectual Property not owned by it. All
such licenses or other agreements are valid and binding, are
enforceable in accordance with their respective terms, and are
in full force and effect. Stokely or the Stokely Subsidiary
which is a party thereto has performed all material obligations
required to be performed by it to date under each such license
or other agreement, and there are not any existing defaults or
circumstances which, with the passage of time, might constitute
a material default under such licenses or other agreements. No
claim, suit or action is pending or, to Stokely's knowledge,
threatened alleging that Stokely or any Stokely Subsidiary is
infringing upon the intellectual property rights of others, or
challenging the rights of Stokely or any Stokely Subsidiary in
any respect in or to any of the Intellectual Property or any
license thereof. The practice or use by Stokely or a Stokely
Subsidiary, as applicable, of any of the Intellectual Property
or any process utilized or any product produced or sold by it
does not infringe, nor to Stokely's knowledge is infringed by,
any patent, trademark, trade name, trade secret, know how or
copyright owned or used by another, nor is it subject to any
outstanding order, decree, judgment or stipulation.
Section 3.11 Insurance. Schedule 3.11 lists and contains
a description of any and all insurance policies, past and
present, owned or held by Stokely or any Stokely Subsidiary that
may represent an asset and/or liability to Stokely or any
Stokely Subsidiary in the event of a claim, audit or adjustment
(including without limitation, policies for fire and casualty,
liability, worker's compensation, business interruption,
umbrella coverage, products liability, medical, disability and
other forms of insurance) specifying the insurer, amount of
coverage, type of insurance, deductible limits, policy number,
contract term, exceptions to coverage, an indication of which
policies are subject to retroactive payments, and any pending
claim in excess of $50,000, whether or not covered by insurance
(the "Insurance"). The Insurance is in full force and effect,
all premiums with respect thereto covering all periods up to and
including the date hereof have been paid, and no notice of
cancellation or termination has been received by Stokely or any
Stokely Subsidiary with respect to any such policy.
Section 3.12 Compliance with Laws; Governmental
Authorizations. Stokely and each Stokely Subsidiary possess all
governmental, regulatory and administrative licenses, permits,
approvals and other authorizations as are necessary to the
conduct of its business or operations in any state or
jurisdiction and, except for the required filings and
authorizations noted in Section 3.04, for the consummation of
the transactions contemplated hereby. Stokely and each Stokely
Subsidiary is, and at all times in the past has been, in
compliance with all Laws and the terms and conditions of all
such licenses, permits, approvals and authorizations, except for
any conflicts or violations which would not, individually or in
the aggregate, have a Material Adverse Effect on Stokely and the
Stokely Subsidiaries.<PAGE>
Section 3.13 Material Contracts and Other Descriptions and
Lists. Schedule 3.13 identifies and briefly describes the
following:
(a) Leases. All leases of personal property to
which Stokely or any Stokely Subsidiary is a
party which in each case involve payments in
excess of $10,000 on an annual basis;
(b) Owned Personal Property. All items of personal
property owned by Stokely or any Stokely
Subsidiary which have a book value or estimated
current market value in excess of $100,000;
(c) Purchase Orders. A list of written or oral
agreements relating to the purchase of products,
services or supplies by Stokely or a Stokely
Subsidiary other than individual purchase orders
issued in the ordinary course of business for
amounts in each case not in excess of $25,000
individually or $100,000 in the aggregate of all
such orders with the same or related parties;
(d) Certain Agreements. A list of the following
described types of agreements or documents:
(i) distributorship, sales representative or
similar agreements to which Stokely or any
Stokely Subsidiary is a party; (ii) supply
contracts for cans and raw and other materials,
other supply contracts and grower contracts to
which Stokely or any Stokely Subsidiary is a
party; (iii) license, royalty or similar
agreements to which Stokely or any Stokely
Subsidiary is a party; (iv) service or
maintenance agreements to which Stokely or any
Stokely Subsidiary is a party which in each case
involve payments in excess of $5,000 on an
annual basis; (v) protective services or
security agreements to which Stokely or any
Stokely Subsidiary is a party which in each case
involve payments in excess of $5,000 on an
annual basis; and (vi) royalty, commission or
other contingent agreements pursuant to which
Stokely's or any Stokely Subsidiary's obligation
to make payments is in excess of $25,000 per
year, or pursuant to which Stokely's or any
Stokely Subsidiary's obligation to make
contingent payments are measured, is dependent
upon sales, revenues, income, success or other
performance standard;
(e) Other Financial Obligations. A list of any
other written or oral agreements or commitments
which require Stokely or any Stokely Subsidiary
to pay or expend, after the Effective Date, more
than $25,000 in any single instance or $100,000
in the aggregate of all such instances with the
same or related parties;<PAGE>
(f) Personnel. (I) A list of: (A) all executive
officers and directors of Stokely and of each
Stokely Subsidiary; (B) the names and current
annual salary rates (and bonus, incentive or
commission arrangements) of all present
employees and agents of Stokely and of each
Stokely Subsidiary who receive aggregate annual
cash remuneration of $50,000 or more; (ii) a
list of all employees of Stokely and of each
Stokely Subsidiary who are expected, as of the
Effective Date, to have earned but unused
vacation days (or earned but unpaid vacation pay
in lieu thereof), together with an estimate of
the dollar amount thereof; and (iii) a list of
all employees who currently are a party to an
employment agreement with Stokely or any Stokely
Subsidiary, and a list of all former employees
who are a party to a severance agreement with
Stokely or any Stokely Subsidiary, payments or
benefits of which thereunder are still due;
(g) Terminated Employees. A list of all employees
of Stokely and of each Stokely Subsidiary
earning base salary at an annual rate of $50,000
or more who have terminated employment since
April 1, 1997, or who have announced their
intention to terminate employment;
(h) Loans and Borrowing Agreements. A list of each
written or oral (I) loan, credit or borrowing
arrangement or agreement to which Stokely or any
Stokely Subsidiary is a party; or (ii) agreement
by which Stokely or any Stokely Subsidiary has
guaranteed or otherwise become liable or
contingently liable for the debt of another;
(I) Bank Accounts. The name of each bank or savings
and loan association, or commodities or
securities firm, in which Stokely or any Stokely
Subsidiary has an account or safe deposit box,
the numbers of each such account or box, and the
names of all persons having power to borrow,
discount debt obligations, cash or draw checks,
enter boxes, sell or buy securities, or
otherwise act on behalf of Stokely or any
Stokely Subsidiary in any dealings with such
banks or savings and loan association,
commodities or securities firm;
(j) Capital Expenditures. A list of all outstanding
written or oral commitments by Stokely or any
Stokely Subsidiary to make a capital
expenditure, capital addition or capital
improvement involving an amount in excess of
$100,000 (to which is additionally attached a
copy of the capital expenditure budget for
Stokely and the Stokely Subsidiaries for the
fiscal year ending March 31, 1998) and a list of
all outstanding written or oral commitments by
Stokely or any Stokely Subsidiary to make major
repairs or maintenance involving an amount in
excess of $100,000 in any individual instance or
$500,000 in the aggregate;
(k) Non-Compete Covenants. A list of any written or
oral covenants not to compete, non-solicitation
covenants and non-disclosure covenants in favor
of Stokely or any Stokely Subsidiary, or binding
upon or against Stokely or any Stokely
Subsidiary;
(l) Powers of Attorney. The names of all persons
holding powers of attorney from Stokely or any
Stokely Subsidiary and a summary statement of
the terms thereof;
(m) Discounts. A list of any agreement, arrangement
or program pursuant to which Stokely or any
Stokely Subsidiary has offered, promised or made
available to its customers any volume discount,
rebate, credit, return, trade credit terms, or
other allowance, other than in the ordinary
course of business;
(n) Non-Ordinary Course Agreements. A list and
description of any contract, agreement or
arrangement binding upon Stokely or any Stokely
Subsidiary and which was made or entered into
other than in the ordinary course of Stokely's
or a Stokely Subsidiary's business;
(o) Options and Warrants. A list of all currently
outstanding and unexercised warrants, options,
and other rights to acquire capital stock or
securities of Stokely or any Stokely Subsidiary
and a description of the terms thereof;
(p) Union Contracts. A list of all contracts with
unions to which Stokely or any Stokely
Subsidiary is a party; and
(q) Change of Control Restrictions. A list of all
contracts, agreements, permits, licenses, surety
bonds, arrangements, and other documents and
instruments to which Stokely or any Stokely
Subsidiary is a party or which run to the
benefit of Stokely or any Stokely Subsidiary
which prohibit, or require the consent or
notification of a party for, a change in control
of Stokely or any indirect change in control of
a Stokely Subsidiary.
Section 3.14 Absence of Litigation. Except as set forth
on Schedule 3.14, there is no litigation, claim, proceeding or
investigation pending, or to Stokely's knowledge, threatened
against or relating to Stokely or any Stokely Subsidiary, their
respective properties or business, or the transactions
contemplated herein which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect
on Stokely and the Stokely Subsidiaries. Schedule 3.14
discloses, with respect to each item described thereon, the name
or title of the action (and parties or potential parties
thereto) and a description of the nature of the action or claim.
Except as set forth on Schedule 3.14, there is no injunction,
order, judgment or decree imposed upon Stokely, any of the
Stokely Subsidiaries, or the assets of Stokely or any of the
Stokely Subsidiaries and there is no regulatory restriction
imposed upon Stokely, any of the Stokely Subsidiaries, or the
assets of Stokely or any of the Stokely Subsidiaries which has
had a Material Adverse Effect on Stokely and the Stokely
Subsidiaries. Except as set forth on Schedule 3.14, within the
past seven years there has been no claim or threatened claim for
indemnification from Stokely or any Stokely Subsidiary by any
director, officer or employee of Stokely or any Stokely
Subsidiary.
Section 3.15 Environmental Matters.
(a) Except as set forth on Schedule 3.15, Stokely
and the Stokely Subsidiaries (including property
owned, operated or leased by Stokely or any
Stokely Subsidiary) are, and have been for at
least three years prior to the execution of this
Agreement, in compliance with all applicable
federal, state and local laws, including common
law, rules, guidance, regulations and ordinances
and with all applicable decrees, orders,
judgments, permits and contractual obligations
relating to the environment, health, safety,
natural resources, wildlife or Hazardous
Materials (which are hereinafter defined as
chemicals, pollutants, contaminants, wastes,
toxic substances, compounds, products, solid,
liquid, gas, petroleum, petroleum byproducts and
derivatives, asbestos, PCBs, radioactive
materials, or other regulated substances or
materials which are hazardous, toxic or
otherwise harmful to health, safety, natural
resources, or the environment) ("Environmental
Laws");
(b) Except as set forth on Schedule 3.15, (i) during
the period of Stokely's or any of the Stokely
Subsidiaries' current or former ownership or
operation of any of their respective properties
(including operations by tenants or agents),
Hazardous Materials have not been generated,
treated, stored, transported, released or
disposed of in, on, under, above, from or
affecting any such property, in violation of any
Environmental Law, and (ii) Hazardous Materials
have not been generated, treated, stored,
transported, released or disposed of, in, on,
under, above, from or affecting any of Stokely's
or any of the Stokely Subsidiaries' current or
former properties for which Stokely or a Stokely
Subsidiary may be liable (including, without
limitation, for response costs or remediation)
which would have a Material Adverse Effect on
Stokely and the Stokely Subsidiaries. Prior to
the date of this Agreement, Stokely has provided
the Acquiror with copies of all Phase I
Environmental Surveys conducted within the last
five years on all of the properties currently or
formerly owned or operated by Stokely or any of
the Stokely Subsidiaries (including operation by
tenants or agents) which were prepared at
Stokely's expense in connection with the
transactions contemplated by this Agreement; and
(c) Except as set forth on Schedule 3.15, Stokely
and the Stokely Subsidiaries have no knowledge
of, and have not received, any notice from any
governmental agency or third party regarding any
Environmental Claims. For purpose of this
Section 3.15, "Environmental Claims" shall mean
any and all administrative, regulatory, judicial
or private actions, suits, demand letters,
notices, notices of potential liability, notices
of non-compliance or violation, investigations,
information request letters, injunctions or
proceedings relating in any way to any (i)
Environmental Law; (ii) Hazardous Materials, or
(iii) actual or alleged damage, injuries, threat
or harm to human health, safety, natural
resources, wildlife or the environment.
Section 3.16 Taxes.
(a) General. Stokely and the Stokely Subsidiaries
have filed all Tax Returns (as defined below)
required to be filed by them as of the date
hereof, and Stokely and the Stokely Subsidiaries
have paid and discharged all Taxes (as defined
below) due in connection with or with respect to
the filing of such Tax Returns, except such as
are being contested in good faith by appropriate
proceedings and for which adequate reserves have
been provided for in the Financial Statements as
determined in accordance with generally accepted
accounting principles (and which are set forth
on Schedule 3.16). The Tax Returns are complete
and correct in all material respects. For
purposes of this Agreement, "Tax" or "Taxes"
shall mean taxes, charges, fees, levies, and
other governmental assessments and impositions
of any kind, payable to any federal, state,
local or foreign governmental entity or taxing
authority or agency, including, without
limitation, (i) income, franchise, profits,
gross receipts, estimated, ad valorem, value
added, sales, use, service, real or personal
property, capital stock, license, payroll,
withholding, disability, employment, social
security, workers' compensation, unemployment
compensation, severance, production, excise,
stamp, occupation, premiums, windfall profits,
transfer and gains taxes, (ii) customs duties,
imposts, charges, levies or other similar
assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean
returns, reports and information statements with
respect to Taxes required to be filed with the
United States Internal Revenue Service (the
"IRS") or any other governmental entity or
taxing authority or agency, domestic or foreign,
including, without limitation, consolidated,
combined and unitary tax returns. Except as
otherwise disclosed on Schedule 3.16, neither
the IRS nor any other governmental entity or
taxing authority or agency is now asserting,
either through audits, administrative
proceedings or court proceedings, any deficiency
or claim for additional Taxes. Except as
otherwise disclosed on Schedule 3.16 and except
for statutory liens for current taxes not yet
due, there are no material tax liens on any
assets of Stokely or any of the Stokely
Subsidiaries. There are not now in force any
waivers or agreements by Stokely or any Stokely
Subsidiary of any statute of limitations for the
assessment of any Taxes.
(b) Tax Sharing Agreements. Except as set forth in
Schedule 3.16, neither Stokely nor any Stokely
Subsidiary is a party to any tax sharing
agreement and neither Stokely nor any Stokely
Subsidiary has assumed the tax liability of any
other person under contract.
(c) Affiliated Groups. Neither Stokely nor any
Stokely Subsidiary has been a member of any
consolidated, combined or unitary group for Tax
purposes for any tax periods which remain
subject to assessment, except as set forth on
Schedule 3.16.
(d) Joint Ventures. Except as set forth in Schedule
3.16, neither Stokely nor any Stokely Subsidiary
is, nor has Stokely or any Stokely Subsidiary
been, a party to any joint venture, partnership
or other arrangement that could be treated as a
partnership for Tax purposes.
(e) Section 341(f). Neither Stokely nor any Stokely
Subsidiary has consented to the application of
Internal Revenue Code Section 341(f).
(f) Foreign Operations. Except as set forth in
Schedule 3.16, neither Stokely nor any Stokely
Subsidiary has engaged in a trade or business in
a foreign country or has a permanent
establishment in any foreign country.
(g) Intercompany Transactions. Schedule 3.16 lists
all intercompany transactions, including
deferred intercompany transactions (with both
terms having the meaning provided in the Income
Tax Regulations Sec. 1.1502-13(a) of the
Internal Revenue Code), which will result in the
payment of any tax after the Effective Date and
which exist because of transactions between
Stokely and any of the Stokely Subsidiaries,
except for those which arose in the ordinary
course of business from the intercompany sale of
inventory.
(h) Regulation Section 1.301-7701. No election has
been made under Regulation Section 1.301.7701 to
treat Stokely or any Stokely Subsidiary as a
taxable entity other than a corporation in its
own right.
Section 3.17 Labor Contracts. Except as set forth on
Schedule 3.17 (which briefly summarizes the terms of the union
contracts to which Stokely or any Stokely Subsidiary is a
party), neither Stokely nor any Stokely Subsidiary is a party to
any collective bargaining agreement or bound to any other
agreement with a labor union. Copies of the union contracts to
which Stokely or any Stokely Subsidiary is a party have
previously been provided to Acquiror. The labor relations of
Stokely and each Stokely Subsidiary are satisfactory in that
there has not been within the preceding two fiscal years of
Stokely and the current fiscal year, nor is there currently, any
strike, walkout or work stoppage; nor, to Stokely's knowledge,
is any such action threatened. Except as set forth on Schedule
3.17, there are no proceedings pending for certification or
representation before the National Labor Relations Board nor, to
Stokely's knowledge, has there been any attempt within the
preceding two fiscal years or the current fiscal year to
organize the employees of Stokely or any Stokely Subsidiary into
a collective bargaining unit.
Section 3.18 Employee Benefit Plans.
(a) General. Schedule 3.18 lists all employee
benefit plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), and all other employee
benefit plans and related trusts (including
without limitation, those providing any stock
option, stock purchase, stock appreciation
right, bonus, deferred compensation, excess
benefits, profit sharing, pension, thrift,
savings, stock bonus, employee stock ownership,
salary continuation, severance, retirement,
supplemental retirement, short- or long-term
disability, dental, vision care,
hospitalization, major medical, life insurance,
accident insurance, vacation, holiday and/or
sick leave pay, tuition reimbursement, executive
perquisite or other employee benefits)
maintained, or contributed to, or required to be
contributed to, by Stokely or any Stokely
Subsidiary for the benefit of any officers or
employees, current or former, active or
inactive, of Stokely or any Stokely Subsidiary,
whether on an active or frozen basis (all of the
foregoing being herein called "Stokely Benefit
Plans"). Stokely has previously furnished, or
made available to the Acquiror, a complete and
accurate copy of each Stokely Benefit Plan (or a
description of the Stokely Benefit Plans, if the
Stokely Benefit Plans are not in writing).
