-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWNmWMlmCrIzH0nXvX/wXs2UNu3GegQmlDmusA4H7jmCaw4xDwOJXP5E6WaIzA2Q peDX+uly5Pq/xDOJ/aR1Yw== 0000101063-97-000034.txt : 19971006 0000101063-97-000034.hdr.sgml : 19971006 ACCESSION NUMBER: 0000101063-97-000034 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19971003 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971003 SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01550 FILM NUMBER: 97690800 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848011 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): September 15, 1997 CHIQUITA BRANDS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) New Jersey 1-1550 04-1923360 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 250 East Fifth Street, Cincinnati, Ohio 45202 (Address of principal executive offices) Registrant's telephone number, including area code: (513) 784-8000 INFORMATION TO BE INCLUDED IN THE REPORT Items 1, 3, 4, 6 and 8 are not applicable and are omitted from this Report. Item 2. Acquisition or Disposition of Assets. On September 24, 1997 Chiquita Brands International, Inc. ("Chiquita" or the "Company") acquired by merger four privately-held companies engaged primarily in the vegetable canning business. The four companies (collectively, the "Owatonna Companies"), each of which is headquartered in Owatonna, Minnesota, are Owatonna Canning Company ("Owatonna"), Olivia Canning Company ("Olivia"), Midwest Foods, Inc. ("Midwest") and Goodhue Canning Company ("Goodhue"). The acquisition, structured as a tax-free reorganization, was effected pursuant to a Merger Agreement dated as of August 22, 1997, which is attached hereto as Exhibit 2.1. The merger consideration payable to the shareholders of the Owatonna Companies (principally individuals who are descendants of the founders and members of their families) was agreed to based on arm's length negotiations. The total merger consideration was $50 million, consisting of (i) approximately 3.3 million shares of Chiquita capital stock, par value $.33 per share ("Common Stock"), valued for purposes of the merger at approximately $46 million and (ii) approximately 87,000 shares of a new series of Chiquita $2.50 Convertible Preference Stock, Series C ("Series C Preference Stock") having an aggregate liquidation value of approximately $4 million. The Chiquita Common Stock was valued at $13.91 per share, which represents the agreed market value of the Common Stock on March 17, 1997, the date of the letter of intent relating to the merger. Up to 500,000 of the shares of Common Stock issued in the transaction may be registered for resale under the Securities Act of 1933 prior to September 23, 1998 pursuant to a Registration Rights Agreement, a copy of which is attached hereto as Exhibit 3.3. The total merger consideration is subject to post-closing adjustment based on an audit of the Owatonna Companies' June 30, 1997 financial statements. The Owatonna Companies produce canned peas, corn, green and wax beans, pumpkin, prepared salads and stew and spaghetti products, marketed under private and branded labels in both the retail and food service trades at six plants located in Owatonna, Bricelyn, Dodge Center, Olivia and Kenyon, Minnesota and Princeville, Illinois. Chiquita presently plans to continue operating the Owatonna Companies' canning business. Item 5. Other Events. On September 17, 1997, Chiquita entered into a definitive agreement with Stokely USA, Inc., a Wisconsin corporation ("Stokely"), for the acquisition of Stokely by Chiquita by means of a merger. The total 2 consideration payable to the Stokely shareholders would be approximately $11 million, consisting entirely of shares of Chiquita Common Stock. In addition, approximately $32 million of Stokely's long-term debt would be exchanged for Chiquita Common Stock having a value equal to the principal amount of such debt. The Common Stock issued to the Stokely shareholders and debtholders would be valued at the average of the closing prices of Chiquita Common Stock on the New York Stock Exchange Composite Tape for the fifteen trading days prior to the closing of the merger transaction. Headquartered in Oconomowoc, Wisconsin, Stokely operates seven vegetable canning facilities in the Midwest. Although the acquisition is subject to Stokely shareholder approval and other conditions, and is not expected to be consummated until January 1998, this acquisition is reflected in the pro forma financial statements included in Item 7 as a probable acquisition. On September 15, 1997, Chiquita entered into a definitive agreement for the acquisition of American Fine Foods, Inc., a privately-held corporation ("AFF"). In the transaction, the AFF shareholders will receive approximately $27 million of Chiquita Common Stock in payment for all outstanding AFF capital stock. In addition, Chiquita will assume or retire AFF's $2 million of long-term debt. Headquartered in Payette, Idaho, AFF owns and operates four vegetable canning facilities and a can manufacturing facility in the northwestern United States. Although the acquisition is still subject to certain conditions, and is not expected to be consummated until late October or November 1997, this acquisition is reflected in the pro forma financial statements included in Item 7 as a probable acquisition. Item 7. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. Page No. Owatonna Canning Company: Independent Auditors' Report 6 Balance Sheets at February 28, 1997 and February 29, 1996 7 Statements of Income and Retained Earnings for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 9 Statements of Cash Flows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 10 Notes to Financial Statements 12 Balance Sheets (unaudited) at June 30, 1997 and 1996 23 Statements of Income (unaudited) for the four months ended June 30, 1997 and 25 1996 3 Statements of Cash Flows (unaudited) for the four months ended June 30, 1997 and 1996 26 Notes to Financial Statements (unaudited) 27 Pursuant to Rule 3-05 (b) (2) (ii) of Regulation S-X financial statements of Olivia, Midwest and Goodhue are not required to be filed. (b) Pro Forma Financial Information. Chiquita Brands International, Inc. Pro Forma Combined Balance Sheet (unaudited) as of June 30, 1997 29 Pro Forma Combined Income Statement (unaudited) for the year ended December 31, 1996 31 Pro Forma Combined Income Statement (unaudited) for the six months ended June 30, 1997 32 (c) Exhibits 2.1 Agreement and Plan of Merger dated as of August 22, 1997 by and among Owatonna, Olivia, Midwest, Goodhue and Chiquita and Chadwick S. Lange, Karen E. Lange, Richard Jackson and Ann Jackson, as Shareholders' Representatives. 3.1 Certificate of Amendment to the Company's Second Restated Certificate of Incorporation, filed with the Secretary of State of the State of New Jersey on September 23, 1997, setting forth the terms of $2.50 Convertible Preference Stock, Series C. 3.2 Certificate of Merger of Owatonna, Olivia, Midwest and Goodhue into Chiquita filed with the Secretary of State of the State of New Jersey on September 24, 1997. 3.3 Registration Rights Agreement dated as of September 24, 1997 between Chiquita and Ann and Richard Jackson, as Shareholders' Representatives. 