(b) Administration. Each Stokely Benefit Plan has
been administered in all material respects in
accordance with its terms. All material
reports, returns and similar documents with
respect to the Stokely Benefit Plans required to
be filed with any government agency have been
filed. Except as set forth on Schedule 3.18,
there are, and have been in the past five years,
no pending (or to Stokely's knowledge,
threatened) investigations by any governmental
agency, termination proceedings or other claims
(except claims for benefits payable in the
normal operation of the Stokely Benefit Plans),
suits or proceedings against or involving any
Stokely Benefit Plan or asserting any rights or
claims to benefits under any Stokely Benefit
Plan that could give rise to any liability, nor
is Stokely aware of any facts that could give
rise to any liability in the event of any such
investigation, claim, suit or proceeding.
(c) Contributions; Funding. All contributions to,
and payments from, the Stokely Benefit Plans
that were required to be made in accordance with
the Stokely Benefit Plans and applicable law
have been made. None of the Stokely Benefit
Plans is subject to the minimum funding
requirements of Section 302 of ERISA or
Section 412 of the Internal Revenue Code of 1986
(the "Code").
(d) Compliance. Except as disclosed on Schedule
3.18, all of the Stokely Benefit Plans, as and
from the date adopted or as they may have been
amended, as, when and to the extent required,
comply and at all times applicable, complied in
all material respects with the applicable
provisions of, the Code, ERISA, the Equal Pay
Act of 1963, as amended, the Age Discrimination
in Employment Act of 1967, as amended, Title VII
of the Civil Rights Act of 1964, as amended, all
other foreign, federal or state laws regulating
employment and employee benefits, and all
regulations and rulings issued by government
agencies responsible for the administration or
enforcement of one or more of such laws. Each
Stokely Benefit Plan that is an employee pension
benefit plan within the meaning of Section 3(2)
of ERISA has received a determination letter
from the Internal Revenue Service to the effect
that such Stokely Benefit Plan is currently
qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively,
of the Code, and no such determination letter
has been revoked nor to Stokely's knowledge, has
revocation been threatened, nor has any such
Stokely Benefit Plan been amended since the date
of its most recent determination letter or
application therefor in any respect that would
adversely affect its qualification or materially
increase its cost.
(e) Absence of Certain Liabilities and Events. No
"prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) has
occurred which involves the assets of any
Stokely Benefit Plan. None of the Stokely
Benefit Plans have been terminated nor have
there been any "reportable events" (as defined
in Section 4043 of ERISA and the regulations
thereunder) with respect thereto. Stokely and
the Stokely Subsidiaries have performed all
obligations required to be performed by them
under, are not in any respect in default under
or in violation of, and Stokely has no knowledge
of any default or violation by any party to, any
Stokely Benefit Plan. No legal action, suit or
claim is pending or, to the knowledge of
Stokely, threatened with respect to any Stokely
Benefit Plan (other than claims for benefits in
the ordinary course). Neither Stokely nor any
Stokely Subsidiary has incurred any material
liability to the Pension Benefit Guaranty
Corporation (other than for premiums which have
been paid when due) or any material liability
under Section 302 of ERISA or Section 412 of the
Code that has not been satisfied in full.
(f) Effect of Agreement. Except as disclosed on
Schedule 3.18, the execution and performance of
the transactions contemplated by this Agreement
will not constitute an event under any Stokely
Benefit Plan that will or may result in any
payment (whether of severance pay or otherwise),
acceleration, vesting or increase in benefits
with respect to any employee, former employee,
officer or director of Stokely or any Stokely
Subsidiary.
Section 3.19 Absence of Certain Changes or Events. Except
as disclosed in the Stokely SEC Reports filed prior to the date
of this Agreement or as set forth on Schedule 3.19, since March
31, 1997 to the date of this Agreement, Stokely and the Stokely
Subsidiaries have conducted their businesses in the ordinary
course or in a manner consistent with past practice and, since
March 31, 1997, there has not been (i) any change, or any facts
or events that have changed which are reasonably likely to
result in a change, in the financial condition, results of
operations or business of Stokely and the Stokely Subsidiaries
having a Material Adverse Effect on Stokely and the Stokely
Subsidiaries, (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to any assets of Stokely
or any of the Stokely Subsidiaries having a Material Adverse
Effect on Stokely and the Stokely Subsidiaries, (iii) any change
by Stokely or any Stokely Subsidiary in its accounting methods,
principles or practices, (iv) any revaluation by Stokely or any
Stokely Subsidiary of any of its assets in any material respect,
(v) any declaration, setting aside or payment of any dividends
or distributions in respect of shares of Common Stock or any
redemption, purchase or other acquisition of any of its
securities or any of the securities of any Stokely Subsidiary,
(vi) any increase in the wages, salaries, compensation, pension
or other fringe benefits or perquisites payable to any executive
officer or director of Stokely or any Stokely Subsidiary from
the amount thereof in effect as of April 1, 1997 (which amounts
have been previously disclosed to the Acquiror), or (vii) any
strike, work stoppage, slow-down or other labor disturbance
involving Stokely or any Stokely Subsidiary.
Section 3.20 Customers and Suppliers. Stokely has
received no notice, nor does it have any knowledge, that (a) any
customer of Stokely or any Stokely Subsidiary who accounted for
more than 5% of Stokely's or such Stokely Subsidiary's sales
during the fiscal year ended March 31, 1997, or (b) any supplier
to Stokely or any Stokely Subsidiary (if such supplier could not
be replaced by Stokely or such Stokely Subsidiary with no
Material Adverse Effect on Stokely and the Stokely
Subsidiaries), has terminated or has threatened to terminate
business relations with Stokely or any Stokely Subsidiary.<PAGE>
Section 3.21 Brokerage. Except as set forth on Schedule
3.21, neither Stokely nor any Stokely Subsidiary has incurred,
or made commitments for, any brokerage, finders' or similar fee
in connection with the transaction contemplated by this
Agreement.
Section 3.22 Representations and Warranties True and
Correct. The representations and warranties contained herein,
and all other documents, certifications, materials and written
statements or written information disclosed in the Stokely
Disclosure Schedule, do not include any untrue statement of a
material fact or omit to state a material fact required to be
stated herein or therein in order to make the statements herein
or therein, in light of the circumstances under which they are
made, not misleading.
Section 3.23 Information Supplied. None of the
information supplied or to be supplied by Stokely (including,
without limitation, any information relating to any of the
Stokely Subsidiaries) for inclusion or incorporation by
reference in the Proxy/Registration Statement, and any
amendments or supplements thereto, will (I) in the case of the
Registration Statement, at the time it becomes effective and at
the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, or (ii) in the case of the Proxy Statement, at the
time of the mailing of the Proxy Statement and at the time of
the meeting of shareholders of Stokely described in Section
5.09, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If
at any time prior to the Effective Time any event with respect
to Stokely, its officers and directors or any of the Stokely
Subsidiaries or any affiliate of Stokely should occur which is
required to be described in an amendment of, or a supplement to,
the Proxy/Registration Statement, such event shall be so
described, and such amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the
shareholders of Stokely. The Proxy/Registration Statement will
(with respect to Stokely) comply as to form in all material
respects with the requirements of the Securities Act and the
Exchange Act.
Section 3.24 Debts to Employees for Services. All debts
owing to employees of Stokely or of any of the Stokely
Subsidiaries for services performed for any of such entities
have been paid current, and none of such debts is past due.
Section 3.25 Leases, Permits, Etc. All leases,
governmental permits, licenses, approvals, and other
authorizations necessary or desirable for the ownership or
conduct of business or operation of any property or properties
of Stokely or of any of the Stokely Subsidiaries (including
operation by tenants or agents) are in effect, and such
operations and ownership (I) are in compliance therewith, and
(ii) have in the past been in compliance therewith other than
such non-compliance of which reasonably would not have a
Material Adverse Effect on Stokely and the Stokely Subsidiaries
after the date of this Agreement. Except as set forth on
Schedule 3.25, no lease agreement of Stokely or of any Stokely
Subsidiary contains any provision which would terminate or
otherwise affect the terms of such lease upon a change in
control of Stokely or an indirect change in control of any
Stokely Subsidiary.<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND ACQUISITION SUB
Except as set forth in the disclosure schedule delivered by
the Acquiror to Stokely prior to the execution of this Agreement
(the "Acquiror Disclosure Schedule"), which shall identify
exceptions by specific section reference, the Acquiror and
Acquisition Sub hereby jointly and severally represent and
warrant to Stokely that:
Section 4.01 Organization.
(a) The Acquiror is a corporation duly incorporated,
validly existing and in good standing under the
laws of the state of New Jersey with all
necessary power to carry on its business as it
is now conducted, and to own, lease and operate
its assets and properties.
(b) Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the
laws of the state of Wisconsin. Prior to the
date of this Agreement, Acquisition Sub engaged
in no business other than matters necessary to
the organization and incorporation of
Acquisition Sub and to authorize Acquisition Sub
to enter into, execute and deliver this
Agreement.
(c) Copies of the Articles of Incorporation and
Bylaws of the Acquiror and Acquisition Sub have
been delivered to Stokely. Such copies are
complete and correct copies of such documents,
and are in full force and effect. The Acquiror
and Acquisition Sub are not in violation of any
of the provisions of its Articles of
Incorporation or Bylaws in any respect which
reasonably could be expected to have an adverse
effect on their ability to consummate the
transactions contemplated by this Agreement.
Section 4.02 Capitalization.
(a) The authorized capital stock of the Acquiror
consists of: (i) 150,000,000 shares of common
stock, $.33 par value per share; (ii) 4,000,000
shares of Voting Cumulative Preference Stock,
issuable in series, without nominal or par
value, none of which is outstanding; and (iii)
10,000,000 shares of Nonvoting Cumulative
Preferred Stock, $1.00 par value per share, of
which (A) 2,875,000 shares have been designated
$2.875 Nonvoting 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. As of August 1, 1997,
56,283,637 shares of Acquiror Stock are issued
and outstanding, all of which are duly
authorized, validly issued, fully paid and non-assessable.
<PAGE>
(b) The authorized capital stock of the Acquisition
Sub consists of 9,000 shares of common stock,
$0.01 par value per share. As of the date of
this Agreement, 100 shares of the Acquisition
Sub's Common Stock are issued and outstanding,
all of which are duly authorized, validly
issued, fully paid and non-assessable.
Section 4.03 Authority and Validity of Agreement. The
Acquiror and Acquisition Sub have full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated herein. The execution, delivery and
performance of this Agreement by the Acquiror and Acquisition
Sub have been duly authorized by all requisite corporate action.
Subject to the required filings under the HSR, this Agreement
will constitute a valid and binding obligation of the Acquiror
and Acquisition Sub, enforceable in accordance with its terms,
except as such terms may be affected by bankruptcy, insolvency,
moratorium and similar laws affecting the rights of creditors
generally and by the availability of equitable remedies.
Neither the execution, delivery and performance of this
Agreement nor the consummation of the Merger contemplated
herein, will conflict with, result in the breach of, constitute
a default under or accelerate the performance provided by, (i)
the terms of any law, or any rule or regulation of any
government agency or authority or any judgment, order or decree
of any court or other government agency to which the Acquiror or
Acquisition Sub may be subject, (ii) any contract, agreement or
instrument to which the Acquiror and Acquisition Sub is a party
or by which the Acquiror or Acquisition Sub is bound or
committed, (iii) the Articles of Incorporation or By-Laws of the
Acquiror or Acquisition Sub, or (iv) constitute an event which
with the lapse of time or action by a third party could result
in a default under any of the foregoing or result in the
creation or imposition of any lien, charge or encumbrance upon
any of the assets or properties of the Acquiror or Acquisition
Sub which could reasonably be expected to have an adverse effect
on the ability of Acquiror to consummate the transactions
contemplated by this Agreement.<PAGE>
Section 4.04 Securities Reports; Financial Statements.
(a) Acquiror has filed all material required to be
filed by Sections 13 and 14 of the Exchange Act
since December 31, 1995 and has delivered to
Stokely, (i) its Annual Reports on Form 10-K for
the fiscal years ended December 31, 1994, 1995
and 1996, (ii) its Quarterly Reports on Form 10-
Q for the periods ended March 31, 1997 and June
30, 1997, (iii) all proxy statements relating to
the Acquiror meetings of shareholders (whether
annual or special) held since December 31, 1995,
(iv) all Reports on Form 8-K filed by the
Acquiror with the SEC since December 31, 1996,
and (v) all other reports or registration
statements (other than the Reports on Form 10-Q
not referred to in clause iii above) filed by
the Acquiror with the SEC since December 31,
1996 (collectively, the "Acquiror SEC Reports").
The Acquiror SEC Reports (i) were prepared in
all material respects in accordance with the
requirements of applicable Laws, and (ii) did
not at the time they were filed contain any
untrue statement of a material fact or omit to
state a material fact required to be stated
therein or necessary in order to make the
statements therein, in light of the
circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes
thereto) contained in the Acquiror SEC Reports
have been prepared in accordance with generally
accepted accounting principles applied on a
consistent basis throughout the periods involved
(except as may be indicated in the notes
thereto) and each fairly presents the
consolidated financial position of the Acquiror
and the Acquiror subsidiaries as of the
respective dates thereof and the consolidated
results of its operations and changes in
financial position for the periods indicated,
except that any unaudited interim financial
statements were or are subject to normal and
recurring year-end adjustments.
Section 4.05 Absence of Certain Changes or Events. Except
as disclosed in the Acquiror SEC Reports filed prior to the date
of this Agreement, since December 31, 1996 to the date of this
Agreement, the Acquiror and its consolidated subsidiaries have
conducted their business only in the ordinary course and in a
manner consistent with past practice and since December 31,
1996, there has not been any change in the financial condition,
results of operations or business of the Acquiror or any of its
consolidated subsidiaries having a Material Adverse Effect on
the Acquiror and its consolidated subsidiaries.
Section 4.06 Ownership of Stokely's Common Stock. Neither
Acquiror nor any Acquiror Subsidiary is a "Significant
Shareholder" (as defined in Section 180.1130 of the WBCL) of
Stokely and neither Acquiror nor any Acquiror Subsidiary is an
affiliate (as defined in Section 180.0103 of the WBCL) of a
Significant Shareholder of Stokely, except as such Acquiror or
Acquiror Subsidiary may be so deemed a Significant Shareholder
as a result of the Merger.<PAGE>
Section 4.07 Disclosure. The representations and
warranties made by the Acquiror or Acquisition Sub contained in
this Agreement, do not include any untrue statement of a
material fact or omit to state a material fact required to be
stated herein in order to make the statements herein, in light
of the circumstances under which they are made, not misleading.
Section 4.08 Information Supplied. None of the
information to be supplied by Acquiror for inclusion or
incorporation by reference in the Proxy/Registration Statement,
or any amendment or supplement thereto, will (i) in the case of
the Registration Statement, at the time it becomes effective and
at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading, or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and
at the time of the meeting of shareholders of Stokely described
in Section 5.09, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
If at any time prior to the Effective Time any event with
respect to Acquiror, its officers and directors, or any of its
subsidiaries shall occur which is required to be described in
the Proxy/Registration Statement, such event shall be so
described, and an amendment or supplement shall be promptly
filed with the SEC. The Registration Statement will comply
(with respect to Acquiror) as to form in all material respects
with the provisions of the Securities Act and the Exchange Act.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.01. Access and Information Regarding Stokely.
From the date hereof until the Closing Date, upon reasonable
notice and subject to applicable laws relating to the exchange
of information, Stokely will give Acquiror, its counsel,
financial advisors, auditors and other authorized
representatives access during normal business hours to the
offices, properties, books and records of Stokely and the
Stokely Subsidiaries; provided, however, that the access
requested shall not interfere unreasonably with the business,
properties or operations of Stokely or the Stokely Subsidiaries.
Stokely also will furnish to Acquiror, its counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information as such
persons may reasonably request, other than in each case reports
or documents which Stokely or the Stokely Subsidiaries are not
permitted to disclose under applicable law or any binding
agreement entered into prior to the date of this Agreement. The
parties will hold any such information which is nonpublic in
confidence in accordance with the terms of the confidentiality
agreement in effect between the parties on the date of this
Agreement and prior to the consummation of the transactions
contemplated by this Agreement, will not use any such
information for any purpose other than in connection with the
consummation of the transactions contemplated by this Agreement.
Section 5.02 Access and Information Regarding Acquiror.
From the date hereof until the Closing Date, and upon reasonable
notice and subject to applicable laws relating to the exchange
of information, the Acquiror shall afford to Stokely's officers,
employees, accountants, legal counsel and other representatives
of Stokely, access, during normal business hours, to its
properties, books, contracts, commitments and records to the
extent reasonably necessary to confirm to Stokely that the
Acquiror SEC Reports and the representations and warranties made
by Acquiror and the Acquisition Sub herein (other than those set
forth in Sections 4.05, 4.07 and 4.08) are true and correct and
do not include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or herein
in order to make the statements therein or herein, in light of
the circumstances under which they are made, not misleading.
Prior to the Effective Time, the Acquiror shall furnish promptly
to Stokely all other information concerning the business,
properties and personnel of the Acquiror as Stokely may
reasonably request in order to confirm the matters set forth in
the prior sentence, other than in each case reports or documents
which the Acquiror is not permitted to disclose under applicable
law or any binding agreement entered in to prior to the date of
this Agreement. The parties will hold any such information
which is nonpublic in confidence as if Stokely and its officers,
employees, accountants, legal counsel and other representatives
were subject to the confidentiality obligations of Acquiror and
its officers, employees, accountants, legal counsel and other
representatives under the confidentiality agreement in effect
between the parties on the date of this Agreement and will not
use any such information for any purpose other than in
connection with the consummation of the transactions
contemplated by this Agreement.
Section 5.03 Operation of Stokely's Business. Without the
prior consent of the Acquiror, and except (i) as set forth on
Schedule 5.03, or (ii) as otherwise specifically permitted by
this Agreement, from the date hereof until the Closing Date
Stokely shall not, and shall not permit any Stokely Subsidiary
to:
(a) Grant or promise any increase in compensation to
any executive officer or director, or any
general increase in the rate of compensation of
its employees, except, however, ordinary merit
increases not unusual in character or amount
made in the ordinary course of business or
consistent with past practice or except as may
be required under existing agreements, plans or
arrangements;
(b) Enter into, amend, renew or extend any
employment contract or collective bargaining
agreement;
(c) Make any capital expenditures, or enter into any
lease of capital equipment or real estate,
involving an amount in excess of $100,000 to any
one entity, or $500,000 in the aggregate to all
entities;<PAGE>
(d) Enter into any other contract with any other
entity or entities involving total payments or
expenditures to any single entity of more than
$25,000 on any single contract, or $100,000 in
the aggregate of all such contracts with the
same or related parties or $500,000 in the
aggregate to all entities;
(e) Enter into any transaction other than in the
ordinary course of business, or create, assume,
incur or guarantee any indebtedness other than
under or pursuant to its revolving line of
credit with Congress Financial Corporation
(Central), ordinary course of business
borrowings or trade debt;
(f) Discharge or satisfy any lien or encumbrance, or
pay or satisfy any obligation or liability
(absolute, contingent, accrued or otherwise)
other than in the ordinary course of business or
consistent with past practice;
(g) Authorize or issue any shares of capital stock
(including, without limitation, treasury shares)
or other securities convertible into capital
stock, or declare or pay any dividend or make
any sale of, or distribution with respect to,
capital stock or directly or indirectly redeem,
purchase or otherwise acquire any capital stock
or carry out any stock split, reverse stock
split, or other form of recapitalization of its
capital stock;
(h) Make any amendments to or changes in its
articles of incorporation or by-laws;
(i) Perform any act, or attempt to do any act, or
permit any act or omission to act, which will
cause a breach of any contract, agreement,
instrument, document, lease, license, permit,
indenture or other obligation to which Stokely
or any Stokely Subsidiary is a party or to which
it is bound and which would have a Material
Adverse Effect on Stokely and the Stokely
Subsidiaries;
(j) Acquire, whether by purchase of equity
securities, merger or consolidation, any other
person or acquire a material amount of assets of
any other person except pursuant to existing
contracts or commitments or in the ordinary
course or consistent with past practice;
(k) Sell, lease, license or otherwise dispose of any
material assets or property except pursuant to
existing contracts or commitments or in the
ordinary course or consistent with past
practice; or<PAGE>
(l) Other than as may be required in the reasonable
judgment of Stokely's Board of Directors in
order to comply with their fiduciary duty to
Stokely's shareholders and other constituencies
under applicable law as permitted under Section
5.09, Section 5.11 and Section 5.14 hereof, and
other than changes to the Stokely Disclosure
Schedule that are required due to actions taken
in the ordinary course of Stokely's or any
Stokely Subsidiary's business (as long as such
changes are not designed to thwart satisfaction
of any condition set forth in Article VI or
Article VII hereof), take any action that is
intended or may reasonably be expected to result
in (I) any of its representations or warranties
set forth in this Agreement being or becoming
untrue in any material respect, (ii) any of the
conditions to the Merger not being satisfied, or
(iii) a violation of any covenant contained in
this Agreement.
Section 5.04 Preservation of Business. From the date
hereof until the Closing Date, Stokely and each Stokely
Subsidiary shall carry on its business in the ordinary course or
consistent with past practice and shall use its best efforts to
keep its business organization intact, including its present
relationships with employees, suppliers and customers and others
having business relations with it.
Section 5.05 Insurance and Maintenance of Property. From
the date hereof until the Closing Date, Stokely shall, or shall
cause each Stokely Subsidiary to, maintain in effect all the
Insurance, and Stokely shall, or shall cause each Stokely
Subsidiary to, operate, maintain and repair all of its property
in a manner consistent with past practice.
Section 5.06 Compliance with Laws. From the date hereof
until the Closing Date, Stokely and each Stokely Subsidiary
shall comply with all material laws, statutes, ordinances,
rules, regulations, guidelines, orders, arbitration awards,
judgments and decrees applicable to, or binding upon, it or its
business or properties.
Section 5.07 Update Stokely Disclosure Schedule. At the
Effective Date, Stokely shall deliver to the Acquiror an updated
and amended Stokely Disclosure Schedule setting forth all
information, events or actions which, if this Agreement were
signed on the Effective Date, would be required to be disclosed
in the Stokely Disclosure Schedule in order to make Stokely's
representations and warranties contained herein true and not
misleading in all respects as of the Effective Date.
Section 5.08 Acquiror Negative Covenants. From the date
of this Agreement until the Effective Time, the Acquiror shall
not do, or agree to commit to do, or permit any of its
subsidiaries to do, without the prior consent of Stokely, any of
the following:
(a) other than as may be required in the reasonable
judgment of Acquiror's Board of Directors in
order to comply with their fiduciary duty to
Acquiror's shareholders and other constituencies
under applicable law, and other than actions
taken in the ordinary course of Acquiror's
business, take any action that is intended or
may reasonably be expected to result in (I) any
of its representations or warranties set forth
in this Agreement being or becoming untrue in
any material respect, (ii) any of the conditions
to the Merger not being satisfied, or (iii) a
violation of any covenant contained in this
Agreement;
(b) amend its Articles of Incorporation or By-laws
or other governing instrument in a manner which
would adversely affect in any manner the ability
of the Acquiror to consummate the transactions
contemplated hereby;
(c) enter into any agreement providing for, or
otherwise participate in, any merger,
consolidation or other transaction in which the
Acquiror or any surviving corporation would be
required not to consummate the Merger or any of
the other transactions contemplated hereby in
accordance with the terms of this Agreement, as
the case may be; or
(d) agree to do any of the foregoing.
Section 5.09 Stokely Shareholder Approval;
Proxy/Registration Statement. Stokely shall (a) call a meeting
of its shareholders (the "Shareholders' Meeting") for the
primary purpose of voting upon the Merger, (b) hold the
Shareholders' Meeting as soon as practicable following the date
of this Agreement, and (c) subject to its fiduciary duties under
applicable law as advised by outside counsel, recommend to its
shareholders the approval of the Merger by its Board of
Directors.
Section 5.10 Indemnification and Insurance.
(a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation,
whether civil, criminal or administrative,
including, without limitation, any such claim,
action, suit, proceeding or investigation in
which any person who is now, or has been at any
time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director,
officer or employee of Stokely or any of the
Stokely Subsidiaries [including in his/her role
as a fiduciary of the employee benefit plans of
Stokely, if applicable (the "Indemnified
Parties")] is, or is threatened to be, made a
party based in whole or in part on, or arising
in whole or in part out of, or pertaining to (i)
the fact that he or she is or was a director,
officer or employee of Stokely, any of the
Stokely Subsidiaries or any of their respective
predecessors, or (ii) this Agreement or any of
the transactions contemplated hereby, whether in
any case asserted or arising before or after the
Effective Time (the "Indemnified Claims"), the
parties hereto agree to cooperate and use their
best efforts to defend against and respond
thereto. It is understood and agreed that after
the Effective Time, the Surviving Corporation
shall indemnify and hold harmless, to the
fullest extent required by law (or if greater,
to the fullest extent provided under Stokely's
Articles of Incorporation and Bylaws as in
effect on the date hereof), each such
Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in
advance of the final disposition of any claim,
suit, proceeding or investigation to each
Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking
required by applicable law), judgments, fines
and amounts paid in settlement in connection
with any Indemnified Claim, and in the event of
any such threatened or actual Indemnified Claim,
the Indemnified Parties may retain counsel
satisfactory to them after consultation with the
Surviving Corporation; provided, however, that
the Surviving Corporation shall have no
obligation to indemnify any of the Indemnified
Parties with respect to any claim, action, suit,
proceeding or investigation if in accordance
with Section 180.0851(2)(a) of the WBCL or
Section 7.02 of Stokely's Bylaws as in effect on
the date hereof, such indemnification is not
permitted [i.e., if liability was incurred
because the director, officer or employee
breached or failed to perform a duty that he or
she owes to the corporation and the breach or
failure to perform constitutes (i) a willful
failure to deal fairly with the corporation or
its shareholders in connection with a matter in
which the director, officer or employee has a
material conflict of interest, (ii) a violation
of the criminal law (unless the director,
officer or employee had reasonable cause to
believe that his or her conduct was lawful or no
reasonable cause to believe that his or her
conduct was unlawful), (iii) a transaction from
which the director, officer or employee derived
an improper personal profit, or (iv) wilful
misconduct]. Notwithstanding anything to the
contrary in this Section 5.10, with respect to
any matter for which the Surviving Corporation
has a duty to indemnify the Indemnified Parties,
(i) the Surviving Corporation shall have the
right to assume the defense thereof and upon
such assumption the Surviving Corporation shall
not be liable to any Indemnified Party for any
legal expenses of other counsel or any other
expenses subsequently incurred by any
Indemnified Party in connection with the defense
thereof, except that if the Surviving
Corporation elects not to assume such defense
for which the Surviving Corporation is
responsible, the Indemnified Parties may retain
counsel satisfactory to them after consultation
with the Surviving Corporation, and the
Surviving Corporation shall pay the reasonable
fees and expenses of such counsel for the
Indemnified Parties, (ii) the Surviving
Corporation shall not be liable for any
settlement effected without its prior consent,
and (iii) the Surviving Corporation shall have
no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction
shall ultimately determine, and such
determination shall have become final and
nonappealable, that indemnification of such
Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim
indemnification under this Section, upon
learning of any such claim, action, suit,
proceeding or investigation, shall promptly
notify the Acquiror and the Surviving
Corporation thereof, provided that the failure
to so notify shall not affect the obligations of
the Surviving Corporation under this Section
except to the extent such failure to notify
materially prejudices the Surviving Corporation.
The Surviving Corporation's obligations under
this Section shall continue in full force and
effect for a period of seven years from the
Effective Time; provided, however, that all
rights to indemnification in respect of any
claim (a "Claim") asserted or made within such
period shall continue until the final
disposition of such Claim.
(b) Prior to the Effective Time, Stokely shall
purchase, and for a period of seven years after
the Effective Time, the Surviving Corporation
shall use its best efforts to maintain,
directors and officers liability insurance
"tail" or "runoff" coverage with respect to
wrongful acts and/or omissions committed or
allegedly committed prior to the Effective Time.
Such coverage shall have an aggregate coverage
limit over the term of such policy in an amount
no less than the annual aggregate coverage limit
under Stokely's existing directors' and
officers' liability policy (set forth on
Schedule 5.10), and in all other respects shall
be at least comparable to such existing policy;
provided, however, that in no event shall the
Surviving Corporation be required to expend on
an annual basis more than 300% of the current
amount expended by Stokely (the "Insurance
Amount") to maintain or procure insurance
coverage, and further provided that if the
Surviving Corporation is unable to maintain or
obtain the insurance called for by this Section,
the Surviving Corporation shall use all
reasonable efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(c) In the event the Acquiror or the Surviving
Corporation or any of its successors or assigns
(i) consolidates with or merges into any other
person and shall not be the continuing or
surviving corporation or entity of such
consolidation or merger, or (ii) transfers or
conveys all or substantially all of its
properties and assets to any person, then, and
in each such case, proper provision shall be
made so that the successors and assigns of the
Acquiror or the Surviving Corporation, as the
case may be, assume the obligations of such
party set forth in this Section.<PAGE>
(d) The provisions of this Section are intended to
be for the benefit of, and shall be enforceable
by, each Indemnified Party and his or her heirs
and representatives.
Section 5.11 No Solicitation. From the date hereof until
the Closing Date, neither Stokely nor any of its officers,
directors, employees, agents or representatives (including,
without limitation, investment bankers, attorneys and
accountants) shall, directly or indirectly, without the prior
consent of the Acquiror, initiate contact with or solicit any
inquiries or proposals by, or except as may be required by, or
advisable pursuant to, the fiduciary duties of the Board of
Directors of Stokely, enter into any discussions or negotiations
or agreements with, any corporation, partnership, person or
other entity or group in connection with a proposal regarding a
sale of all or substantially all of Stokely's capital stock or
a consolidation, merger, or sale of all or a substantial portion
of the assets of Stokely or any similar transaction. Nothing
contained in this Section or in any other provision of this
Agreement shall prohibit Stokely or its Board of Directors from
making such disclosures to Stokely's shareholders as are
required under applicable law.
Section 5.12 Requisite Regulatory Approvals.
(a) Pre-Merger Notification. Pursuant to the HSR
Act, Stokely and the Acquiror will prepare and
file, or cause to be filed, a notification and
report form (the "Hart-Scott Report") with the
Pre-Merger Notification Office of the Federal
Trade Commission and with the Antitrust Division
of the Department of Justice (collectively, the
"Pre-Merger Notification Agencies") in respect
of the transactions contemplated hereby, which
filing shall comply as to form with all
requirements applicable thereto and all of the
data and information reported therein shall be
accurate and complete in all material respects.
Each of Stokely and the Acquiror will promptly
comply with all requests, if any, of the Pre-
Merger Notification Agencies for additional
information or documentation in connection with
the Hart-Scott Report forms filed by or on
behalf of each of such parties pursuant to the
HSR Act, and all such additional information or
documentation shall comply as to form with all
requirements applicable thereto and shall be
accurate and complete in all material respects.
The Acquiror and Stokely also will use their
best efforts to obtain early termination of the
waiting period required under the HSR Act.
(b) Other Regulatory Filings. Each of Stokely and
the Acquiror shall duly make all other
regulatory filings required to be made by each
in respect of this Agreement or other
transactions contemplated hereby. Each party
shall use all reasonable efforts to obtain all
permits, approvals and consents required to be
obtained prior to the consummation of the Merger
or necessary to carry out the transactions
contemplated by this Agreement under applicable
federal, state, local and foreign laws, rules
and regulations.
Section 5.13 Consultation and Notice of Actions and
Proceedings. From the date hereof until the Closing Date,
Stokely will cause one or more of its officers to confer on a
regular basis with officers of the Acquiror to report the
general status of ongoing operations. Stokely shall promptly
notify the Acquiror of any claims, actions, proceedings or
investigations commenced or, to its knowledge threatened,
involving Stokely, any Stokely Subsidiary or any of their
respective properties or assets or, to its knowledge, any
employee, director or officer of Stokely or any Stokely
Subsidiary which if pending on the date hereof would have been
required to be disclosed on the Stokely Disclosure Schedule or
which relates to the consummation of the Merger.
Section 5.14 Reasonable Best Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without
limitation: (i) cooperation in the preparation and filing of the
Proxy/Registration Statement and any amendments thereto; and
(ii) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby. Stokely and
the Acquiror shall each use its best efforts to cause to be
fulfilled on or prior to the Effective Time each of the
conditions set forth in Articles VI, VII and VIII hereof. In
case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party
hereto shall take all such necessary action. Notwithstanding
the foregoing, Stokely shall not be obligated to use its
reasonable best efforts or take or not take any action pursuant
to this Section 5.14 if in the reasonable judgment of its Board
of Directors such action would be a breach of the Board's
fiduciary duties to its shareholders or other constituencies as
contemplated by Section 5.09 or Section 5.11.
Section 5.15 Public Announcements. The Acquiror and
Stokely, as the case may be, will consult with one another
before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to
any listing agreement with any national securities exchange.
Section 5.16 Subsequent SEC Filings. As soon as
reasonably available, but in no event more than five business
days after the filing thereof with the SEC, the Acquiror will
deliver to Stokely and Stokely will deliver to the Acquiror
their respective reports, including Forms 8-K, 10-Q, 10-K and
proxy statements, as filed with the SEC under the Exchange Act
from the date hereof until the Closing Date.
Section 5.17 Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of Stokely, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on
behalf of Stokely, any other actions and things they may deem
desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest
in, to and under any of the rights, properties or assets of
Stokely acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.<PAGE>
Section 5.18 Stokely Employment-Related Agreements.