23.1Consent of Independent Auditors (Hutton, Nelson & McDonald LLP) 4 OWATONNA CANNING COMPANY REPORT ON EXAMINATION YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 5 INDEPENDENT AUDITORS' REPORT The Board of Directors Owatonna Canning Company We have audited the accompanying balance sheets of Owatonna Canning Company as of February 28, 1997 and February 29, 1996, and the related statements of income and retained earnings, and cash flows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Owatonna Canning Company as of February 28, 1997 and February 29, 1996, and the results of its operations and its cash flows for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 in conformity with generally accepted accounting principles. As discussed in the note to the financial statements regarding inventories, the Company changed its method of accounting for certain inventories in 1996 and, as discussed in the Summary of Accounting Policies note to the financial statements, the Company changed its method of accounting for debt and equity securities in 1995. /s/ Hutton, Nelson & McDonald LLP Oakbrook Terrace, Illinois March 26, 1997 6
OWATONNA CANNING COMPANY BALANCE SHEETS FEBRUARY 28, 1997 AND FEBRUARY 29, 1996 ASSETS 1997 1996 Current assets Cash $ 3,233,615 $ 2,524,740 Marketable securities 3,556,335 5,005,881 Accounts receivable Trade 4,481,744 4,091,416 Affiliates and others 159,258 198,672 Inventories 20,546,801 15,668,372 Refundable income taxes -- 1,674,043 Prepaid expensess 278,008 275,402 Deferred income tax 237,000 171,000 ---------- ---------- Total current assets 32,492,761 29,609,526 ---------- ---------- Property, plant and equipment, at cost Land 1,061,323 3,875,690 Buildings and improvements 10,183,260 11,327,075 Machinery and equipment 28,733,358 28,561,855 Assets under construction 766,401 272,922 ---------- ---------- 40,744,342 44,037,542 Accumulated depreciation 27,926,491 27,742,069 ---------- ---------- 12,817,851 16,295,473 ---------- ---------- Other assets Investment in affiliates 2,001,090 1,912,521 Cash surrender value of life insurance 175,303 600,004 Notes and contracts receivable - noncurrent portion 13,350 15,635 Excess of cost over fair value of net assets acquired 39,220 40,470 Prepaid pension cost 1,181,261 1,069,162 Other 1 1 ---------- ---------- 3,410,225 3,637,793 ---------- ---------- $ 48,720,837 $ 49,542,792 ========== ==========
The accompanying notes are an integral part of these financial statements. 7
OWATONNA CANNING COMPANY BALANCE SHEETS (Continued) FEBRUARY 28, 1997 AND FEBRUARY 29, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 Current liabilities Current maturities of long-term debt $ 761,150 $ 787,293 Accounts payable Trade 1,366,210 1,016,773 Affiliates 3,127,996 1,325,836 Accrued income taxes 505,423 -- Accrued liabilities 1,365,265 1,422,128 ---------- ---------- Total current liabilities 7,126,044 4,552,030 ---------- ---------- Long-term debt Real estate purchase contracts and mortgage -- 187,709 Term loans 750,000 1,500,000 ---------- ---------- 750,000 1,687,709 ---------- ---------- Deferred income taxes 1,037,000 1,058,000 ---------- ---------- Stockholders' equity Capital stock Class A common stock, par value $100 per share; 450 shares authorized, issued and outstanding 45,000 45,000 Class B common stock, par value $100 per share; 9,000 shares authorized; 4,050 shares issued and outstanding 405,000 405,000 Net unrealized losses on marketable securities (220,088) (314,640) Retained earnings 39,577,881 42,109,693 ---------- ---------- 39,807,793 42,245,053 ---------- ---------- $ 48,720,837 $ 49,542,792 ========== ==========
The accompanying notes are an integral part of these financial statements. 8
OWATONNA CANNING COMPANY STATEMENTS OF INCOME AND RETAINED EARNINGS YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 1997 1996 1995 Sales $ 53,712,410 $ 52,925,667 $ 49,588,708 Cost of sales 31,000,180 32,328,841 27,880,278 ---------- ---------- ---------- Gross profit 22,712,230 20,596,826 21,708,430 Selling and distribution expense 14,124,070 15,592,065 13,212,673 Administrative expense 2,141,800 1,831,249 1,844,849 ---------- ---------- ---------- 16,265,870 17,423,314 15,057,522 ---------- ---------- ---------- Operating income - seasonal pack 6,446,360 3,173,512 6,650,908 Nonseasonal pack income, less allocated expenses of $147,691 188,226 168,825 210,967 Operating income 6,634,586 3,342,337 6,861,875 Other income (expense) Equity in net income of affiliates 120,569 144,333 180,125 Interest income 462,767 662,541 820,316 Interest expense (360,356) (590,964) (576,527) Miscellaneous 11,776 10,514 28,957 Gain (loss) on disposition of property and equipment 1,585,050 (324,744) 8,750 Realized gain (loss) on sale of marketable securities (98,893) 5,401 (916,449) Amortization of excess cost of net assets acquired (1,250) (1,250) (1,250) ---------- -------- --------- Income before income taxes 8,354,249 3,248,168 6,405,797 Income taxes Current 2,665,470 1,254,743 2,721,428 Deferred (87,000) (129,000) (38,000) 2,578,470 1,125,743 2,683,428 ----------- ----------- ---------- Net income 5,775,779 2,122,425 3,722,369 ----------- ---------- ---------- Retained earnings Beginning of year 42,109,693 40,556,084 37,240,077 ---------- ---------- ---------- Preferred stock retired -- 454 -- Cash dividends Preferred stock ($6 per share) -- 1,362 1,362 Class A common stock ($100, $126 and $90 per share) 45,000 56,700 40,500 Class B common stock ($100, $126 and $90 per share) 405,000 510,300 364,500 450,000 568,362 406,362 ---------- ---------- ---------- Net assets distributed to Festal Farms Co. 7,857,591 -- -- ----------- ---------- ---------- End of year $ 39,577,881 $ 42,109,693 $ 40,556,084 =========== ========== ==========
The accompanying notes are an integral part of these financial statements. 9
OWATONNA CANNING COMPANY STATEMENTS OF CASH FLOWS YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 1997 1996 1995 Cash flows from operating activities: Cash received from customers $ 52,666,464 $ 51,944,159 $ 48,489,448 Cash paid to suppliers and employees (49,964,892) (47,444,765) (47,176,937) Interest received 447,858 517,938 601,167 Interest paid (364,137) (595,801) (585,506) Income taxes paid (1,823,116) (4,045,505) (1,552,000) Income tax refund 1,337,112 -- 542,566 Dividend and distribution received 32,000 35,000 32,000 Miscellaneous income received 11,776 10,514 28,957 ---------- ---------- ---------- Net cash provided by operating activities 2,343,065 421,540 379,695 ---------- ---------- ---------- Cash flows from investing activities: Proceeds from sale of property and equipment 1,852,125 2,050 8,750 Capital expenditures (3,644,318) (3,385,664) (2,310,265) Proceeds from contract receivables 2,090 3,012 3,320 Proceeds from employee note receivable -- 70 730 Purchase of marketable securities (4,573,883) (6,365,219) (20,563,482) Proceeds from disposition of marketable securities 6,010,397 8,325,706 22,791,022 Premiums paid for officers' life insurance (43,308) (47,460) (8,675) ---------- ----------- ----------- Net cash used in investing activities (396,897) (1,467,505) (78,600) ---------- ----------- ----------- Cash flows from financing activities: Principal payments on long-term debt (787,293) (811,588) (2,030,851) Preferred stock acquired and retired -- (23,154) -- Dividends paid (450,000) (569,724) (406,362) ---------- ---------- ----------- Net cash used in financing activities (1,237,293) (1,404,466) (2,437,213) ---------- ---------- ---------- Net increase/(decrease) in cash 708,875 (2,450,431) (2,136,118) Cash at beginning of year 2,524,740 4,975,171 7,111,289 ---------- ---------- ---------- Cash at end of year $ 3,233,615 $ 2,524,740 $ 4,975,171 ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 10