(a) Employment Arrangements. From and after the
Effective Time, the Acquiror shall cause the
Surviving Corporation or any of its subsidiaries
to assume the rights and discharge the duties
and obligations of Stokely under, and (i) honor
(without modification, effect or counterclaim)
in accordance with their terms all existing
employment agreements (including all Change of
Control Contingent Employment Agreements as
defined and set forth on Schedule 5.18),
severance plans and agreements and deferred
compensation agreements or arrangements
("Employment-Related Agreements") set forth on
Schedule 5.18 (and which Stokely represents is a
complete list of such Employment-Related
Agreements) between Stokely or any of the
Stokely Subsidiaries, and any officer, director,
or employee of Stokely or any of the Stokely
Subsidiaries to the extent such terms are in
effect on the date hereof or as otherwise
provided hereunder, except for changes thereto
which are permitted by this Agreement, and (ii)
honor (without modification, effect or
counterclaim) all obligations under the Stokely
Benefit Plans, including provisions for vested
benefits or other vested amounts earned or
accrued through the Effective Date under any
Stokely Benefit Plan, each as of the date
hereof, except for changes thereto which are
permitted by this Agreement. Notwithstanding
anything to the contrary in this Agreement, the
Surviving Corporation shall not be deemed to
assume, or be required to honor any provisions
of any Employment-Related Agreements or Stokely
Benefit Plans providing stock options, stock
appreciation rights or other equity-based
incentives, and nothing in this Agreement shall
preclude the amendment or termination of any
Stokely Benefit Plan to the extent that it
provides stock options, stock appreciation
rights, warrants, or other equity-based
incentives. To the extent any such Employment-
Related Agreements can be unilaterally amended
by Stokely, the Acquiror agrees not to allow the
amendment of any such Employment-Related
Agreement prior to the third anniversary of the
Effective Date in a manner that will reduce or
otherwise impair the benefits that would be
payable hereunder to any employee who is covered
thereby or who is terminated on or before the
third anniversary of the Effective Date; and
provided further, that nothing in this Agreement
shall restrict actions being taken at any time
that terminate any of the Employment-Related
Agreements at or after the third anniversary of
the Effective Date or do not extend any of the
Employment-Related Agreements beyond the earlier
of their current term or the third anniversary
of the Effective Date. The Acquiror also hereby
acknowledges and agrees that (i) all of the
Employment-Related Agreements are valid and
binding obligations of Stokely, enforceable in
accordance with their terms, (ii) by reason of
the Merger, all of such Employment-Related
Agreements will remain valid and binding
obligations of the Surviving Corporation,
enforceable in accordance with its terms, and
(iii) neither the Acquiror nor any of its
affiliates will contest or challenge the
validity or the enforceability of any of the
Employment-Related Agreements at any time
hereafter. The Acquiror acknowledges that the
agreements contained in this Section 5.18(a) are
an integral part of the transactions
contemplated by this Agreement, and that without
these agreements, Stokely would not enter into
this Agreement; accordingly, if the Surviving
Corporation fails to honor the terms of any of
the Employment-Related Agreements or the Stokely
Benefit Plans, or fails to pay any amounts
payable thereunder promptly when due, the
Surviving Corporation shall in addition thereto
pay to the affected employee all costs and
expenses (including fees and disbursements of
counsel) incurred in collecting such amounts,
together with interest on such amounts (or any
unpaid portion thereof) from the date such
payment was required to be made until the date
such payment is received by the affected
employee, at the prime rate of a national bank
of the affected employee's choosing, as in
effect from time to time during such period.
(b) Acquiror Guaranty. From and after the Effective
Time, Acquiror hereby guarantees the Surviving
Corporation's obligations under the Change of
Control Contingent Employment Agreements as set
forth in Section 5.18(a). In no event shall
this guarantee by Acquiror extend to any of the
Surviving Corporation's obligations set forth in
Section 5.18(a) with respect to any of the
Employment-Related Agreements (other than the
Change in Control Contingent Employment
Agreements) or the Stokely Benefit Plans.
Section 5.19 Stokely Benefit Plans.
(a) General. Subject to the provisions of the
collective bargaining agreements set forth on
Schedule 3.17 or the Change of Control
Contingent Employment Agreements as set forth in
Section 5.18(a), at the sole option of the
Acquiror, for a period of three years after the
Effective Date the Acquiror shall elect to
either (i) have the employees of Stokely and the
Stokely Subsidiaries ("Stokely Employees")
participate in the employee benefit plans in
which similarly situated employees of Friday
Canning Company, one of the Acquiror's
subsidiaries, participate, to the same extent as
comparable employees of Friday Canning Company,
as currently set forth on Schedule 5.19(a), or
(ii) maintain the Stokely Benefit Plans in
place, but Acquiror shall retain the right to
make such changes as are necessary or
appropriate to bring the overall level of
benefits provided to Stokely employees to such
levels as are generally in line with industry
standards. If Acquiror chooses (i) above, then
as soon as administratively practicable after
the Effective Time, the Acquiror shall permit
the Stokely Employees to participate in the
Acquiror's group hospitalization, medical, life
and disability insurance plans, defined
contribution retirement plan, severance plan and
similar plans on the same terms and conditions
as applicable to comparable employees of the
Acquiror but including the waiver of pre-existing condition
prohibitions, and giving effect to years of service with
Stokely and the Stokely Subsidiaries as if such service were
with the Acquiror, for purposes of eligibility,
vesting and benefit accrual.
(b) Specific Treatment of Certain Benefit Plans.
Schedule 5.19(b) sets forth certain agreements
with respect to certain of the Stokely Benefit
Plans and other employee benefit matters.
Section 5.20 Merger as Change in Control. The Merger will
constitute a change in control for the purposes of all
Employment-Related Agreements and Stokely Benefit Plans.
Section 5.21 Severance Arrangements. Set forth on
Schedule 5.21 is a summary of Stokely's Severance Program, which
Stokely represents and warrants to the Acquiror and Acquisition
Sub has not been amended or supplemented since January 1, 1997.
Stokely's Severance Program shall govern termination of
employment which occurs within one year following the Effective
Time, except for Stokely Employees who have in effect a Change
of Control Contingent Employment Agreement. After the
expiration of the applicability of Stokely's Severance Program,
or after the expiration of the Change of Control Contingent
Employment Agreement, as applicable, Stokely Employees will be
eligible under the Surviving Corporation's regular severance
plan as then in effect.
Section 5.22 Contribution of Cash by Acquiror; Payment to
Congress Financial Corporation (Central).
At the Effective Time, Acquiror shall contribute cash to
Stokely, which cash shall then be used by Stokely to pay off
then outstanding revolving credit indebtedness to Congress
Financial Corporation (Central) ("Congress") under Stokely's
current Loan and Security Agreement by and between Congress and
Stokely, dated May 21, 1996 (the "Congress Agreement") in such
amounts that the balance outstanding under the Congress
Agreement at the Effective Time, and after giving effect to such
payment, shall be as contemplated in Section 6.08.<PAGE>
Section 5.23 Debt Exchange. Conditioned upon, and in
conjunction with, the closing of the transactions contemplated
by this Agreement, (a) the Acquiror acknowledges and agrees that
it will honor the agreements and arrangements set forth in the
Debt-Holder Agreement ("Debt-Holder Agreement"), attached hereto
as Exhibit E, and will discharge all of its obligations and
duties thereunder on the terms set forth therein, and (b)the
Acquiror also agrees to take such actions and provide such
documents in connection therewith as may be reasonably requested
by any of the parties to the Debt-Holder Agreement in order to
effectuate the intent and purpose of the Debt-Holder Agreement.
Section 5.24 Stock Exchange Listing. Acquiror shall use
its best efforts to cause the shares of Acquiror Stock to be
issued in the Merger to be approved for listing on the New York
Stock Exchange prior to the Effective Time.
ARTICLE VI
CONDITIONS OF THE ACQUIROR'S AND
THE ACQUISITION SUB'S OBLIGATION TO CLOSE
The obligation of the Acquiror and the Acquisition Sub to
consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction and fulfillment, prior to and on
the Effective Date, of each of the following express conditions
precedent:
Section 6.01 Compliance by Stokely. (a) All the terms,
covenants and conditions of this Agreement required to be
complied with and satisfied by Stokely at or prior to the
Effective Time shall have been duly complied with and satisfied
in all material respects, and (b) the representations and
warranties made by Stokely, as may be updated pursuant to
Section 5.07 hereof, shall be true and correct in all material
respects at and as of the Effective Time, except for those
specifically relating to a time or times other than the
Effective Time (which shall be true and correct in all material
respects at such time or times), with the same force and effect
as if made at and as of the Effective Time; provided, however,
that for purposes of determining the satisfaction of the
condition contained in this clause (b), no effect shall be given
to any exception in such representations and warranties relating
to a Material Adverse Effect. The Acquiror shall have received
a certificate signed on behalf of Stokely by the Chief Executive
Officer and the Chief Financial Officer to the foregoing
effects.
Section 6.02 Consents Under Agreements. The consent,
approval or waiver of each person whose consent or approval
shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation,
right or interest of Stokely or to any change in indirect
control of a Stokely Subsidiary under any contract, loan or
credit agreement, note, mortgage, indenture, lease, permit,
surety bond, license or other agreement, instrument, arrangement
or document shall have been obtained (except where the failure
to obtain such consent, approval or waiver would not have a
Material Adverse Effect on the Surviving Corporation assuming
the Merger had taken place), but in any event including, without
limitation, those consents, approvals and waivers listed on
Schedule 6.02.<PAGE>
Section 6.03 Proceedings and Instruments Satisfactory.
All proceedings, corporate or otherwise, to be taken in
connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Acquiror.
Section 6.04 Opinion of Counsel. Stokely shall have
delivered to the Acquiror an opinion of Michael Best & Friedrich
LLP, counsel for Stokely, dated on the Effective Date in form
and substance as attached hereto as Exhibit B.
Section 6.05 Absence of Certain Changes or Events. As of
the Closing Date, there shall have been no event, circumstance
or change that has resulted in, or has a reasonable possibility
of resulting in, a Material Adverse Effect on Stokely and the
Stokely Subsidiaries from that which was represented and
warranted on the date of this Agreement pursuant to this
Agreement and the Stokely Disclosure Schedule provided at the
time of execution of the Agreement. For purposes of this
Section 6.05, (i) Acquiror shall be entitled to consider all
updates or amendments to the Stokely Disclosure Schedule from
the Stokely Disclosure Schedule provided by Stokely concurrently
with the execution of this Agreement as events, circumstances or
changes, and (ii) "Material Adverse Effect" shall not be deemed
to include the following: (a) the effects of the prepayment of
insurance premiums for directors' and officers' liability
insurance; and (b) if it occurs, the effects of being delisted
from the NASDAQ National Market System. For purposes of this
Section 6.05, it shall be deemed to constitute a Material
Adverse Effect if Stokely's consolidated net loss (a) is greater
than $3,380,000 for the quarter ending September 30, 1997 or (b)
is or, in Acquiror's reasonable judgment, is likely to be,
greater than $3,000,000 for the quarter ending December 31,
1997. Net losses for such quarters equal to or less than such
amounts shall not, in and of themselves, be deemed to constitute
a Material Adverse Effect. Stokely shall have promptly provided
to Acquiror (which Stokely hereby covenants to provide) copies
of its monthly financial statements, and copies of its weekly
margin reports, for purposes of Acquiror monitoring Stokely's
results of operations and financial condition. All information
provided by Stokely in connection with this covenant also shall
be governed by the terms and conditions set forth in Section
5.01, as if such information were disclosed or provided pursuant
thereto.
Section 6.06 Cancellation of Stock Options. All options
to purchase Stokely Common Stock that are outstanding on the
Effective Date (each a "Stokely Stock Option") shall have been
canceled or cashed out at no value and shall be of no force or
effect as of the Effective Date, including any Stokely Stock
Options whose vesting is accelerated due to a change in control.
Section 6.07 Cancellation of Warrants. All warrants to
purchase Stokely Common Stock that are outstanding on the
Effective Date (each, a "Stokely Warrant") shall have been
canceled or cashed out at no value, and shall be of no force or
effect as of the Effective Date.<PAGE>
Section 6.08 Directors' Phantom Stock Plan. From the date
of this Agreement until the Effective Date, no shares of Phantom
Stock shall have been granted under the Directors' Phantom Stock
Plan (as described on Schedule 3.02) and as of the Effective
Date, the Directors' Phantom Stock Plan shall have been
terminated.
Section 6.09 Treatment of Indebtedness. Contemporaneously
with the Effective Time, holders of at least $31.8 million in
principal amount (less any principal payments made thereon after
the date of this Agreement up to the Effective Time) of
Stokely's approximately $45 million of Senior Notes and
Industrial Revenue Bonds shall have exchanged such amount of
indebtedness for Acquiror stock on the terms outlined in the
Debt-Holder Letter Agreement attached hereto as Exhibit E. The
Debt-Holder Letter Agreement (as may be amended by the parties
thereto, but only to the extent the Acquiror agrees in writing
to such changes) shall have been duly executed and shall have
remained in full force and effect through the Effective Date.
At the Effective Date, no event of default shall have occurred
or be continuing with respect to non-exchanging holders of
Senior Notes or the Industrial Revenue Bonds unless (i) the
event of default has been waived on or before the Effective
Date; (ii) the non-exchanging Senior Notes or the non-exchanging
Industrial Revenue Bonds may be prepaid at face value, without
premium or penalty; or (iii) the event of default was a result
of a breach of financial covenants which could be cured by the
Acquiror contributing capital to Stokely and/or by the Acquiror
exchanging Acquiror Stock for the Senior Notes and/or the
Industrial Revenue Bonds. Congress shall have agreed with
Stokely, on terms and conditions reasonably satisfactory to
Congress and Acquiror, that the Congress Agreement shall remain
in place, in full force and effect, with at least $20 million in
borrowings then outstanding (which amount of credit shall
thereafter remain available to Stokely), until the end of its
current term.
Section 6.10 Treatment of Certain Supplier Indebtedness.
At or prior to the Effective Time, certain of Stokely's
suppliers shall have forgiven in the aggregate at least $1.0
million of their accounts receivable from Stokely.
Section 6.11 Dissenters' Rights. Stokely shall have
delivered to Acquiror evidence in form reasonably satisfactory
to Acquiror that there are not more than 5% of the total issued
and outstanding shares of Stokely Common Stock as to which the
holders thereof have exercised and perfected dissenters' rights
pursuant to the WBCL.
Section 6.12 Updates and Amendments to Stokely Disclosure
Schedule. To the extent that the Stokely Disclosure Schedule
provided by Stokely concurrently with the execution of this
Agreement is updated (to reflect events, circumstances or
changes occurring after the date of execution of this Agreement)
or amended (to reflect corrections made to the Stokely
Disclosure Schedule which should have been so set forth on the
date of this Agreement) at or before the Effective Time, and (I)
in the case of any such update to the Stokely Disclosure
Schedule as it relates to any provision of the Stokely
Disclosure Schedule except as listed specifically in Section
6.12(ii) below, in Acquiror's reasonable judgment any such
update represents a material change from the information
disclosed in the Stokely Disclosure Schedule provided by Stokely
concurrently with the execution of this Agreement, (ii) in the
case of any such update to the Stokely Disclosure Schedule as it
relates to Sections 3.01(b), 3.01(c), 3.04, 3.06, 3.07, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.18, 3.19, 3.20, 3.22, 3.23
and 3.25, in Acquiror's reasonable judgment any such update
(together with all other updates and amendments) sets forth an
event, circumstance or change that has resulted in, or has a
reasonable possibility of resulting in, a Material Adverse
Effect (without being limited by any Material Adverse Effect
qualifiers in any of such sections listed above) on Stokely and
the Stokely Subsidiaries (as defined in Section 6.05 hereof), or
(iii) in the case of any amendment to the Stokely Disclosure
Schedule, in Acquiror's reasonable judgment any such amendment
represents a material change from the information disclosed in
the Stokely Disclosure Schedule provided by Stokely concurrently
with the execution of this Agreement, then Acquiror shall have
consented in writing to such update(s) and amendment(s).
ARTICLE VII
CONDITIONS TO STOKELY'S OBLIGATION TO CLOSE
The obligation of Stokely to consummate the transactions
contemplated by this Agreement shall be subject to the
satisfaction and fulfillment, prior to and on the Effective
Date, of the following express conditions precedent:
Section 7.01 Compliance by the Acquiror and the
Acquisition Sub. (a) All terms, covenants and conditions of this
Agreement required to be complied with and satisfied by the
Acquiror and the Acquisition Sub at or prior to the Effective
Time shall have been duly complied with and satisfied in all
material respects, and (b) the representations and warranties
made by Acquiror and the Acquisition Sub shall be true and
correct in all material respects at and as of the Effective
Time, except for those specifically relating to a time or times
other than the Effective Time (which shall be true and correct
in all material respects at such time or times). Stokely shall
have received a certificate signed on behalf of each of the
Acquiror and the Acquisition Sub by the Chief Executive Officer
and the Chief Financial Officer to the foregoing effects.
Section 7.02 Delivery of Merger Consideration. The
Acquiror shall have made proper arrangements for the delivery of
the Merger Consideration as described in Section 2.02 hereof.
Section 7.03 Fairness Opinion. An opinion shall have been
received by Stokely from Donaldson, Lufkin & Jenrette Securities
Corporation dated as of the date of this Agreement and confirmed
prior to distribution of the Stokely Proxy Statement to the
shareholders of Stokely, to the effect that the consideration to
be received by Stokely's shareholders pursuant to this Agreement
is fair to the shareholders of Stokely from a financial point of
view.
Section 7.04 Opinion of Counsel for the Acquiror and the
Acquisition Sub. Stokely shall have received an opinion of
counsel from Robert W. Olson, General Counsel for the Acquiror
and the Acquisition Sub, dated the Effective Date and in form
and substance substantially similar to the form attached hereto
as Exhibit C, together with such other opinions as Stokely may
reasonably request.<PAGE>
ARTICLE VIII
CONDITIONS TO THE RESPECTIVE OBLIGATIONS OF
THE ACQUIROR, THE ACQUISITION SUB AND STOKELY TO CLOSE
The respective obligations of the Acquiror, the Acquisition
Sub and Stokely to consummate the transactions contemplated by
this Agreement are subject to the further conditions that:
Section 8.01 Approval by Affirmative Vote of Shareholders.
This Agreement and the Plan of Merger shall have been duly
approved, confirmed and ratified by the requisite vote of the
shareholders of Stokely and shall not have been revoked at any
time prior to the Effective Date.
Section 8.02 Requisite Regulatory Approvals. The parties
hereto shall have received all requisite regulatory approvals
set forth in Section 5.12 and required to consummate the
transactions contemplated by this Agreement from the appropriate
regulatory agencies and governmental entities, and each such
approval shall remain in full force and effect and all statutory
waiting periods in connection therewith shall have expired. No
federal or state governmental or regulatory authority or other
agency or commission, or federal or state court of competent
jurisdiction, shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order,
decree, injunction or other order which is in effect
restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement nor shall any
proceeding have been commenced or threatened by any federal or
state governmental or regulatory authority or other agency or
commission seeking to prevent consummation of the transactions
contemplated by this Agreement.
Section 8.03 Matters Relating to the Registration
Statement. The Registration Statement shall have been declared
effective and no stop order suspending effectiveness shall have
been issued, no action, suit, proceeding or investigation by the
SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under
state securities laws, the Securities Act and the Exchange Act
relating to the issuance or trading of the Acquiror Stock
issuable in connection with the Merger shall have been received.
ARTICLE IX
TERMINATION
Section 9.01 Reasons for Termination. This Agreement may
be terminated before the Effective Date, notwithstanding the
approval and adoption of this Agreement or the Merger Agreement
by the shareholders of Stokely:
(a) By mutual consent of the Boards of Directors of
Stokely, the Acquiror and the Acquisition Sub;
(b) By either Stokely or the Acquiror if the Merger
is not consummated on or before January 31,
1998, unless the failure to consummate shall be
due to the failure of the party seeking to
terminate to perform or observe the covenants
and agreements of such party set forth herein;
(c) by the Acquiror, provided the Acquiror has used
its best efforts to ensure that all of the
conditions set forth in Articles VII and VIII
have been fulfilled, if any of the conditions
set forth in Articles VI or VIII hereof shall
not have been fulfilled and shall not have been
waived on or before January 31, 1998 or shall
have become impossible of fulfillment;
(d) by Stokely, provided Stokely has used its best
efforts to ensure that all of the conditions set
forth in Articles VI and VIII have been
fulfilled, if any of the conditions set forth in
Articles VII or VIII hereof shall not have been
fulfilled and shall not have been waived on or
before January 31, 1998 or shall have become
impossible of fulfillment; or
(e) by either Stokely or the Acquiror if this
Agreement and the Plan of Merger shall not have
been approved on or before January 31, 1998 by
the requisite vote of the shareholders of
Stokely at a duly held meeting of such
shareholders or at any adjournment or
postponement thereof.
Section 9.02 Effect of Termination. In the event this
Agreement and the Plan of Merger are terminated as provided
herein, this Agreement and the Plan of Merger shall become void
and of no further force and effect without any liability on the
part of the terminating party or parties or their respective
shareholders, directors or officers; provided, however, that the
last sentences of Sections 5.01, 5.02 and 10.12 and Sections
9.02, 9.03, 10.10 and 10.15 of this Agreement shall survive any
such termination and that no party shall be relieved or released
from any liability or damages arising out of its willful breach
of any provision of this Agreement. In the event of termination
of this Agreement, written notice thereof and the reasons
therefor shall be given to the other parties by the terminating
party.
Section 9.03 Fee. Stokely hereby agrees to pay the
Acquiror and the Acquiror shall be entitled to receipt of a fee
(the "Acquiror Fee") as follows: (i) in the event (a) the
Agreement is terminated solely as a result of the failure of the
condition set forth in Section 8.01, (b) Stokely's Board of
Directors shall have failed to approve or recommend this
Agreement or the Merger, or (c) a competing offer is made to
Stokely, Stokely's Board of Directors approves such offer and
recommends that such offer be approved by the Stokely
shareholders, the Merger is not consummated and the transaction
underlying the competing offer is not consummated, then a fee of
$250,000 and a number of shares of Preferred Stock of Stokely
having a redemption value of $2,750,000, the designation, rights
and preferences of which are set forth on Exhibit D, or (ii)
following the occurrence of a Purchase Event (as defined below),
a fee of $3,000,000 (but in the event a fee has already been
paid pursuant to (i) above, then no additional fee will be paid,
but the Preferred Stock shall be redeemed in accordance with the
terms set forth on Exhibit D). Such payment shall be made in
immediately available funds and such issuance shall be
effectuated within five business days after delivery of notice
of entitlement by the Acquiror.
The term "Purchase Event" shall mean any of the following
events, or Stokely agreeing to, in writing, enter into an
agreement relating to any of the following events, occurring
after the date hereof and before the Effective Time or occurring
within twelve months of the date of termination of this
Agreement pursuant to this Article IX:
(a) the acquisition by any person, other than the
Acquiror or any of its subsidiaries, alone or
together with such person's affiliates and
associates or any group, of beneficial ownership
of 50% or more of Stokely Common Stock (for
purposes of this Subsection (a), the terms
"group" and "beneficial ownership" shall be as
defined in Section 13(d) of the Exchange Act and
regulations promulgated thereunder);
(b) a merger, consolidation or any other similar
transaction involving Stokely; or
(c) a purchase, lease or other acquisition of all or
substantially all of the assets of Stokely.
Section 9.04 Amendment. Subject to compliance with
applicable law, this Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the
shareholders of Stokely; provided, however, that after any
approval of the transactions contemplated by this Agreement by
Stokely's shareholders, there may not be, without further
approval of such shareholders, any amendment of this Agreement
which reduces the amount of the consideration to be delivered to
Stokely shareholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
Section 9.05 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or
authorized by their respective Board of Directors, may, to the
extent legally allowed, (a) extend the time for the performance
of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this
Agreement by Stokely's shareholders, there may not be, without
further approval of such shareholders, any extension or waiver
of this Agreement or any portion thereof which reduces the
amount or changes the form of the consideration to be delivered
to Stokely's shareholders hereunder other than as contemplated
by this Agreement. Any agreement on the part of a party hereto
or any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance
with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. Any notice given hereunder shall
be in writing and shall be mailed by first class mail, postage
prepaid, to the parties at the following addresses:
If to the Acquiror and the Acquisition Sub, then to:
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: Anthony D. Battaglia, President -
Diversified
Foods
With copies to:
Robert W. Olson, Senior Vice President, General
Counsel
and Secretary
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
and
Timothy E. Hoberg
Taft Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
If to Stokely, then to:
Stephen W. Theobald, President
and Chief Executive Officer
Stokely USA, Inc.
1230 Corporate Center Drive
Oconomowoc, WI 53066-0248
With a copy to:
Mr. Frank J. Pelisek
Michael Best & Friedrich LLP, Suite 3300
100 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Section 10.02 Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, their
respective successors and assigns, but shall not be assigned by
any party without the prior written consent of the other
parties.
Section 10.03 Articles and Other Headings. Articles and
other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.04 Entire Agreement. This Agreement embodies
the entire agreement among the parties and supersedes all prior
arrangements, understandings, agreements or covenants among the
parties.
Section 10.05 Governing Law. This Agreement shall be
governed by the laws of the State of Wisconsin applicable to
contracts made and to be performed therein.
Section 10.06 Counterparts. This Agreement may be
executed in counterparts, each of which when so executed shall
be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
Section 10.07 Closing. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in
Articles VI, VII and VIII, a closing (the "Closing") of the
transactions provided for herein shall take place on a date
chosen by Acquiror, which shall be no later than 30 days after
all approvals required hereby have been received and all
applicable waiting periods have expired, or on such later day as
the parties may agree (the "Closing Date"), at the offices of
Michael Best & Friedrich in Milwaukee, Wisconsin. In the event
the Closing does not take place on the date referred to in the
preceding sentence because any condition to the obligations of
any party under this Agreement and the Plan of Merger is not met
on that date, the other parties to this Agreement may postpone
the Closing to any designated subsequent business day by giving
the nonperforming party to this Agreement notice of the
postponed date. At the Closing, the parties will exchange the
certificates, opinions and other documents called for herein.
Subject to the terms and conditions hereof, consummation of the
Merger in the manner described herein shall be accomplished as
soon as practicable after the exchange of the documents at the
Closing has been completed.
Section 10.08 Articles of Merger. Subject to the
provisions of this Agreement, on the Closing Date, the Articles
of Merger shall be signed, verified and affirmed as required by
the WBCL and duly filed with the Department of Financial
Institutions of the State of Wisconsin. The date and time such
filing is to become and becomes effective is referred to herein
as the "Effective Time."
Section 10.09 Further Acts. Each of the parties (a) shall
perform such further acts and execute such further documents as
may be reasonably required to effect the Merger (including,
without limitation, the certification, execution, acknowledgment
and filing of the Plan of Merger), and (b) shall use all
reasonable efforts to satisfy or obtain the satisfaction of the
conditions set forth in Articles VI, VII and VIII hereof.
Section 10.10 Expenses. Stokely and Acquiror shall each
pay all of their own fees and expenses incident to the
negotiation, preparation, execution and performance of this
Agreement and the Shareholders' Meeting, including the fees and
expenses of their own counsel, accountants, investment bankers
and other experts, whether or not the transactions contemplated
by this Agreement are consummated, except that the parties agree
to divide equally the costs of printing the Registration
Statement and the Proxy Statement/Prospectus, and Acquiror
agrees to bear the entire cost of filing the Registration
Statement with the SEC.
Section 10.11 Attorney's Fees. Should any litigation or
arbitration be commenced between the Acquiror and Stokely, or
any of their affiliates, or any of the parties in interest set
forth in Section 10.13 hereof, concerning this Agreement, or the
rights and duties of the parties in relation to this Agreement,
the party prevailing in such litigation or arbitration shall be
entitled, in addition to such other relief as may be granted, to
the reasonable attorneys' fees and costs which it incurs in
connection with such litigation or arbitration, as determined by
the trier of fact in such litigation or arbitration or in a
separate action brought for that purpose. The trier of fact in
such litigation or arbitration shall specify the "prevailing
party" and the "non-prevailing party" in the decision. If any
such litigation or arbitration embraces more than one dispute
and a party is the prevailing party with respect to less than
all such disputes, the trier of fact shall apportion the costs
and expenses and reasonable attorneys' fees incurred by the
parties to the separate disputes, and equitably determine the
amount to be borne by each party.
Section 10.12 Nonsurvival of Representations and
Warranties; Survival of Certain Agreements. All
representations, warranties and agreements in this Agreement or
in any instrument delivered by Stokely, the Acquiror or the
Acquisition Sub pursuant to or in connection with this Agreement
shall expire at the earlier of termination of this Agreement or
the Effective Time, except that the agreements of the parties
which by their terms are to be performed in whole or in part
after the termination of this Agreement or the Effective Time
shall survive the termination of this Agreement or the Effective
Time. The confidentiality agreement previously executed by the
parties hereto shall survive any termination of this Agreement.
Section 10.13 Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, other than (i) Section 5.10 (which is intended
to be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties) and (ii) Section 5.18,
Section 5.19, and Section 5.21 (which are intended to be for the
benefit of the directors, officers and employees of Stokely and
may be enforced by such persons).
Section 10.14 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
Section 10.15 Enforcement of Agreement. The parties
hereto agree that irreparable damage would occur in the event
that the provisions contained in the last sentence of each of
Sections 5.01 and 5.02 of this Agreement (and the related
confidentiality agreement between the parties) and Section 5.11
of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of each of
Sections 5.01 and 5.02 and Section 5.11 of this Agreement and to
enforce specifically the terms and provisions thereof in any
court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which they are
entitled at law or in equity.<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this
Agreement to be executed as of the date first above written.
CHIQUITA BRANDS INTERNATIONAL, INC.
By:
, its
Attest:
, its
CHIQUITA ACQUISITION CORP.
By:
, its
Attest:
, its
STOKELY USA, INC.
By:
Stephen W. Theobald, President and
Chief Executive Officer
Attest:
Robert M. Brill, Vice President
and
Secretary
<PAGE>
EXHIBIT A:
Agreement and Plan of Merger<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Plan of Merger") is made and
entered into as of ___________, 199_, between Chiquita Acquisition Corp., a
Wisconsin corporation ("Acquiror"), and Stokely USA, Inc., a Wisconsin
corporation (the "Company"). Acquiror and the Company are hereinafter sometimes
collectively referred to as the "Constituent Corporations."
RECITALS
Acquiror is a corporation duly organized and validly existing under the
laws of the State of Wisconsin. As of the date hereof, the authorized capital
stock of Acquiror consists of 9,000 shares of common stock, $0.01 par value per
share ("Acquiror Common Stock"), of which 100 shares were issued and outstanding
at September __, 1997.
The Company is a corporation duly organized and validly existing under the
laws of the State of Wisconsin. As of the date hereof, the authorized capital
stock of the Company consists of 20,000,000 shares of the Company common stock,
$0.05 par value per share ("Company Common Stock"), of which __________ shares
were issued and outstanding at September __, 1997; and 1,000,000 shares of
Preferred Stock, $0.10 par value per share, of which none are outstanding as of
the date hereof.
Chiquita Brands International, Inc., a New Jersey corporation
("Chiquita"), Acquiror and the Company have entered into an Agreement and Plan
of Reorganization, dated September __, 1997 (the "Agreement"), setting forth
certain representations, warranties, covenants and agreements in connection with
the transactions therein and herein contemplated and which contemplates the
merger of the Acquiror with and into the Company (the "Merger") in accordance
with this Plan of Merger.
The respective Boards of Directors of Acquiror and the Company deem the
Merger advisable and in the best interest of each such corporation and their
respective shareholders. The respective Boards of Directors of Acquiror and the
Company, by resolutions duly adopted, have approved the Agreement and this Plan
of Merger and the transactions contemplated thereby, and the same have been
submitted to and approved by the requisite vote of the Company's shareholders.
Therefore, in consideration of the premises and the mutual covenants and
agreements contained herein, Acquiror and the Company hereby covenant and agree
as follows:
ARTICLE I
1.01 Merger of the Acquiror into the Company. The Acquiror shall be
merged with and into the Company at the Effective Time (as defined in Section
1.02 hereof) in accordance with the applicable provisions of the Wisconsin
Business Corporation Law (the "WBCL") and on the terms and subject to the
conditions contained in the Agreement. Simultaneously with the effectiveness
of the Merger, (a) the separate existence of the Acquiror shall cease, and (b)
the Company, as the surviving corporation (the "Surviving Corporation"), shall
continue to exist under and be governed by the WBCL.
1.02 Effective Time. The Merger shall be consummated upon the receipt
of appropriate Articles of Merger by the Department of Financial Institutions
of the State of Wisconsin in the form and manner required by the WBCL. The
close of business on the date on which such Articles of Merger shall have been
received is herein referred to as the "Effective Time," unless some other date
is agreed upon by Acquiror and the Company, and subject to the terms and
conditions hereof, the Effective Time shall occur on the Closing Date (as
defined in Section 10.07 of the Agreement).
<PAGE>
1.03 Effect of the Merger. From and after the Effective Time:
(a) The separate existence of Acquiror shall cease and be merged
with and into the Company, as the Surviving Corporation, which shall
possess all of the rights, privileges, immunities, powers and franchises
of a public as well as of a private nature, and shall be subject to all
of the restrictions, disabilities and duties, of each of the Company and
Acquiror; and all singular rights, privileges, immunities, powers and
franchises of each of the Company and Acquiror, and all property, real,
personal and mixed, and all debts due to either the Company or Acquiror
in whatever amount, including subscriptions to shares, and all other
things in action or belonging to each of the Company and Acquiror shall
be vested in the Surviving Corporation; and all property, rights,
privileges, immunities, powers and franchises, and all and every interest,
shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Acquiror and the title to any
real estate, or interest therein, vested by deed or otherwise, in either
of the Company or Acquiror shall not revert or be in any way impaired by
reason of the Merger.
(b) All rights of creditors and all liens upon any property of
the Company or Acquiror shall be preserved unimpaired and all debts,
liabilities and duties of the Company or Acquiror shall thenceforth attach
to the Surviving Corporation and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it, provided, however, that all such
liens shall attach only to those assets to which they were attached prior
to the Effective Time.
(c) Any action or proceeding, whether civil, criminal or
administrative, instituted, pending or threatened by or against either the
Company or Acquiror or relating to their assets, liabilities or shares of
common stock shall be prosecuted as if the Merger had not taken place, and
the Surviving Corporation may be substituted as a party in such action or
proceeding in place of the Company or Acquiror.
1.04 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable to (a) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
rights, title or interest in, to or under any of the rights, properties or
assets of the Company or the Acquiror acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger, or (b)
otherwise carry out the purposes of the Agreement and this Plan of Merger, each
of the Company, the Acquiror and their proper officers and directors shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of the Agreement
and this Plan of Merger; and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of the Company and the Acquiror or
otherwise to take any and all such action.
ARTICLE II
2.01 Name. The name of the Surviving Corporation shall be "Stokely USA,
Inc."
2.02 Articles of Incorporation. The Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time will, from and
after the Effective Time, be the Articles of Incorporation of the Surviving
Corporation until the same are duly amended in accordance with applicable law.
2.03 Bylaws. The Bylaws of the Company, as in effect immediately prior
to the Effective Time will, from and after the Effective Time, be the Bylaws of
the Surviving Corporation until the same are amended as provided therein or
provided in the Articles of Incorporation of the Surviving Corporation.