OWATONNA CANNING COMPANY STATEMENTS OF CASH FLOWS (Continued) YEARS ENDED FEBRUARY 28, 1997, FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 1997 1996 1995 ------------ ------------ ------------ Reconciliation of net income to net cash provided by operating activities: Net income $ 5,775,779 $ 2,122,425 $ 3,722,369 ---------- ---------- ---------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,345,029 2,402,724 2,375,500 Discount accretion, net of premium amortization 8,691 (144,603) (145,716) Amortization of excess cost of net assets acquired 1,250 1,250 1,250 (Gain) loss on disposition of property and equipment (1,585,050) 324,744 (8,750) Realized (gain) loss on sale of marketable securities 98,893 (5,401) 916,449 Deferred income taxes (87,000) (129,000) (38,000) Increase in cash surrender value of life insurance (22,455) (28,195) Equity in net income of affiliates - net of distributions received of $32,000, $35,000 and $32,000 (88,569) (109,333) (148,125) Change in assets (increase) decrease: Accounts receivable (350,719) (306,246) (465,542) Refundable income taxes 1,674,043 (1,674,043) 595,275 Inventories (4,878,429) (152,118) (5,893,629) Prepaid expenses (2,606) 145,553 (118,707) Prepaid pension cost (112,099) (115,840) (174,701) Change in liabilities increase (decrease): Accounts payable (1,004,689) (889,446) (1,373,666) Accrued income taxes 505,423 (1,116,719) 1,116,719 Accrued liabilities 65,573 95,788 18,969 ---------- ---------- ---------- Total adjustments (3,432,714) (1,700,885) (3,342,674) ---------- ---------- ---------- Net cash provided by operating activities $ 2,343,065 $ 421,540 $ 379,695 ========== ========== ========= Supplemental schedule of noncash investing and financing activities: Net unrealized gains (losses) on marketable securities $ 94,552 $ 482,145 $ (796,785) ========== ========== ========= Distribution of net assets to Festal Farms Co. $ 7,857,591 $ -- -- ========== ========== $ =========
The accompanying notes are an integral part of these financial statements. 11 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS SUMMARY OF ACCOUNTING POLICIES Nature of Operations - The Company, whose products are distributed worldwide, processes and cans food products at its plants in Minnesota and Illinois. Principles of Consolidation - The Company uses the equity method of accounting for unconsolidated affiliates in which it does not have a majority ownership interest. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Marketable Securities - On March 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115) which requires that investments in debt securities and marketable equity securities be designated as trading, held-to- maturity or available-for-sale. Securities available-for-sale are securities that are intended to be held for indefinite periods of time, but which may not be held to maturity. Management determines the appropriate classifications of its investments in debt and equity securities at the time of purchase and reevaluates such determination at each balance sheet date. Marketable securities are considered available-for-sale and are carried at market value. Unrealized holding gains and losses for available-for-sale securities are reported net of applicable income taxes as a separate component of stock-holders' equity. No income tax benefit has been applied due to the uncertainty of the ability to utilize available unrealized capital loss carryovers. The cumulative effect reflecting the change in accounting method was shown as a separate component of stockholders' equity in the balance sheet. Receivables - Accounts receivable have been adjusted for all known uncollectible accounts. No allowance for uncollectible accounts has been provided since the amount of such allowance would not be significant. Inventories - The Company's inventories of canned foods are priced at cost, determined by the last-in, first-out method. Inventories of factory and farm supplies are priced at the lower of cost, determined by the first-in, first-out method, or market. Property, Plant and Equipment - Property, plant and equipment are recorded at cost. Expenditures for renewals and betterments which extend the life of such assets are capitalized. Maintenance and repairs are charged to expense as incurred. Differences between amounts received and net carrying value of assets retired or disposed of are charged or credited to income. 12 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Depreciation - For financial statement reporting, depreciation charged to income is computed using the straight-line and declining-balance methods. For income tax purposes, an accelerated method of depreciation is used for certain assets. The income taxes applicable to the excess depreciation claimed for tax purposes over depreciation charged to income in the financial statements are included in income tax expense and deferred income taxes. Amortization - The excess of cost over fair value of net assets acquired is being amortized on a straight-line basis over 40 years. Employees' Retirement Plans - The Company has a noncontributory defined benefit pension plan covering all of its eligible employees. The Company funds an amount equaling an actuarially determined amount meeting minimum requirements under the ERISA Funding Standard Account. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. The Company also has a trusteed defined contribution profit sharing plan covering all eligible employees. Annual contributions to the trust are made at the discretion of the Board of Directors, but are not to exceed the maximum allowed as a deduction for federal income tax purposes. Income Taxes - Deferred income taxes are provided for temporary differences between financial accounting and tax accounting. SPIN-OFF Effective January 1, 1997, the Company declared a spin-off distribution of 100% of the Class A and Class B common shares of a newly formed wholly-owned subsidiary, Festal Farms Co., to the Company's Class A and Class B common shareholders on the basis of one share of Festal Farms Co. stock for each share of the Company's stock. Prior to the spin-off, pursuant to a contribution agreement dated December 31, 1996 and effective as of January 1, 1997, the Company contributed to Festal Farms Co. all of its farming related assets and liabilities and appropriate working capital. Following the distribution, Festal Farms Co. became an independent company. 13 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) In connection with the spin-off, the Company charged the net assets transferred against retained earnings. A summary of the net assets distributed is as follows:
Property, plant and equipment $ 4,509,836 Cash surrender value of life insurance 490,464 Working capital 3,200,000 Real estate purchase contract and mortgage (176,559) Accrued liabilities (166,150) ---------- $ 7,857,591 ==========
AFFILIATION Owatonna Canning Company is affiliated either by common ownership or managerial control with various companies. Listed below are some of the affiliated companies and the material transactions that have occurred between those affiliates and Owatonna Canning Company:
1997 1996 1995 Midwest Foods, Inc. Income to Owatonna Canning Company from rental of building and equipment to Midwest Foods, Inc. $ 334,557 $ 316,516 $ 358,658 ========== ========== ========== Administrative services $ 30,000 $ 30,000 $ 30,000 ========== ========== ==========
14 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) AFFILIATION (Continued) Goodhue Canning Company and Olivia Canning Company Owatonna Canning Company bills all Goodhue Canning Company and Olivia Canning Company sales and collects related accounts receivable. All transactions related to these billings have cleared through the respective companies accounts on Owatonna Canning Company's records. Transactions with those two affiliates were as follows:
1997 1996 1995 Goodhue Canning Company Administrative and selling fees $ 63,564 $ 53,305 $ 54,852 Brokerage fees 63,788 34,740 30,566 Olivia Canning Company Administrative and service fees 77,286 47,948 50,231 Brokerage fees 176,826 124,298 135,330 Hartle-Lange-Hammel Company Rental expense 43,800 43,800 43,800
MARKETABLE SECURITIES The composition of marketable securities which are classified as available - -for-sale at February 28, 1997 and February 29, 1996 are as follows:
Gross Gross Unrealized Unrealized Market Cost Gains Losses Value February 28, 1997 Mortgage-backed securities $ 1,044,505 $ -- $ 99,721 $ 944,784 Municipal bond fund 1,673,035 32,010 147,317 1,557,728 Equity funds 1,058,883 18,376 23,436 1,053,823 ---------- ---------- ---------- ---------- $ 3,776,423 $ 50,386 $ 270,474 $ 3,556,335 ========== ========== ========== ========== February 29, 1996 Mortgage-backed securities $ 1,041,072 $ -- $ 119,263 $ 921,809 Municipal bond funds 3,165,159 79,423 139,043 3,105,539 Other 1,114,290 -- 135,757 978,533 ---------- ---------- --------- ---------- $ 5,320,521 $ 79,423 $ 394,063 $ 5,005,881 ========== ========== ========= ==========
15 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Realized gains and losses are determined on a specific identification basis and are reported in the statement of income and retained earnings as realized gains and losses on disposition of securities. Gross gains of $46,718, $5,401 and $47,906 were realized in 1997, 1996 and 1995, respectively, and gross losses of $145,611 and $964,355 were realized in 1997 and 1995, respectively. INVENTORIES Major classifications of inventories are as follows:
1997 1996 Canned foods $ 19,494,172 $ 14,596,332 Factory and farm supplies 1,052,629 1,072,040 ---------- ---------- $ 20,546,801 $ 15,668,372 =========== ==========
As a result of the merger of Princeville Canning Company into Owatonna Canning Company in 1996, the Company changed the method of valuation of canned foods of its Princeville division from the FIFO cost method to the LIFO cost method. The effects of adopting the LIFO method at the Princeville division was to increase February 29, 1996 inventories and net income by $158,437. The cumulative effect of this change on the operating results of prior years has not been presented, as the effect was not readily determinable. DEPRECIATION Depreciation was charged to income, based on the estimated useful lives of the assets, in the following amounts:
Estimated 1997 1996 1995 Life - Years Land improvements $ 46,683 $ 67,157 $ 86,950 10 -20 Buildings 252,260 254,383 262,612 10 -33 Machinery and equipment 1,313,174 1,234,812 1,198,959 5 -15 Farm equipment 527,386 517,169 512,392 2 - 8 Automobiles and trucks 100,131 85,330 78,011 3 - 6 Furniture and fixtures 88,321 89,121 81,818 5 -10 Bulk storage facility 7,691 7,690 7,691 40 Pollution control facilities 9,383 147,062 147,067 10 -15 ---------- ---------- ---------- $ 2,345,029 $ 2,402,724 $ 2,375,500 ========== ========== ==========
16 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) INVESTMENT IN UNCONSOLIDATED AFFILIATES The Company owns 33.058% in 1997 and 30.534% in 1996 and 1995 of the outstanding common stock of Olivia Canning Company and has a 50% interest in the partnership of Hartle-Lange-Hammel Company. The following is a summary of these investments which are accounted for under the equity method:
1997 -------------------------------------- Hartle- Olivia Lange- Canning Hammel 1996 1995 Company Company Combined Combined Combined Balance at beginning of year $ 1,389,535 $ 522,986 $ 1,912,521 $ 1,803,188 $ 1,655,063 Equity in undistributed net income 96,307 24,262 120,569 144,333 180,125 Dividends and distributions received (8,000) (24,000) (32,000) (35,000) (32,000) ---------- ---------- ---------- ---------- ---------- Balance at end of year $ 1,477,842 $ 523,248 $ 2,001,090 $ 1,912,521 $ 1,803,188 ========== ========== ========== ========= =========
The financial position of Olivia Canning Company and Hartle-Lange-Hammel Company is summarized as follows:
1997 ------------------------------------------ Hartle- Olivia Lange- Canning Hammel 1996 Company Combined Combined Combined Current assets $ 3,264,935 $ 6,380 $ 3,271,315 $ 3,063,092 Property, plant and equipment, net of depreciation 1,376,909 1,050,000 2,426,909 2,722,518 Other assets 29,636 20 29,656 28,331 ---------- ---------- ---------- ---------- $ 4,671,480 $ 1,056,400 $ 5,727,880 $ 5,813,941 ========== ========== ========= ========= Current liabilities $ 136,527 $ 1,905 $ 138,432 $ 140,205 Long-term debt -- -- -- 30,986 Other liabilities 64,500 -- 64,500 38,000 Stockholders' equity or partners' capital 4,470,453 1,054,495 5,524,948 5,604,750 --------- --------- --------- --------- $ 4,671,480 $ 1,056,400 $ 5,727,880 $ 5,813,941 ========= ========= ========= =========
17 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) The net income of Olivia Canning Company for the years ended February 28, 1997, February 29, 1996, and February 28, 1995, was $225,904, $395,284, and $499,895, respectively. Net income for Hartle-Lange-Hammel Company for the years ended December 31, 1996, 1995 and 1994 was $48,524, $47,274 and $54,972, respectively. Transactions with affiliates follows:
1997 1996 1995 Olivia Canning Company Brokerage received $ 176,826 $ 124,298 $ 135,330 Administrative and selling fees 77,286 47,948 50,231 Hartle-Lange-Hammel Company Rental expense 43,800 43,800 43,800
NOTES PAYABLE - BANK The Company has lines of credit amounting to $5,500,000 at February 28, 1997 and $5,000,000 at February 29, 1996. The lines of credit at February 28, 1997 consist of a $2,500,000 note expiring on July 15, 1997 and a $3,000,000 note expiring on July 31, 1997. The $5,000,000 line of credit at February 29, 1996 expired on July 31, 1996. The $2,500,000 note provides for interest at 7% per annum. The other notes provide for interest to be determined under an "interest rate option" as defined in the loan agreements and elected by the Company. There were no outstanding borrowings against these lines of credit at either balance sheet date. LONG-TERM DEBT Long-term debt consists of the following:
1997 1996 Real estate purchase contracts due through May 2006, payable in varying amounts with interest at 7.5% to 10%. Secured by real estate with a carrying value totaling $327,531. Contracts totaling $176,559 were assumed by Festal Farms Co. in 1997. $ 11,150 $ 225,002 Unsecured installment note due $750,000 annually with final payment due August 10, 1998 with interest payable monthly at 10.49% 1,500,000 2,250,000 --------- --------- 1,511,150 2,475,002 Current maturities 761,150 787,293 ---------- ---------- $ 750,000 $ 1,687,709 ========== ==========
18 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) The Company's installment notes contain certain restrictions relating to working capital requirements,investments, indebtedness and payment of cash dividends. All restrictive covenants have been complied with. Scheduled principal maturities of long-term debt are:
Year Ended February 28, 1998 $ 761,150 February 28, 1999 750,000 -------- $1,511,150
EMPLOYEES' RETIREMENT PLANS The Company complies with the accounting and disclosure provisions of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." The 1997, 1996 and 1995 net periodic pension cost (income) components are summarized as follows:
1997 ---------------------------------- Owatonna/ Owatonna Canning Midwest Company and Salaried Midwest Foods, Inc. Employees' Hourly Workers' Pension Plan Pension Plan Combined 1996 1995 Service cost $ 107,082 $ 46,186 $ 153,268 $ 130,094 $ 111,362 Interest cost on projected benefit obligation 162,927 169,426 332,353 329,983 299,145 Actual return on plan assets (314,809) (444,928) (759,737) (794,966) (287,330) Net amortization and deferral Amortization of initial unrecognized net (assets) obligation (65,195) 5,412 (59,783) (59,783) (59,783) Amortization of unrecognized prior service cost (48,317) 28,216 (20,101) (20,101) 17,855 Deferred expense 48,440 255,219 303,659 402,605 (167,822) ---------- ---------- --------- ---------- --------- Total periodic pension cost (income) (109,872) 59,531 (50,341) (12,168) (86,573) Attributable to Midwest Foods, Inc. -- (33,218) (33,218) (41,832) (31,978) ---------- ---------- --------- ---------- ---------- Net periodic pension cost (income) $ (109,872) $ 26,313 $ (83,559) $ (54,000) $ (118,551) =========== =========== ========== =========== ===========
19 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) EMPLOYEES' RETIREMENT PLANS (Continued) The funded status of the plans and the amount recognized in the Company's balance sheets at February 28, 1997 and February 29, 1996 are set forth as follows:
1997 --------------------------------------------- Owatonna/ Owatonna Canning Midwest Company and Salaried Midwest Foods, Inc. Employees' Hourly Workers' Pension Plan Pension Plan Combined 1996 Actuarial present value of benefit obligations Vested benefit obligation $ (1,987,115) $ (2,398,512) $ (4,385,627) $ (4,229,814) Nonvested benefit obligation (14,008) (72,629) (86,637) (80,319) ---------- ------------ ------------ ------------ Accumulated benefit obligation (2,001,123) (2,471,141) (4,472,264) (4,310,133) Effect of projected compensation levels (420,143) (26,760) (446,903) (441,618) ---------- ------------ ------------- ------------ Actuarial present value of projected benefit obligation (2,421,266) (2,497,901) (4,919,167) (4,751,751) Plan assets at fair market value 4,443,628 3,137,520 7,581,148 6,779,092 ------------ ------------- ------------ ------------ Plan assets at fair market value in excess of projected benefit obligation 2,022,362 639,619 2,661,981 2,027,341 Unrecognized net gain (632,163) (329,666) (961,829) (406,086) Prior service cost not yet recognized in net periodic pension cost (8,469) 185,353 176,884 205,223 Unrecognized net (assets) obligations being recognized over 7-16 years (423,766) 9,890 (413,876) (473,659) ------------ ------------- ------------ ------------ 957,964 505,196 1,463,160 1,352,819 Prepayment attributable to Midwest Foods, Inc. -- (281,899) (281,899) (283,657) ----------- ------------- ------------ ------------ Prepaid pension cost included in other assets $ 957,964 $ 223,297 $ 1,181,261 $ 1,069,162 ============ ============= ============ ============
20 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) EMPLOYEES' RETIREMENT PLANS (Continued) The assets of the plans consist principally of debt and equity securities and fixed income instruments. Although the actual return on plan assets is shown, the expected long-term rates of return used in determining net periodic pension cost was 8%. The differences between actual return and expected return are included in net amortization and deferral. The discount rates used in determining the actuarial present value of the projected benefit obligation were 7% in 1997 and 1996. In connection with a collective bargaining agreement with the United Food and Commercial Workers Union, the Company participates with Midwest Foods, Inc. in a defined benefit pension plan covering all eligible hourly employees who are members of the Union. Contributions to the plan were as follows:
1997 1996 1995 Owatonna Canning Company $ 30,000 $ 66,000 $ 60,000 Midwest Foods, Inc. 30,000 66,000 62,000 ---------- --------- --------- $ 60,000 $ 132,000 $ 122,000 ========== ========== ==========
The Company has a noncontributory profit-sharing plan covering all of its eligible salaried employees. Contributions charged to operations were $360,444 in 1997, $271,528 in 1996 and $291,303 in 1995. STOCKHOLDERS' EQUITY The 6% cumulative preferred stock, callable at $102 per share, was retired on February 29, 1996. 21 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) INCOME TAXES Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Provisions for federal and state income taxes consist of the following:
1997 1996 1995 Current Federal $ 2,139,666 $ 1,005,327 $ 2,226,781 State 525,804 249,416 494,647 ----------- ----------- ------------ 2,665,470 1,254,743 2,721,428 ------------ ----------- ----------- Deferred Federal (64,000) (106,000) 14,000 State (23,000) (23,000) (52,000) ------------ ----------- ----------- (87,000) (129,000) (38,000) ----------- ---------- ----------- $ 2,578,470 $ 1,125,743 $ 2,683,428 ============ =========== ===========
22 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) Differences between the provision for income taxes and income taxes at the federal statutory rate of 34% and the effective rate are as follows:
1997 1996 1995 Income taxes at the statutory rate $ 2,840,445 $ 1,104,377 $ 2,177,971 State income taxes, net of federal income tax benefit 347,031 163,947 326,467 Deferred income taxes, attributable to fluctuation in tax rates (62,690) (9,960) 89,386 Tax exempt income (75,038) (76,943) (111,272) Pension cost (38,114) (39,386) (59,398) Equity in net income of affiliates (30,024) (38,317) (49,177) Environmental tax -- 1,496 6,016 Capital losses carryforward utilized (392,290) -- 311,593 Prior year adjustment (26,990) 23,791 (25,178) Other 16,140 (3,262) 17,020 ------------ ----------- ----------- $ 2,578,470 $ 1,125,743 $ 2,683,428 ============ =========== ===========
The deferred tax assets and liability are summarized as follows:
1997 1996 Deferred tax liability Excess of accelerated depreciation for tax purposes over financial reporting $ 1,037,000 $ 1,058,000 ------------- ----------- Deferred tax assets Additional inventory costs capitalized for tax purposes 216,000 149,000 Nondeductible accrued vacation pay 14,000 16,000 Nondeductible accrued bonus 7,000 6,000 Capital loss carryforward -- 449,000 ----------- ----------- Gross deferred tax assets 237,000 620,000 Valuation allowance -- 449,000 ----------- ----------- Net deferred tax assets 237,000 171,000 ----------- ----------- Net deferred liability $ 800,000 $ 887,000 =========== ===========
23 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (Continued) The significant components of deferred income tax expense for the years ended February 28, 1997, February 29, 1996, and February 28, 1995 are as follows:
1997 1996 1995 Deferred tax expense $ 451,000 $ 7,000 $ -- Deferred tax benefit (89,000) (135,000) (488,000) Increase (decrease) in the valuation allowance for deferred tax assets (449,000) (1,000) 450,000 ----------- ----------- ------------ Deferred income tax benefit - net $ (87,000) $ (129,000) $ (38,000) ============= ============ ============
LITIGATION The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, all of these pending matters are without merit or are of such kind or involve such amounts that unfavorable dispositions would not have a material effect on the financial position of the Company. BUSINESS WITH MAJOR CUSTOMERS Accounts receivable from one customer in 1997 and two customers in 1996 amounted to approximately $735,000 and $1,057,000, respectively. SUBSEQUENT EVENT In March 1997, the Company executed a Letter of Intent which provides for an unrelated publicly held corporation to acquire 100% of the outstanding stock of the Company and its affiliates in a tax-free reorganization. The transaction is subject to regulatory approval, the results of certain due diligence and the execution of final agreements. RECLASSIFICATION Certain amounts in the 1996 and 1995 financial statements have been reclassified to agree with the 1997 presentation with no effect on net income. 24 OWATONNA CANNING COMPANY UNAUDITED FINANCIAL STATEMENTS FOUR MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 25
OWATONNA CANNING COMPANY BALANCE SHEETS (unaudited) JUNE 30, 1997 AND JUNE 30, 1996 ASSETS 1997 1996 Current assets Cash $ 8,484,245 $ 8,289,764 Marketable securities 3,790,465 5,626,682 Accounts receivable 2,864,752 2,776,951 Inventories 18,416,655 12,931,829 Prepaid expenses 605,513 746,523 ------------ ------------ Total current assets 34,161,630 30,371,749 Property, plant and equipment, net 14,134,345 16,248,791 Other assets Investment in affiliates 1,993,359 2,036,685 Prepaid pension cost 1,208,096 1,069,162 Other 236,543 729,005 ------------ ------------ 3,437,998 3,834,852 ------------ ------------ $ 51,733,973 $ 50,455,392 ============ ============
The accompanying notes are an integral part of these financial statements. 26
OWATONNA CANNING COMPANY BALANCE SHEETS (unaudited) (Continued) JUNE 30, 1997 AND JUNE 30, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 Current liabilities Current maturities of long-term debt $ 768,881 $ 787,479 Accounts payable 6,734,612 4,063,255 Accrued liabilities 3,038,607 522,062 ------------ ------------ Total current liabilities 10,542,100 5,372,796 Long-term debt, non-current portion 777,388 1,668,856 Deferred income taxes 989,468 1,058,000 ------------ ------------ Total liabilities 12,308,956 8,099,652 ------------ ------------ Stockholders' equity Capital stock Class A common stock, par value $100 per share; 450 shares authorized, issued and outstanding 45,000 45,000 Class B common stock, par value $100 per share; 9,000 shares authorized; 4,050 shares issued and outstanding 405,000 405,000 Net unrealized gains (losses) on marketable securities 7,908 (530,499) Retained earnings 38,967,109 42,436,239 ------------ ------------ 39,425,017 42,355,740 ------------ ------------ $ 51,733,973 $ 50,455,392 ============ ============
The accompanying notes are an integral part of these financial statements. 27
OWATONNA CANNING COMPANY STATEMENTS OF INCOME AND RETAINED EARNINGS (unaudited) FOUR MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 1997 1996 Sales $ 17,200,563 $14,478,352 Cost of sales 10,355,643 9,540,539 ----------- ------------- Gross profit 6,844,920 4,937,813 ------------ ------------- Selling and distribution expense 5,665,680 3,682,586 Administrative expense 2,404,447 646,824 ----------- ------------ 8,070,127 4,329,410 ----------- ------------ Operating income (loss) - seasonal pack (1,225,207) 608,403 Nonseasonal pack income 6,186 51,890 ----------- ------------ Operating income (loss) (1,219,021) 660,293 Other income (expense) Equity in net income of affiliates 8,269 33,417 Interest income (expense), net 21,708 (61,724) Miscellaneous 2,842 368 Gain on disposition of property and equipment 20,300 -- ------------ ------------- Income (loss) before income taxes (1,165,902) 632,354 Income taxes (benefit) (433,992) 305,808 ------------ ------------- Net income (loss) $ (731,910) $ 326,546 ============ =============
The accompanying notes are an integral part of these financial statements. 28
OWATONNA CANNING COMPANY STATEMENTS OF CASH FLOWS (unaudited) FOUR MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 1997 1996 Cash provided (used) by: Operations Net income (loss) $ (731,910) $ 326,546 Prior period adjustment 688,138 -- Depreciation 781,670 733,477 Changes in current assets and liabilities Receivables 1,776,250 1,513,137 Inventories 2,130,146 2,736,543 Accounts payable 2,240,406 1,720,646 Other current assets and liabilities 1,077,414 473,856 Other (93,802) (197,059) ------------ ------------ Cash flow from investing 7,868,312 7,307,146 ------------ ------------ Investing Capital expenditures (2,096,945) (836,660) Increase in marketable securities -- (427,717) Other 11,144 160,008 ------------ ------------ Cash flow from investing (2,085,801) (1,523,455) ------------ ------------ Financing Debt transactions Issuances of long-term debt 35,119 -- Repayments of long-term debt -- (18,667) Stock transactions Dividends (567,000) -- ------------ ------------ Cash flow from financing (531,881) (18,667) ------------ ------------ Increase in cash 5,250,630 5,765,024 Balance at beginning of period 3,233,615 2,524,740 ------------ ------------ Balance at end of period $ 8,484,245 $ 8,289,764 ============ ============
The accompanying notes are an integral part of these financial statements. 29 OWATONNA CANNING COMPANY NOTES TO FINANCIAL STATEMENTS (unaudited) SUMMARY OF ACCOUNTING POLICIES Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. PRIOR PERIOD ADJUSTMENT During the four months ended June 30, 1997, management determined that the inventories of factory and farm supplies and that the accrued liabilities for cash discounts and cooperative advertising were respectively understated in the amounts of $1,336,318 and $214,785 at February 28, 1997. Accordingly, the necessary adjustment to previously reported retained earnings in the amount of $688,138, net of income taxes of $433,395, and has been recorded through retained earnings. INVENTORIES Inventories at June 30 consist of the following:
1997 1996 ------------ ------------ Canned foods $15,492,252 $11,371,024 Factory and farm supplies 2,924,403 1,560,805 ---------- ---------- $18,416,655 $12,931,829 =========== ===========
SUBSEQUENT EVENT On September 24, 1997, 100% of the outstanding common stock of the Company and its affiliates was acquired by Chiquita Brands International, Inc. in a tax-free reorganization. 30 CHIQUITA BRANDS INTERNATIONAL, INC. PRO FORMA COMBINED FINANCIAL STATEMENTS The following unaudited pro forma combined financial statements give effect to the acquisition by Chiquita of the Owatonna Companies and the proposed acquisitions by Chiquita of Stokely and AFF. Each transaction will be accounted for as a purchase. The unaudited pro forma combined balance sheet is based on the individual balance sheets of Chiquita, the Owatonna Companies, Stokely and AFF at June 30, 1997 and has been prepared to reflect the acquisitions assuming they all occurred on June 30, 1997. The unaudited pro forma combined income statement for the year ended December 31, 1996 is based on the individual income statements of Chiquita, Stokely and AFF for the twelve months ended December 31, 1996 and of the Owatonna Companies for the twelve months ended February 28, 1997 and has been prepared as if all the acquisitions had occurred on January 1, 1996. The unaudited pro forma combined income statement for the six months ended June 30, 1997 combines the individual income statements of Chiquita, the Owatonna Companies, Stokely and AFF for the same period and is prepared as if all the acquisitions had occurred on January 1, 1997. These unaudited pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of Owatonna included elsewhere in this Form 8-K. 31
Chiquita Brands International, Inc. Pro Forma Combined Balance Sheet (unaudited) June 30, 1997 (in thousands) Owatonna Pro Forma Pro Forma Chiquita Companies Stokely AFF Adjustments Combined Assets Current assets Cash and equivalents $ 233,077 $ 9,412 $ 2,228 $ 485 $ (17,226) (a) $ 227,976 Marketable securities -- 3,790 -- -- -- 3,790 Trade receivables, net 197,458 2,842 10,276 4,383 -- 214,959 Other receivables, net 72,739 -- -- 587 -- 73,326 Inventories 250,136 21,362 59,842 31,724 (368) (b) 362,696 Other current assets 33,644 958 1,050 3,826 (788) (c) 38,690 ------- ------- ------- ------- ------- ------- Total current assets 787,054 38,364 73,396 41,005 (18,382) 921,437 Property, plant and equipment, net 1,130,785 16,095 40,468 10,104 -- 1,197,452 Investments and other assets 312,912 2,782 2,677 929 1,468 (d) 320,768 Intangibles, net 156,701 39 -- -- 9,423 (e) 166,163 ------- ------- ------- ------- ------- -------- Total assets $2,387,452 $ 57,280 $116,541 $52,038 $ (7,491) $ 2,605,820 ==================== ========= ======= ======== =========== Liabilities and Shareholders' Equity Current liabilities Notes and loans payable $ 27,110 $ -- $ 6,137 $ 14,948 $ (14,948) (a) $ 33,247 Long-term debt due within one year 97,489 774 2,584 1,142 (1,142) (a) 100,847 Accounts payable 199,281 3,009 27,201 4,115 -- 233,606 Accrued liabilities 90,033 3,684 3,407 3,372 3,600 (f) 104,096 ------- ------- ------- ------- ------- -------- Total current liabilities 413,913 7,467 39,329 23,577 (12,490) 471,796 Long-term debt of parent company 697,788 -- -- -- -- 697,788 Long-term debt of subsidiaries 299,577 786 68,188 1,136 (33,093) (a) 336,594 Accrued pension and other employee benefits 86,127 -- 2,945 521 (114) (g) 89,479 Other liabilities 89,679 1,298 -- 1,193 (2,491) (c) 89,679 ------- ------- ------- ------- ------ ------- Total liabilities 1,587,084 9,551 110,462 26,427 (48,188) 1,685,336 --------- ------- ------- ------- ------- --------- Shareholders' equity Preferred stock 249,256 -- -- -- 4,329 (h) 253,585 Capital stock 18,750 520 572 865 767 (a)(i)(j) 21,474 Capital surplus 600,540 -- 43,521 2,498 67,044 (a)(i)(j) 713,603 Other shareholders' equity -- (279) (265) (526) 1,070 (j) -- Accumulated deficit (68,178) 47,488 (37,749) 22,774 (32,513) (j) (68,178) -------- ------- ------- ------- ------- ------- Total shareholders' equity 800,368 47,729 6,079 25,611 40,697 920,484 ------- ------- ------- ------ ------ ------- Total liabilities and shareholders' equity $2,387,452 $ 57,280 $116,541 $ 52,038 $ (7,491) $2,605,820 ==================== ========= ======== ======== =========
32 NOTE: The Pro Forma Combined Balance Sheet has been prepared to reflect the acquisition by Chiquita of 100% of the equity of the Owatonna Companies, Stokely and AFF for $50.0 million, $11.4 million and $26.8 million, respectively. Estimated transaction costs related to the acquisitions total an additional $3.6 million. Pro forma adjustments are made to reflect: (a) Assumed repayments of $17.2 million of AFF debt with cash and $32.0 million of Stokely debt with approximately 2.2 million shares of Chiquita Common Stock. (b) Write-down of Owatonna Companies' inventory to fair value. (c) The elimination of deferred tax assets and liabilities of the acquired companies. (d) The adjustment to fair value of the Owatonna Companies' prepaid pension funding asset associated with its defined benefit pension plan. (e) The excess of acquisition cost (including transaction costs) over the fair value of net assets acquired, totaling $1.0 million for the Owatonna Companies, $6.7 million for Stokely and $1.7 million for AFF. (f) Estimated transaction costs for professional services incurred in connection with the acquisitions. (g) Adjustment of the accumulated postretirement benefit liabilities of Stokely and AFF. (h) The issuance of $4.3 million (approximately 87,000 shares) of Chiquita Series C Preference Stock to the former shareholders of the Owatonna Companies. (i) The issuance of Chiquita Common Stock of approximately $45.7 million (approximately 3.3 million shares) to the former shareholders of the Owatonna Companies, approximately $11.4 million (approximately .8 million shares) to the former shareholders of Stokely and approximately $26.8 million (approximately 1.9 million shares) to the former shareholders of AFF. j) The elimination of the shareholders' equity accounts of the Owatonna Companies, Stokely and AFF. This Pro Forma Combined Balance Sheet is based on a preliminary allocation of purchase price to the net assets acquired. 33
Chiquita Brands International, Inc. Pro Forma Combined Income Statement (unaudited) Year Ended December 31, 1996 (in thousands, except per share data) Pro Forma Pro Forma Chiquita Owatonna Stokely AFF Adjustments Combined Net sales $2,435,248 $61,885 $198,108 $81,111 $(40,329) (a) $2,736,023 Operating expenses Cost of sales 1,947,888 32,346 160,022 69,178 (38,900) 2,170,534 Selling, general and administrative 313,490 18,243 30,632 5,458 (1,074)(a) (b) 366,749 Depreciation 89,534 2,690 6,675 1,692 (569) (a) 100,022 Nonrecurring charges -- -- 26,029 -- (12,500) (a) 13,529 -------- ------- -------- ------- ------- ------- Operating income (loss) 84,336 8,606 (25,250) 4,783 12,714 85,189 Interest income 28,276 573 -- 12 (1,250) (c) 27,611 Interest expense (130,232) (365) (11,066) (1,645) 7,500 (a) (c) (135,808) Other income, net 892 163 -- 53 -- 1,108 ------- ------- ------- ------- ------- ------- Income (loss) before income taxes (16,728) 8,977 (36,316) 3,203 18,964 (21,900) Income taxes (11,000) (2,755) -- (1,339) 3,794 (d) (11,300) ------- ------- ------- ------- ------- -------- Income (loss) before extraordinary item (27,728) 6,222 (36,316) 1,864 22,758 (33,200) Less dividends on preferred stock (11,955) -- -- -- (216) (12,171) ---------- ---------- ---------- --------- ---------- ----------- Loss before extraordinary item attributable to common shares $ (39,683) $ 6,222 $(36,316) $1,864 $22,542 $(45,371) =========== ============ =========== =================== =========== Loss per common share before extraordinary item - primary and fully diluted $(.72) $(.72) ========== ============= Shares used to calculate loss per common share before extraordinary item 55,167 63,338 ========= =============