2.04 Officers and Directors. Upon the effectiveness of the Merger, the
officers and directors of the Surviving Corporation shall be the persons serving
in such positions of Acquiror immediately prior to such effectiveness.<PAGE>
ARTICLE III
3.01 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Acquiror, the Company or the holder
of any of the following securities, the shares of Acquiror and the Company shall
be converted as follows:
(a) Each share of Common Stock of the Acquiror issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one validly issued, fully paid and non-assessable share
of Common Stock of the Surviving Corporation; and
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares held by the
Company or any of its wholly-owned subsidiaries, which shall be canceled)
shall cease to be outstanding and shall be converted into and become the
right to receive such fraction of a share of common stock, $.33 par value
per share, of Chiquita ("Chiquita Stock"), as is equal to $1.00 divided
by the average closing price of Chiquita Stock on the New York Stock
Exchange Composite Tape for the fifteen consecutive trading days
immediately preceding the Effective Time, subject to the provisions of
Section 3.01(c) hereof with regard to the nonissuance of fractional shares
(the "Merger Consideration").
(c) Notwithstanding any other provision of the Agreement or this
Plan of Merger, no certificates or scrip representing fractional shares
of Chiquita Stock shall be issued upon the surrender for exchange of
Certificates (as defined in Section 3.02 hereof). Any holder of Company
Common Stock who would otherwise have been entitled to a fractional share
of Chiquita Stock shall be entitled to receive a cash payment in lieu of
such fractional share in an amount equal to the product of such fraction
multiplied by the average of the last reported sales price per share of
Chiquita Stock on the New York Stock Exchange Composite Tape for the
fifteen consecutive trading days ending with the last trading day prior
to the Effective Time, without any interest thereon. Any such holder
shall not be entitled to vote or to any other rights of a holder of
Chiquita Stock in respect of such fractional share.
3.02 Surrender and Payment.
(a) As of the Effective Time, Chiquita shall deposit, or shall
cause to be deposited with a bank or trust company designated by Chiquita
and satisfactory to the Company (the "Exchange Agent"), for the benefit
of the holders of the Company Common Stock for exchange in accordance with
this Article III, the amount of cash payable in the Merger (for fractional
shares) and certificates representing the shares of Chiquita Stock payable
and issuable in exchange for outstanding shares of the Company Common
Stock.
(b) Within three business days after the Effective Time, Chiquita
shall cause the Exchange Agent to request (in the form of a letter of
transmittal and instructions for effecting the surrender) each registered
holder of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (the
"Certificates") to surrender such Certificates for exchange. Upon such
surrender, Chiquita shall cause the Exchange Agent to promptly issue to
the holder of such Certificates the number of whole shares of Chiquita
Stock which such holder is entitled to receive pursuant to Section 3.01,
and cash in payment of any fractional shares, and the Certificates so
surrendered shall be canceled. Until so surrendered, such Certificates
shall represent solely the right to receive the applicable number of
shares of Chiquita Stock with respect to the number of shares of Company
Common Stock evidenced thereby. No dividends or other distributions
declared or made after the Effective Time with respect to shares of
Chiquita Stock with a record date after the Effective Time shall be paid
to the holder of an unsurrendered Certificate with respect to the shares
of Chiquita Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to
Section 3.01(c) hereof until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of any
such Certificate, there shall be paid to the registered holder of the
certificates representing whole shares of Chiquita Stock issued in
exchange therefore, without interest, (i) at the time of such surrender,
the amount of any cash payable in lieu of a fractional share of Chiquita
Stock to which such holder is entitled pursuant to Section 3.01(c) hereof
and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole
shares of Chiquita Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Chiquita Stock, as
the case may be. If any cash or certificate evidencing shares of Chiquita
Stock is to be paid to or issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to Chiquita any transfer or
other taxes required by reason of the issuance of certificates for such
shares of Chiquita Stock in a name other than that of the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of Chiquita that such tax has been paid or is not applicable.
3.03 Dissenting Shares. "Dissenting Shares" means any shares held by
any holder who becomes entitled to payment of the fair value of such shares
under the WBCL. Notwithstanding any provision of this Agreement to the
contrary, if required by the WBCL but only to the extent required thereby,
shares of Stokely Common Stock which are issued and outstanding immediately
prior to the Effective Date and which are held by holders of such shares of
Stokely Common Stock who have properly exercised dissenters' rights with respect
thereto in accordance with the WBCL will not be exchangeable for the right to
receive the Merger Consideration, and holders of such Dissenting Shares will be
entitled to receive payment of the fair value of such Dissenting Shares in
accordance with the WBCL unless and until such holders fail to perfect or
effectively withdraw or lose their rights to direct and receive payment of fair
value under the WBCL. If, after the Effective Date, any such holder fails to
perfect or effectively withdraws or loses such right, such Dissenting Shares
will thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Date, the right to receive the Merger
Consideration, without any interest thereon. Notwithstanding anything to the
contrary contained in this Section 3.03 or the Agreement, if the Merger is
rescinded, abandoned or not effectuated, then the right of any shareholder to
be paid the fair value of such shareholders' Dissenting Shares pursuant to the
WBCL shall cease. Stokely shall give Acquiror prompt notice of any demands and
withdrawals of such demands received by Stokely relating to the exercise of, or
of Stokely's learning of the intent to exercise, dissenters' rights. Stokely
shall not, without the prior consent of Chiquita, make any payment with respect
to any demands for payment of fair value or offer to settle or settle any such
demands.<PAGE>
ARTICLE IV
4.01 Notices. All documents, notices, requests, demands and other
communications that are required or permitted to be delivered or given under
this Plan of Merger shall be in writing and shall be deemed to have been duly
delivered or given upon the delivery or mailing thereof, as the case may be, if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
If to Chiquita and Acquiror, then to:
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
Attn: Anthony D. Battaglia, President - Diversified Foods
With copies to:
Robert W. Olson, Senior Vice President, General Counsel
and Secretary
Chiquita Brands International, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
and
Timothy E. Hoberg
Taft Stettinius & Hollister
1800 Star Bank Center
425 Walnut Street
Cincinnati, Ohio 45202-3957
If to the Company, then to:
Stephen W. Theobald, President
and Chief Executive Officer
Stokely USA, Inc.
1230 Corporate Center Drive
Oconomowoc, WI 53066-0248
With a copy to:
Mr. Frank J. Pelisek
Michael Best & Friedrich LLP, Suite 3300
100 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
or to such other person or address as a party hereto shall specify hereunder.<PAGE>
4.02 Consummation of the Merger. Consummation of the Merger is
conditioned upon the fulfillment or waiver of the conditions precedent set forth
in Articles Six, Seven and Eight of the Agreement.
4.03 Counterparts. This Plan of Merger may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one agreement.
4.04 Governing Law. This Plan of Merger shall be governed in all
respects, including, but not limited to, validity, interpretation, effect and
performance, by the laws of the State of Wisconsin.
4.05 Amendment. Subject to applicable law, this Plan of Merger may be
amended, modified or supplemented only by written agreement of Acquiror and the
Company, by their respective officers thereunto duly authorized, at any time
prior to the Effective Time.
4.06 Waiver. Any of the terms or conditions of this Plan of Merger may
be waived at any time by whichever of the Constituent Corporations is, or the
shareholders of which are, entitled to the benefit thereof by action taken by
the Board of Directors of such Constituent Corporation.
4.07 Termination. This Plan of Merger shall terminate simultaneously
upon the termination of the Agreement in accordance with Article Nine thereof.
There shall be no liability on the part of any of the parties hereto (or any of
their respective directors or officers) except as otherwise provided in the
Agreement.<PAGE>
IN WITNESS WHEREOF, each of the Constituent Corporations have caused this
Plan of Merger to be executed on their behalf by their officers hereunto duly
authorized all as of the date first above written.
ATTEST: STOKELY USA, INC.
By:______________________________ By:_______________________________
ATTEST: CHIQUITA ACQUISITION CORP.
By:______________________________ By:_______________________________
<PAGE>
EXHIBIT B:
Form of Legal Opinion
of
Michael Best & Friedrich LLP<PAGE>
EXHIBIT B:
FORM OF LEGAL OPINION
OF
MICHAEL BEST & FRIEDRICH LLP
We have acted as counsel to Stokely USA, Inc.
(the "Company") in connection with the merger of Chiquita
Acquisition Corp. with and into the Company (hereinafter, the
"Transaction") as set forth in the Agreement and Plan of
Reorganization By and Among Chiquita Brands International, Inc.,
Chiquita Acquisition Corp. and the Company dated as of September
__, 1997 (the "Agreement"). This Opinion Letter is provided
pursuant to Section 6.04 of the Agreement. Except as otherwise
indicated herein, capitalized terms used in this Opinion Letter
are defined in the Agreement or the Accord (as defined below).
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord,
and this Opinion Letter should be read in conjunction therewith.
In addition, all of the General Qualifications set forth in the
Accord apply to all opinions expressed below. The law covered
by the opinions expressed herein is limited to the Law of the
State of Wisconsin and the federal Law of the United States
expressly referenced herein. We have relied upon factual
representations made by the Company in Article III of the
Agreement.
Based upon and subject to the foregoing, we are of the
opinion that:
(i) The Company is a corporation duly incorporated,
validly existing and in active status (meaning it has
filed its annual report for its most recently
completed report year and has not filed articles of
dissolution) under the laws of the State of Wisconsin,
and has the requisite corporate power and authority to
carry on its business as now being conducted.
(ii) The Company has the requisite corporate power and
authority to execute and deliver the Agreement and to
perform its obligations thereunder and to consummate
the Transaction contemplated thereby.
(iii) The execution and delivery of the Agreement by the
Company and the consummation by the Company of the
Transaction contemplated thereby have been duly and
validly authorized by all necessary corporate action
on the part of the Company.
(iv) The Agreement has been duly and validly authorized,
executed and delivered by the Company and is
enforceable against the Company in accordance with its
terms.
(v) The execution and delivery of the Agreement by the
Company do not, and the performance of the Agreement
by the Company will not, conflict with or violate, (a)
the Company's Articles of Incorporation or By-Laws, in
each case as amended to date and presently in effect,
or (b) any Laws applicable to the Company or its
properties.
(vi) The authorized capital stock of the Company consists
of 20,000,000 shares of common stock having a par
value of $0.05 per share and 1,000,000 shares of
preferred stock having a par value of $0.10 per share.
All of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued and
are fully paid and non-assessable except for statutory
liability under Section 180.0622(2)(b) of the
Wisconsin Business Corporation Law.
(vii) To our Actual Knowledge, there is no legal or
governmental proceeding pending or threatened to which
the Company is a party which is required to be
described in the Proxy Statement and is not so
described, nor any contract, document, transaction or
relationship to which the Company is a party which is
required to be described in the Proxy Statement which
is not so described.
(viii) The Proxy Statement (excluding the financial
statements and other financial and statistical
information included or incorporated therein or
omitted therefrom, and all information about, or
supplied or omitted by, the Acquiror or the
Acquisition Sub for use in the Proxy Statement, as to
all of which we do not express any opinion), at the
time it was first mailed to holders of Stokely Common
Stock and of the date of the Shareholders' Meeting,
complied as to form in all material respects with the
requirements of the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder.
This Opinion Letter may be relied upon by you only in
connection with the Agreement and may not be used or relied upon
by you or any other person for any other purpose whatsoever,
except to the extent authorized in the Accord, without in each
instance our prior written consent.<PAGE>
In a Separate Letter:
We have participated in the preparation and filing of the
Proxy Statement and, in the course of such preparation, in
conferences with certain officers and employees of the Company
with respect thereof. Although we are not passing upon or
assuming any responsibility for the accuracy, completeness or
fairness of the statements contained or incorporated in the
Proxy Statement, during the course of such participation no
facts have come to our attention which would lead us to believe
that the Proxy Statement, at the time it was first mailed to
holders of Stokely Common Stock and at the time of the
Shareholders' Meeting, contained any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading (except that we do not comment with respect
to the financial statements and other financial and statistical
information included or incorporated therein or omitted
therefrom, or any information about, or supplied or omitted by,
the Acquiror or Acquisition Sub for use in the Proxy Statement).
We assume no obligation to advise you or any events that
occur subsequent to the date of this letter. This letter is
being furnished to you solely for your benefit and may not be
relied upon by any other person or for any other purpose, and it
may not be quoted in whole or in part or otherwise referred to
and it may not be filed with or furnished to any governmental
agency or other person or entity without the prior written
consent of this firm.
EXHIBIT C:
Form of Legal Opinion
of
Robert W. Olson, General Counsel of Acquiror<PAGE>
EXHIBIT C:
FORM OF LEGAL OPINION
OF
ROBERT W. OLSON, GENERAL COUNSEL OF ACQUIROR
[Introductory language to be provided by Mr. Olson]
1. Each of the Acquiror and the Acquisition Sub has been
duly incorporated and is validly existing as a corporation under
the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business
as it is currently being conducted and to own, lease and operate
its properties.
2. All of the outstanding shares of capital stock of, or
other ownership interest in, the Acquisition Sub has been duly
authorized and validly issued and is fully paid and non-
assessable and, to our knowledge, are owned by the Acquiror,
free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
3. The Acquiror and the Acquisition Sub each have the
requisite corporate power and authority to execute and deliver
the Agreement and to perform its respective obligations
thereunder and to consummate the Transactions contemplated
thereby.
4. The Agreement has been duly authorized, executed and
delivered by the Acquiror and the Acquisition Sub, and is a
valid and binding agreement of the Acquiror and the Acquisition
Sub, enforceable in accordance with its terms, except as such
terms may be affected by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general
principles of equity; and the Plan of Merger, the Registration
Rights Agreement and the [Debt-Related] Agreements have each
been duly authorized, executed and delivered by the Acquiror,
and each is a valid and binding agreement of the Acquiror,
enforceable in accordance with its respective terms, except as
such terms may be affected by bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general
principles of equity.
5. All of the issued and outstanding shares of Acquiror
Stock have been duly authorized and validly issued, fully paid
and non-assessable. The Acquiror Stock to be issued pursuant to
the Agreement has been duly authorized and, when issued and
delivered as provided by the Agreement upon consummation of the
Merger, will be validly issued, fully paid and non-assessable;
the issuance of such Acquiror Stock is not subject to any
preemptive rights; and such Acquiror Stock has been accepted for
listing on the New York Stock Exchange, subject to notice of
issuance.
6. The authorized capital stock of the Acquiror,
including the Acquiror Common Stock, conforms as to legal
matters to the description thereof incorporated by reference in
the Proxy Statement; and to our knowledge, the authorized,
issued and outstanding capital stock of the Acquiror as of
___________, 1997 was as described in the Proxy Statement under
the heading "Capitalization."
7. The Registration Statement has become effective under
the 1933 Act, and no stop order suspending its effectiveness has
been issued and no proceedings for that purpose are pending
before or contemplated by the Securities and Exchange
Commission.
8. The execution, delivery and performance of the
Agreement, the Plan of Merger, the Registration Rights Agreement
and the [Debt-Related] Agreements by the Acquiror and of the
Agreement by the Acquisition Sub, compliance by the Acquiror and
the Acquisition Sub with all the applicable provisions thereof
and the consummation of the transactions contemplated thereby
does not (i) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the articles of
incorporation or bylaws (as amended or restated) of the Acquiror
or the Acquisition Sub; or (ii) violate or conflict with any
Laws applicable to the Acquiror or the Acquisition Sub, or their
respective properties.
9. To our knowledge, there is no legal or governmental
proceeding pending or threatened to which the Acquiror or the
Acquisition Sub is a party or to which any of their respective
property is subject which is required to be described in the
Registration Statement or the Proxy Statement and is not so
described, nor any contract, document, transaction or
relationship which is required to be described in the
Registration Statement or the Proxy Statement or required to be
filed as an exhibit to the Registration Statement which is not
described or filed as required.
10. The Registration Statement (except for the financial
statements and other statistical or financial data included or
incorporated therein or omitted therefrom, and all information
about, or supplied or omitted by, Stokely for use in the
Registration Statement, as to all of which we express no
opinion) as of the effective date thereof complied as to form in
all material respects with the Securities Act of 1933, as
amended.
11. The Proxy Statement (except for the financial
statements and other financial or statistical data included or
incorporated therein or omitted therefrom and all information
about, or supplied or omitted by, Stokely for use in the Proxy
Statement, as to all of which we express no opinion), at the
time it was first mailed to the holders of Stokely Common Stock
and as of the date hereof, complies as to form in all material
respects with the Securities Exchange Act of 1934, as amended
("1934 Act").
12. The descriptions in the Registration Statement and the
Proxy Statement of contracts and other documents filed as
exhibits to the Acquiror's periodic filings under the 1934 Act
are accurate in all material respects; and to our knowledge,
there has been no challenge by any person to the legality,
validity or enforceability of any material agreement of the
Acquiror expressly referenced in the Proxy Statement.
In addition, we have participated in conferences with
officers and representatives of the Acquiror and the Acquisition
Sub, and representatives of the independent accountants of the
Acquiror and the Acquisition Sub, which the contents of the
Registration Statement and the Proxy Statement and related
matters were discussed and, although we are not passing upon,
and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Proxy Statement (except as
provided in paragraphs 10, 11, and 12 above) and have made no
independent check or verification thereof, on the basis of the
foregoing, no facts have come to our attention that have led us
to believe the Registration Statement, at the time it became
effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Proxy Statement, as of its date or as of the date
hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except
that we express no opinion or belief with respect to the
financial statements, pro forma financial information, schedules
and other financial or statistical data included or incorporated
therein or omitted therefrom, or any information about, or
supplied or omitted by, Stokely for use in the Registration
Statement or the Proxy Statement.
<PAGE>
EXHIBIT D:
Additional Terms of Issuance
of Preferred Stock
and
Form of Certificate of Designation,
Preferences Rights and Limitations of
Class A Preferred Stock
of
Stokely USA, Inc.<PAGE>
EXHIBIT D:
ADDITIONAL TERMS OF ISSUANCE
OF PREFERRED STOCK
AND
FORM OF CERTIFICATE OF DESIGNATION,
PREFERENCES, RIGHTS AND LIMITATIONS OF
CLASS A PREFERRED STOCK
OF
STOKELY USA, INC.
A. Prior to the issuance of shares of Class A Preferred
Stock to the Acquiror, Stokely USA, Inc., a Wisconsin
corporation (the "Company"), shall have received the notice
referred to in Section 9.03 of the Agreement and Plan of
Reorganization Among Chiquita Brands International, Inc. (the
"Acquiror"), Chiquita Acquisition Corp. and the Company dated as
of September __, 1997 (the "Agreement"), the Acquiror shall be
entitled to receive the Class A Preferred Stock in accordance
with the terms of Section 9.03 of the Agreement, and the
following conditions also must be met:
1. The Acquiror shall sign a Subscription Agreement,
wherein it will represent that it is acquiring the
shares of Class A Preferred Stock for its own account,
and that it has no intention of selling or
transferring such securities in a distribution in
violation of the federal securities laws or any
applicable state securities law and that it is an
"accredited investor" within the meaning of Rule 501
of Regulation D.
2. In connection with any proposed transfer of the Class
A Preferred Stock, the holder thereof shall deliver a
written notice to the Company describing in reasonable
detail the proposed transfer, together with an opinion
of legal counsel (such as, but not limited to, the
Acquiror's in-house counsel), which to the Company's
reasonable satisfaction is knowledgeable in securities
law matters, to the effect that such proposed transfer
may be effected without registration at both the
federal level and the applicable state(s) level.
B. Stokely USA, Inc., a Wisconsin corporation, does
hereby certify that, pursuant to authority conferred upon its
Board of Directors by its Restated and Amended Articles of
Incorporation and by the provisions of Section 180.0602 of the
Wisconsin Business Corporation Law ("WBCL"), the following
resolution will be adopted by its Board of Directors at a
meeting duly called and held:
RESOLVED, that pursuant to the authority
conferred upon the Board of Directors of Stokely USA,
Inc. (the "Board") by the provisions of its Restated
and Amended Articles of Incorporation and by the
provisions of Section 180.0602 of the WBCL, there will
hereby be created a class of Preferred Stock of the
Company, which class shall have the powers,
designation, preferences and relative, participating,
optional and other special rights, and the
qualifications, limitations or restrictions thereof,
as set forth herein.
Section 1. Designation of Class; Number of Shares. The
designation of such class shall be "Class A Preferred Stock,"
par value $.10 per share, and the number of shares constituting
such class shall be 55 shares.
Section 2. Rank. The Class A Preferred Stock shall
rank: (i) junior to any other class or series of capital stock
of the Company hereafter created specifically ranking by its
terms senior to the Class A Preferred Stock (collectively, the
"Senior Securities"); (ii) prior to all of the Company's Common
Stock, $.05 par value per share ("Common Stock"); (iii) prior to
any class or series of capital stock of the Company hereafter
created not specifically ranking by its terms senior to or on
parity with the Class A Preferred Stock (collectively, the
"Junior Securities"); and (iv) on parity with any class or
series of capital stock of the Company hereafter created
specifically ranking by its terms on parity with the Class A
Preferred Stock ("Parity Securities"), in each case as to
distributions of assets upon liquidation, dissolution or winding
up of the Company.
Section 3. Dividends. Subject to the rights of the
holders of any Senior Securities, the holders of record of Class
A Preferred Stock shall be entitled to receive, out of funds
legally available therefor, cash dividends from the date of
issuance of the shares of Class A Preferred Stock accruing at
the rate of $6,000 per share per annum (calculated on the basis
of a 365 day year), payable in quarterly installments of $1,500
per share per fiscal quarter (but paid for the actual number of
days elapsed in a quarter), to and including the date on which
the redemption of such shares of Class A Preferred Stock shall
have been effected or on which payment with respect to such
share shall have been made pursuant to any liquidation,
dissolution or winding up of the Company. All dividends payable
hereunder shall be payable quarterly in arrears when specified
above or otherwise as the Board of Directors may from time to
time determine when and as declared by the Board of Directors,
provided, however, that if any of the regularly scheduled
quarterly dividends specified above are not paid at any time
when scheduled, the amount(s) not paid when scheduled shall
accrue interest and be due and owing from the Company to the
holders of record of the Class A Preferred Stock at the rate of
14% per annum from the date of the scheduled payments until such
payments are received by the holders. The right to such
dividends on the Class A Preferred Stock shall be cumulative and
the holders of such shares shall be entitled to receive payment
in full (with interest at the rate of 14% per annum as specified
above) for any and all quarterly dividends on such shares that
are not declared in any quarter. The holders of Class A
Preferred Stock shall be entitled to no other cash or non-cash
dividends in excess of the dividends specified above.
Declaration and payment of dividends on other Parity Securities
shall be on parity with the Class A Preferred Stock and no
dividends shall be declared or paid on any Common Stock or
Junior Securities until all unpaid cumulative dividends on the
Class A Preferred Stock and all unpaid interest as hereinbefore
specified are paid in full.
Section 4. Redemption. The Company shall, and is
required to, redeem, out of funds legally available therefor,
all of the shares of Class A Preferred Stock upon the earlier
of the occurrence of a "Purchase Event" (as defined in the
Agreement) or August 31, 1998. In addition, the Company, at its
option, on one or more occasions, provided the Company may
legally do so at such time, may redeem all or any part of the
Class A Preferred Stock on any date set by the Board. The
redemption price for the Class A Preferred Stock shall be a cash
amount per share of $50,000 (plus interest accruing thereon at
the rate of 14% per annum if such redemption price is not paid
when required under this Section 4) plus all unpaid dividends
and interest accruing thereon as specified in Section 3. In
order to redeem the Class A Preferred Stock hereunder, the
Company shall send to each holder of a share of Class A
Preferred Stock a written notice demanding redemption under this
Section 4, which notice shall specify the date of redemption
(which shall not be less than two business days after receipt of
such notice by each such holder), specify the total number of
shares of Class A Preferred Stock to be redeemed (and the number
of each such holders' shares to be redeemed if less than all of
the shares are to be redeemed), and specify the redemption price
and place of payment (provided that neither failure to give such
notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Class A Preferred
Stock to be redeemed).
Section 5. Reacquired Shares. Any shares of Class A
Preferred Stock purchased or otherwise acquired by the Company
in any manner whatsoever shall be retired and cancelled promptly
after such purchase or acquisition. All such cancelled shares
shall thereupon become authorized and unissued shares of
Preferred Stock and may be reissued as part of any new class of
series of Preferred Stock, subject to conditions and
restrictions on issuance set forth in the Company's Articles of
Incorporation, as may be amended or restated from time to time,
or in any applicable law.
Section 6. Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, before any payment or distribution of
the assets of the Company shall be made to or set apart for the
holders of any Common Stock or Junior Securities, but in parity
with any distribution to Parity Securities, each holder of
shares of Class A Preferred Stock shall be entitled to receive
from the assets of the Company an amount per share of $50,000
plus all unpaid dividends and interest accruing thereon as
specified in Section 3. If the assets distributable upon such
liquidation, dissolution or winding up of the Company shall be
insufficient to permit payment to the holders of shares of Class
A Preferred Stock and Parity Securities of the full preferential
amount as set forth in this Section 6, then such assets shall be
distributed ratably among the shares of Class A Preferred Stock
and the Parity Securities, pro rata, based on the respective
liquidation amounts to which each such class or series is
entitled. Consolidation or merger of the Company with or into
one or more other corporations, or a sale, whether for cash,
securities or properties, of all or substantially all of the
assets of the Company, shall be deemed and construed to be a
liquidation, dissolution or winding up of the Company within the
meaning of this Section 6.
Section 7. No Voting Rights. The holders of shares of
Class A Preferred Stock shall have no voting power whatsoever,
except as otherwise provided by the WBCL, and no holder of
shares of Class A Preferred Stock shall vote or otherwise
participate in any proceeding in which actions shall be taken by
the Company or the shareholders thereof or be entitled to
notification as to any meeting of the shareholders.
To the extent that under the WBCL, the vote of the holders
of the Class A Preferred Stock, voting separately as a class, is
required to authorize a given action of the Company, the
affirmative vote of the holders of at least a majority of shares
of Class A Preferred Stock represented at a duly held meeting at
which a quorum is present or by written consent of a majority of
the shares of Class A Preferred Stock (except as otherwise may
be required under the WBCL) shall constitute the approval of
such action by the class. To the extent that under the WBCL the
holders of shares of Class A Preferred Stock are entitled to
vote on a matter with holders of Common Stock, voting together
as one class, each share of Class A Preferred Stock shall be
entitled to one vote per share.
Section 8. Preference Rights. Nothing contained herein
shall be construed to prevent the Board from issuing one or more
classes or series of Preferred Stock with dividends and/or
liquidation preferences senior to, on parity with, or junior to
the dividend and liquidation preferences of the Class A
Preferred Stock.
<PAGE>
EXHIBIT E:
Debt-Holder Letter Agreement<PAGE>
September 29, 1997
State of Wisconsin Investment Board
121 East Wilson Street
P.O. Box 7842
Madison, WI 53707
Allstate Insurance Company
3075 Sanders Road
North Brook, IL 60062
Foothill Capital Corporation
11111 Santa Monica Boulevard
15th Floor
Los Angeles, CA 90025
Nomura Holding America, Inc.
2 World Financial Center
21st Floor
New York, NY 10281
Oppenheimer & Co., Inc.
Contrarian Capital Fund I, L.P.
The Chase Manhattan Bank as directed
Trustee for the IBM Retirement Plan Trust
Mellon Bank, N.A. as Trustee for
First Plaza Group Trust
c/o Contrarian Capital Management, L.L.C
411 W. Putnam Avenue
Suite 225
Greenwich, CT 06830
Gentlemen:
Reference is made to the Agreement and Plan of
Reorganization (the "Merger Agreement") among Chiquita Brands
International, Inc. ("Chiquita"), Chiquita Acquisition Corp.,
and Stokely USA, Inc. ("Stokely"). The following sets forth our
understanding of the treatment of certain of Stokely's debt
instruments prior to and contemporaneous with the closing of the
transaction described in the Merger Agreement (the "Closing").
State of Wisconsin Investment Board shall be referred to herein
as "SWIB," Allstate Insurance Company shall be referred to
herein as "Allstate," and the remaining addressees shall be
referred to herein together with SWIB as the "Noteholders."
1. AMENDED AND RESTATED SENIOR SECURED NOTES DUE JANUARY 15,
2000 (the "Notes")
Stokely proposes the Notes and the Series A Warrants
and Series B Warrants issued to the Noteholders in connection
with the issuance of the Notes (the "Warrants") be treated as
follows.
a. At the Closing, the Noteholders shall sell the
Notes to Chiquita in exchange for a number of shares of Chiquita
common stock (the "Stock") having a value equal to the par value
of the Notes. The value of the Stock for purposes of the
exchange at par shall be computed on the basis of the average
closing price of Chiquita common stock on the New York Stock
Exchange Composite Tape for the 15 consecutive trading days
immediately preceding the Closing. In lieu of any fractional
share of Stock which might otherwise result from such exchange,
a cash payment shall be made by Chiquita to each of the
Noteholders in an amount equal to the product of such fraction
multiplied by the value of the Stock, computed as described
above.
b. The Noteholders shall waive and forgo any Make-Whole
Premium payable with respect to the Notes.
c. The Noteholders shall surrender the Warrants to
Chiquita for cancellation for no additional consideration in
connection with the exchange of the Notes for the Stock.
d. The Noteholders shall defer to the Closing all
Required Principal Payments due on the Notes from the date
hereof through the Closing.
e. The Noteholders shall defer to the Closing all
interest payments due on the Notes from the date hereof through
the Closing. Accrued interest from June 30, 1997 to the Closing
shall be capitalized. At the Closing, the Noteholders shall
receive a number of shares of Stock having a value equal to the
amount of capitalized interest. The value of the Stock for
this purpose shall be computed on the basis of the average
closing price of Chiquita common stock on the New York Stock
Exchange Composite Tape for the 15 consecutive trading days
immediately preceding the Closing. In lieu of any fractional
share of Stock which might otherwise result from such
computation, a cash payment shall be made by Chiquita to each of
the Noteholders in an amount equal to the product of such
fraction multiplied by the value of the Stock, computed as
described above.
<PAGE>
2. $3,000,000 CITY OF ACKLEY, IOWA
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(STOKELY USA, INC. PROJECT) SERIES 1989
$1,600,00 VILLAGE OF POYNETTE, WISCONSIN
REFUNDING REVENUE BONDS
(STOKELY USA, INC. PROJECT)
$4,000,000 VILLAGE OF WAUNAKEE, WISCONSIN
INDUSTRIAL REVENUE BONDS
(STOKELY USA, INC. PROJECT)
Stokely makes the following proposal with respect to
the above-noted bond issues (the "Bonds").
a. Allstate shall agree to waive any prepayment
restrictions and optional redemption premiums payable to
Allstate with respect to the Bonds.
b. Accrued interest from the last interest payment
date on the Bonds prior to the date hereof through the Closing
shall be deferred and capitalized.
c. Allstate shall deliver the Bonds to Chiquita at
the Closing in exchange for a number of shares of Stock having
a value equal to the par value of the Bonds plus the amount of
capitalized interest. The value of the Stock for this purpose
shall be computed on the basis of the average closing price of
Chiquita common stock on the New York Stock Exchange Composite
Tape for the 15 consecutive trading days immediately preceding
the Closing. In lieu of any fractional share of Stock which
might otherwise result from such computation, a cash payment
shall be made by Chiquita to Allstate in an amount equal to the
product of such fraction multiplied by the value of the Stock,
computed as described above.
3. $6,000,000 VILLAGE OF POYNETTE, WISCONSIN
INDUSTRIAL REVENUE BONDS
(STOKELY USA, INC. PROJECT)
Stokely makes the following proposal with respect to
the above-noted Bonds ("$6M Poynette Bonds").
Allstate shall deliver its $3,580,000 of the $6M
Poynette Bonds to Chiquita at the Closing in exchange for a
number of shares of Stock having a value equal to the par value
of its $3,580,000 of the $6M Poynette Bonds. The value of the
Stock for purposes of the exchange at par shall be computed on
the basis of the average closing price of Chiquita common stock
on the New York Stock Exchange Composite Tape for the 15
consecutive trading days immediately preceding the Closing. In
lieu of any fractional share of Stock which might otherwise
result from such exchange, a cash payment shall be made by
Chiquita to Allstate in an amount equal to the product of such
fraction multiplied by the value of the Stock, computed as
described above.
4. REGISTRATION RIGHTS
The registration rights with respect to the Stock to
be delivered under paragraphs 1 through 3 hereof are described
in Exhibit A attached hereto.
5. AGREEMENT TO RETAIN DEBT INSTRUMENTS
Each of the Noteholders and Allstate agree to retain
ownership of, and not sell, transfer, assign, or otherwise
dispose of, any of the Notes, Warrants, Bonds, or $6M Poynette
Bonds, or any interest therein, prior to the Closing.
6. $3,000,000 CITY OF GREEN BAY, WISCONSIN
INDUSTRIAL REVENUE BONDS
(STOKELY USA, INC.)
$3,000,000 TOWN OF UTICA, WISCONSIN
INDUSTRIAL REVENUE BONDS
(STOKELY USA, INC.)
$4,000,000 PORT OF WALLA WALLA PUBLIC CORPORATION
INDUSTRIAL REVENUE BONDS, SERIES 1990
(STOKELY USA, INC.)
$3,000,000 CITY OF WELLS, MINNESOTA
INDUSTRIAL REVENUE BONDS
(STOKELY USA, INC. PROJECT) SERIES 1991
Stokely will remain obligated under the terms of the
above-noted Bonds.
<PAGE>
Stokely requests that each of you acknowledge and
agree to the foregoing terms, and commit to participate in the
transactions outlined above assuming the transaction described
in the Merger Agreement is consummated. If you are in agreement
with the foregoing, please execute the enclosed copy of this
letter and return it to me.
Sincerely,
STOKELY USA, INC.
Stephen W. Theobald
President and Chief Executive
Officer<PAGE>
Each of the undersigned acknowledges and agrees to the
terms outlined above and agrees to participate in the
transactions described above, and each of the undersigned
understands that this letter will constitute the binding
obligation of the undersigned, subject only to (i) the receipt
of signatures from all of the undersigned parties; (ii) the
execution of the Merger Agreement by all parties thereto on or
before September 30, 1997; and (iii) the Closing occurring on or
before January 31, 1998.
STATE OF WISCONSIN INVESTMENT BOARD ALLSTATE INSURANCE COMPANY
Title:________________________ Title:________________________
FOOTHILL CAPITAL CORPORATION NOMURA HOLDING AMERICA, INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
THE CHASE MANHATTAN BANK OPPENHEIMER & CO., INC.
as Directed Trustee for the By: Contrarian Capital Advisors,
IBM Retirement Plan Trust L.L.C., as Agent
By:___________________________ By:___________________________
Title:________________________ Title:________________________
CONTRARIAN CAPITAL FUND I, L.P. MELLON BANK, N.A.
By: Contrarian Capital Management, Solely in its capacity as
L.L.C., as General Partner Trustee for First Plaza Group
Trust (as directly by Contrarian
Capital Advisors, L.L.C.) and
By:___________________________ not in its individual capacity
Title:________________________
By:___________________________
Title:________________________<PAGE>
EXHIBIT A
I. Capitalized Terms. Capitalized terms used, but not
otherwise defined, in this Exhibit A have the meanings provided in
the letter agreement to which this Exhibit A is attached (the
"Letter Agreement") unless the context clearly requires otherwise.
II. Registration.
(a) As of the date of the Closing (but subject to the
provisions of Section II(b), Chiquita will have prepared and filed
with the Securities and Exchange Commission ("SEC") and have
exercised all reasonable efforts to have caused to become effective
a registration statement (the "Registration Statement") on Form S-3
under and complying with the Securities Act of 1933, as amended,
and regulations and rules issued pursuant to that Act, as amended
(the "Securities Act"), covering the resale by Allstate and/or the
Noteholders of the Stock acquired by them under the Letter
Agreement which such parties have elected by written notice to
Chiquita to have covered by the Registration Statement
(collectively, the "Registration Shares"). For the purposes of
this Exhibit A, Allstate and the Noteholders shall be referred to
as the "Selling Shareholders."
(b) Chiquita shall be entitled to postpone the filing
with the SEC of the Registration Statement, or any pre-effective
amendment thereto, or a request for the acceleration of the
effectiveness of the Registration Statement, or, if the
Registration Statement has been declared effective, to suspend use
thereof by the Selling Shareholders, for a period to be specified
by Chiquita in a notice to the Selling Shareholders if (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
judgement, 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;
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 or end such
suspension as soon as the conditions which permit it to postpone
such filing or impose such suspension no longer exist (or the
90-day aggregate postponement period shall have otherwise expired).
During any such period, the Selling Shareholders shall make no
sales of shares pursuant to the Registration Statement.
(c) 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 Selling Shareholders 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.<PAGE>
III. Covenants of the Selling Shareholders.
(a) In connection with any registration of the
Registration Shares, the Selling Shareholders covenant and agree to
do all of the following and the Selling Shareholders shall have all
of the following obligations:
(i) It shall be a condition precedent to Chiquita's
undertaking to effect the registration contemplated by Section
II(a) that the Selling Shareholders shall have furnished to
Chiquita such information regarding themselves, the Registration
Shares to be held by them and the intended method of disposition of
the Registration Shares held by them as shall be reasonably
required to effect the registration of the Registration Shares and
shall execute such documents in connection with any such
registration as Chiquita may reasonably request. At least 10 days
prior to the anticipated filing date of the Registration Statement,
Chiquita shall notify each Selling Shareholder of the information
Chiquita requires from such Selling Shareholders (the "Requested
Information"). If within 5 business days prior to the filing date
Chiquita has not received the Requested Information from a Selling
Shareholder (a "Non-Responsive Selling Shareholder"), then Chiquita
may file the Registration Statement without including Registration
Shares of such Non-Responsive Selling Shareholders.
(ii) Each Selling Shareholder agrees to cooperate
with Chiquita as reasonably requested by Chiquita in connection
with the preparation and filing of the Registration Statement,
unless such Selling Shareholder has notified Chiquita in writing of
such Selling Shareholders' election to exclude all of such Selling
Shareholder's Registration Shares from the Registration Statement.
(iii) In the event Selling Shareholders holding a
majority in interest of the Registration Shares being registered
determine to engage the services of an underwriter, each Selling
Shareholder agrees to enter into and perform such Selling
Shareholder's obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and to take such other actions as are
reasonably required in order to expedite or facilitate the
disposition of the Registration Shares, unless such Selling
Shareholder has notified Chiquita in writing of such Selling
Shareholders' election to exclude all of such Selling Shareholder's
Registration Shares from the Registration Statement.
(iv) No Selling Shareholder may participate in any
underwritten registration hereunder unless such Selling Shareholder
(1) agrees to sell such Selling Shareholder's Registration Shares
on the basis provided in any underwriting arrangements, (2)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (3)
agrees to pay its pro rata share of all underwriting discounts and
commissions and other fees and expenses of investment banker and
any manager or managers of such underwriting and legal expenses of
the underwriter applicable with respect to its Registration Shares,
in each case to the extent not payable by Chiquita pursuant to the
terms of this Exhibit A.<PAGE>
(b) If Chiquita gives a notice to a Selling Shareholder
as provided for in Section IV(d), such Selling Shareholder will
immediately cease any disposition of Registration Shares pursuant
to the Registration Statement until Chiquita notifies such Selling
Shareholder pursuant to Section IV(e) that a prospectus supplement
has been filed or an amendment to the Registration Statement has
been declared effective by the SEC 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
IV(a) for the Registration Statement shall be deemed tolled from
the date of Chiquita's notice pursuant to Section IV(d) through the
date of Chiquita's notice pursuant to Section IV(e) that such
supplement has been filed with, or such amendment has been declared
effective, by the SEC.
(c) If any Selling Shareholder believes, or receives
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, any
of the Selling Shareholders for inclusion in the Registration
Statement, then such Selling Shareholder will promptly notify
Chiquita in writing.
IV. Undertakings by Chiquita.
(a) With respect to the Registration Statement, Chiquita
will prepare and file with the SEC such amendments 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 90 days after the Registration
Statement has been declared effective by the SEC (subject to
extensions as are contemplated by Section III(b).
(b) Once the Registration Statement has been declared
effective b the SEC, 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 participating in such registration
may rely on Rule 153 under the Securities Act. Notwithstanding the
immediately preceding sentence, Chiquita will furnish to the
Selling Shareholders such number of copies of the prospectus
forming part of the Registration Statement, including, without
limitation, a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the
Selling Shareholders may reasonably request in order to facilitate
the sale of the Registration Shares subject to the Registration
Statement.
(c) Chiquita will use reasonable efforts: (i) to
register or qualify, not later than the effective date of the
Registration Statement, the Registration Shares subject thereto
under the securities or Blue Sky laws of such jurisdictions within
the United States as the Selling Shareholders participating in such
registration may reasonably request, and (ii) 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.
(d) Chiquita will promptly notify the Selling
Shareholders whose Registration Shares are included therein in
writing if (i) a stop order has been issued by the SEC or any other
suspension of effectiveness of the Registration Statement has
occurred, (ii) a postponement as permitted under Section II(b) is
put into effect, or (iii) 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.
(e) As soon after the occurrence of an event, specified
in Section IV(d) or Section III(c) as may be practicable, but
subject to Chiquita's rights under Section II(b), at the request of
the Selling Shareholders, Chiquita will, in the case of any event
specified in Section IV(d), 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 IV(d) or Section III(c), if applicable,
prepare and file with the SEC and the New York Stock Exchange, and
provide copies to the Selling Shareholders of, a supplement to the
prospectus or an amendment to the Registration Statement as may be
necessary to meet the requirements of the Securities 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
Selling Shareholders.
(f) Chiquita will enter into an underwriting agreement
with a managing underwriter reasonably acceptable to Chiquita
retained by the Selling Shareholders in connection with an offering
pursuant to the Registration Statement, which agreement will
contain representations, warrants and agreements customarily
included by an issuer in underwriting agreements with respect to a
secondary distribution.
V. Costs and Expenses.
(a) With respect to the registration under Section II,
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).
(b) For purposes hereof, (i) "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, 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 included in
the Registration Statement, and the costs and expenses incurred in
connection with the qualification of the Registration Shares
included in the Registration Statement under Blue Sky or other
state securities laws of such jurisdictions within the United
States as the Selling Shareholders may reasonably request in
accordance with the other terms of this Exhibit A, (ii)
"Registration Costs" means all registration and filing fees payable
to the SEC or any state securities law agency, and (iii) "Selling
Shareholder Costs" means the fees and expenses of counsel and
accountants of any or all of the Selling Shareholders and all
transfer taxes, underwriting discounts and commission attributable
to Registration Shares included in the Registration Statement.
VI. Indemnification. In the event any Registration Shares
are included in the Registration Statement:
(a) To the extent permitted by law, Chiquita will
indemnify and hold harmless each Selling Shareholder who holds such
Registration Shares, the directors and officers, if any, of such
Selling Shareholder, each person, if any, who controls any Selling
Shareholder within the meaning of the Securities Act, any
underwriter (as defined in the Securities Act) for the Selling
Shareholders, the directors, if any, of such underwriter and the
officers, if any, of such underwriter, and each person, if any, who
controls any such underwriter within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended, and
regulations and rules issued pursuant to that Act, as amended (the
"Exchange Act") (each, an "Indemnified Registration-Related
Person"), against any loses, claims, damage, expenses or
liabilities (joint or several) (collectively "Claims") to which any
of them become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of
or are based upon any of the following statements, omissions or
violations in the Registration Statement or any post-effective
amendment thereof, or any prospectus included therein: (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date
of the Registration Statement or contained in the final prospectus
(as amended or supplemented, if Chiquita files any amendment
thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by Chiquita of the
Securities Act, the Exchange Act or any state securities law or any
rule or regulation (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section VI(d) with respect to the number
of legal counsel, Chiquita shall reimburse the Selling Shareholders
and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section VI(a): (1) shall not apply to
a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in
writing to Chiquita by any Indemnified Registration-Related Person
or underwriter for such Indemnified Registration-Related Person
expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto, if the prospectus forming a part of such Registration
Statement was timely made available by Chiquita pursuant to
Section IV(b); (2) with respect to any preliminary prospectus shall
not inure to the benefit of any such person from whom the person
asserting any such Claim purchased the Registration Shares that are
the subject thereof (or to the benefit of any person controlling
such person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was
timely made available by Chiquita pursuant to Section IV(b); and
(3) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of
Chiquita, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Registration-
Related Persons.
(b) In connection with the Registration Statement in
which a Selling Shareholder is participating, each such Selling
Shareholder agrees to indemnify and hold harmless, to the same
extent and in the same manner set forth in Section VI(a), Chiquita,
each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls Chiquita,
within the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers
or any person who controls such stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Registration-Related Party"), against any Claim to
which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to Chiquita by such
Selling Shareholder expressly for use in connection with the
Registration Statement; and such Selling Shareholder will promptly
reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this
Section VI(b) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written
consent of such Selling Shareholder, which consent shall not be
unreasonably withheld; provided, further, however, that a Selling
Shareholder shall be liable under this Section VI(b) for only that
amount of a Claim as does not exceed the net proceeds to such
Selling Shareholder as a result of the sale of Registration Shares
pursuant to the Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Registration-Related
Party. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section VI(b) with
respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Registration-Related Party if the untrue
statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Chiquita shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any
distribution, to the same extent as provided above, with respect to
information furnished in writing by such persons expressly for
inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified
Registration-Related Person or Indemnified Registration-Related
Party under this Section VI of notice of the commencement of any
action (including any governmental action), such Indemnified
Registration-Related Person or Indemnified Registration-Related
Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section VI, deliver to the
indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of
the defense thereof with counsel mutually satisfactory to the
indemnifying parties; provided, however, that an Indemnified
Registration-Related Person or Indemnified Registration-Related
Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Registration-
Related Person or Indemnified Registration-Related Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified
Registration-Related Person or Indemnified Registration-Related
Party and other party represented by such counsel in such
proceeding. Chiquita shall pay for only one separate legal counsel
for all of the Selling Shareholders; such legal counsel shall be
selected by the Selling Shareholders holding a majority in interest
of the Registration Shares. The failure to deliver written notice
to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Registration-Related
Party under this Section VI, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section VI shall be
made by periodic payments of the amount thereof during the course
of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
VII. Contribution. To the extent any indemnification provided
for herein is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts
for which it would otherwise be liable under Section VI to the
fullest extent permitted by law; provided, however, that (a) no
contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault
standards set forth in Section VI, (b) no seller of Registration
Shares guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registration Shares who was not
guilty of such fraudulent misrepresentation, and (c) contribution
by any seller of Registration Shares shall be limited in amount to
the net amount of proceeds received by such seller from the sale of
such Registration Shares.
VIII. Investment Representations. Each Selling Shareholder
represents that it is its present intention to acquire the Stock
for investment for such Selling Shareholder's own account (and such
Selling Shareholder will be the sole beneficial owner thereof) and
that the Stock is being acquired for the purpose of investment and
not with a view to distribution or resale thereof except pursuant
to registration under the Securities Act or exemption therefrom.
Each Selling Shareholder further represents that it understands and
agrees that, until registered under the Securities Act, all
certificates evidencing the Stock, whether upon initial issuance or
upon any transfer thereof, shall bear a legend, prominently stamped
or printed thereon, reading substantially as follows:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933 or
applicable state securities laws. These securities have
been acquired for investment and not with a view to
distribution or resale. These securities may not be
offered for sale, sold, delivered after sale, or
transferred in the absence of an effective registration
statement covering such shares under such Act and any
applicable state securities laws, or the availability, in
the opinion of counsel, of an exemption from registration
thereunder."<PAGE>
EXHIBIT 99.1
Joint Press Release of the Registrant
and Chiquita issued September 17, 1997<PAGE>
For: Stokely USA, Inc. Contact: Stephen W. Theobald
1230 Corporate Center Drive (414) 569-1800
Oconomowoc, WI 53066
Chiquita Brands International, Inc. Contact: Joseph Hagin
250 East Fifth Street (513)784-8866
Cincinnati, Ohio 45202
OCONOMOWOC, WI, and CINCINNATI, OH, September 18, 1997 . . .
Stokely USA, Inc. and Chiquita Brands International, Inc. announced
today that they have signed a definitive agreement for the aquisition of
Stokely by Chiquita. The transaction, which will take the form of a
merger of Stokely into a Chiquita subsidiary, is valued at
approximately $110 million (including assumption or aquisition of
Stokely's outstanding debt).
The proposed merger will result in Stokely shareholders receiving
$1.00 per Stokely share in the form of Chiquita common stock. The
Chiquita stock issuable to Stokely shareholders will be valued at the
average closing price per Chiquita share on the New York Stock Exchange
for the 15 trading days prior to the closing date of the transaction.
In the proposed merger, a significant amount of Stokely's long-term debt
will be exchanged for Chiquita common shares. Completion of the
transaction is subject to obtaining necessary regulatory and Stokely
shareholder approvals and various other closing conditions.
"We plan to leverage Stokely's first-class processing facilities,
experienced work force and excellent customer base with our Friday
Canning subsidiary's position as the premier domestic private label
canned vegetable supplier," said Anthony D. Battaglia, President of the
Diversified Foods Group of Chiquita. "This combination will enable us to
better serve our customers with high-quality private label canned
vegetables."
Consistent with its previous statements about the need for
consolidation and structural change in the vegetable processing industry,
Stokely had retained Donaldson, Lufkin & Jenrette Securities Corporation
to assist its Board of Directors in a review of all strategic alternatives,
including a sale of the Company. Commenting on the proposed merger,
Stokely's President and Chief Executive Officer Stephen W. Theobald stated,
"Despite several attempts to restructure our operations, the combination
of high leverage and the difficult market conditions we face has continued
to erode the value of the Company and negatively impact our liquidity
position. Our ability to compete effectively in the marketplace has been
undermined as a result. After a thorough review, our Board of Directors
concluded that this merger, which will give current Stokely shareholders
a stake in a larger, more diversified food company, represents the most
attractive strategic alternative available. Additionally, we believe
Stokely's customers and other constituencies will benefit because Chiquita
is a committed and growing player in the processed vegetable category and
knows how to deliver value to customers in both private label and brand
channels of distribution."
The proposed merger, which has been unanimously approved by both
Stokely's and Chiquita's Board of Directors, is subject to approval by
Stokely's shareholders. Stokely's common stock is traded on the NASDAQ
National Market System (STKY), where its last trade on September 17, 1997
was $1-9/16 per share. Approximately 11.4 million Stokely shares are
outstanding. The transaction is expected to close in early January 1998.
Donaldson, Lufkin & Jenrette has rendered its opinion to Stokely's Board
of Directors that the consideration to be paid is fair to Stokely's
shareholders from a financial point of view.
Chiquita will file a registration statement (which will include
Stokely's proxy statement for a shareholders meeting at which the proposed
merger will be considered) with the Securities and Exchange Commission
covering the shares of Chiquita common stock to be issued in connection
with the proposed merger. Stokely anticipates that the shareholders
meeting to vote on the proposed merger will be held in early January 1998.
Stokely USA, Inc. is a major domestic producer of canned vegetables.
The Company processes, markets and sells a broad range of vegetables under
customer private labels and under the Stokely's Finest label and the
Stokely's Gold label and other brand labels through the retail, food
service and industrial channels of distribution. Headquartered in
Oconomowoc, Wisconsin, Stokely operates seven processing facilities in the
Midwest.
Chiquita is a leading international marketer, producer and
distributor of bananas and other quality fresh and processed food products.
Its Friday Canning operation, headquartered in New Richmond, Wisconsin,
operates eight production facilities in Wisconsin and a joint venture in
China and exports its private label canned vegetables to more than 40
countries.
This press release includes certain statements that may be deemed to
be "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements, other than statements
of historical facts, included in this press release that address
activities, events or developments that the companies expect, believe or
anticipate will or may occur in the future, are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
companies in light of their experience and perception of historical trends,
current conditions, expected future developments and other factors they
believe are appropriate in the circumstances. Such statements are subject
to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the companies. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results
or developments may differ materially from the projections in the forward-
looking statements.