34 NOTE: This Pro Forma Combined Income Statement, which gives effect to the acquisition of the Owatonna Companies and the proposed acquisitions of Stokely and AFF by Chiquita, includes pro forma adjustments to reflect: (a) Elimination of operating results associated with Stokely's frozen vegetable business, and elimination of nonrecurring charges resulting from Stokely's sale of this business. The acquisition of Stokely by Chiquita does not include any assets on operating activity in the frozen vegetable business. (b) Amortization of goodwill totaling $.2 million arising from the acquisitions on a straight-line basis over 40 years. (c) Assumed repayment of $17.2 million of AFF debt with cash and $32.0 million of Stokely debt with approximately 2.2 million shares of Chiquita Common Stock. (d) Elimination of tax expense of the Owatonna Companies and federal tax expense of AFF as a result of including these companies in the Chiquita consolidated tax returns. This Pro Forma Combined Income Statement does not include any adjustment to eliminate $13.5 million ($.21 per pro forma share) of nonrecurring charges which are principally associated with the closing and write-down of plant and office facilities and are included in Stokely's historical operating income. This Pro Forma Combined Income Statement is based on a preliminary allocation of purchase price to the net assets acquired. Furthermore, it is not necessarily indicative of the actual results of the combined companies had the acquisitions occurred on January 1, 1996 or of the future results of the combined companies. 35
Chiquita Brands International, Inc. Pro Forma Combined Income Statement (unaudited) Six Months Ended June 30, 1997 (in thousands, except per share data) Owatonna Pro Forma Pro Forma Chiquita Companies Stokely AFF Adjustments Combined -------- --------- ------- --- ----------- -------- Net sales $ 1,277,643 $ 32,453 $ 71,879 $ 35,794 $ -- $ 1,417,769 Operating expenses Cost of sales 948,107 19,446 56,893 28,490 -- 1,052,936 Selling, general and administrative 147,212 12,380 12,762 2,912 (1,532) (a)(b) 173,734 Depreciation 43,041 1,486 2,398 746 -- 47,671 ------ ------ ------ ------ ------ ------- Operating income (loss) 139,283 (859) (174) 3,646 1,532 143,428 Interest income 8,633 289 -- 6 (300) (c) 8,628 Interest expense (55,778) (185) (5,020) (381) 1,800 (c) (59,564) Other income, net 439 38 -- (26) -- 451 ------ ------ ------ ------ ------ ------ Income (loss) before income taxes 92,577 (717) (5,194) 3,245 3,032 92,943 Income taxes (8,200) 261 -- (1,007) 521 (d) (8,425) ------ ------ ------ ------ ------ ------ Net income (loss) $ 84,377 $ (456) $ (5,194) $ 2,238 $3,553 $ 84,518 ======= ======= ======= ======= ======= ======== Earnings per common share: - Primary $1.33 $ 1.16 - Fully diluted $1.16 $ 1.04 Shares used to calculate earnings per common share: - Primary 57,108 65,279 - Fully diluted 72,506 80,931
NOTE: This Pro Forma Combined Income Statement, which gives effect to the acquisition of the Owatonna Companies and the proposed acquisitions of Stokely and AFF by Chiquita, includes pro forma adjustments to reflect: (a) Amortization of goodwill totaling $.1 million arising from the acquisitions on a straight-line basis over 40 years. (b) Transaction costs for professional services incurred by the acquired companies totaling $1.7 million. (c) Assumed repayments of $17.2 million of AFF debt with cash and $32.0 million of Stokely debt with approximately 2.2 million shares of Chiquita Common Stock. (d) Elimination of tax expense of the Owatonna Companies and federal tax expense of AFF as a result of including these companies in the Chiquita consolidated tax returns. This Pro Forma Combined Income Statement is based on a preliminary allocation of purchase price to the net assets acquired. Furthermore, it is not necessarily indicative of the actual results of the combined companies had the acquisitions occurred on January 1, 1997 or of the future results of the combined companies. 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 3, 1997 CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ William A. Tsacalis William A. Tsacalis Vice President and Controller 37 EX-2.1 2 EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER BY AND AMONG CHIQUITA BRANDS INTERNATIONAL, INC. AND OWATONNA CANNING COMPANY, OLIVIA CANNING COMPANY, MIDWEST FOODS, INC., GOODHUE CANNING COMPANY AND THE SHAREHOLDERS REPRESENTATIVES DATED AS OF AUGUST 22, 1997 TABLE OF CONTENTS RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1 1997 Financial Statements . . . . . . . . . . . . 1 Accounts . . . . . . . . . . . . . . . . . . . . 1 Act . . . . . . . . . . . . . . . . . . . . . . . 1 Adjustment Date . . . . . . . . . . . . . . . . . 1 Affiliate . . . . . . . . . . . . . . . . . . . . 2 Agreement . . . . . . . . . . . . . . . . . . . . 2 Announcement . . . . . . . . . . . . . . . . . . 2 Articles of Merger . . . . . . . . . . . . . . . 2 Buildings . . . . . . . . . . . . . . . . . . . . 2 Certificate . . . . . . . . . . . . . . . . . . . 2 Certificate of Merger . . . . . . . . . . . . . . 2 Chiquita . . . . . . . . . . . . . . . . . . . . 2 Chiquita Closing Certificate . . . . . . . . . . 2 Chiquita Common Shares . . . . . . . . . . . . . 3 Chiquita Counsel Opinion . . . . . . . . . . . . 3 Chiquita Preferred Shares . . . . . . . . . . . . 3 Claim Notice . . . . . . . . . . . . . . . . . . 3 Closing . . . . . . . . . . . . . . . . . . . . . 3 Closing Balance Sheets . . . . . . . . . . . . . 3 Closing Date . . . . . . . . . . . . . . . . . . 3 Closing Financial Statements . . . . . . . . . . 3 Code . . . . . . . . . . . . . . . . . . . . . . 3 Commission . . . . . . . . . . . . . . . . . . . 3 Companies . . . . . . . . . . . . . . . . . . . . 3 Companies Closing Certificate . . . . . . . . . . 4 Companies Counsel Opinion . . . . . . . . . . . . 4 Companies Counsel Tax Opinion . . . . . . . . . . 4 Confidentiality Agreement . . . . . . . . . . . . 4 Consulting Agreement . . . . . . . . . . . . . . 4 Contracts . . . . . . . . . . . . . . . . . . . . 4 Control . . . . . . . . . . . . . . . . . . . . . 4 Disclosure Documents . . . . . . . . . . . . . . 4 Disclosure Schedule . . . . . . . . . . . . . . . 4 Drop-Down . . . . . . . . . . . . . . . . . . . . 4 Effective Time of the Merger . . . . . . . . . . 4 Employees . . . . . . . . . . . . . . . . . . . . 4 Employee Benefit Plans . . . . . . . . . . . . . 5 Employee and Equipment Leasing Agreement . . . . 5 Employment Agreement . . . . . . . . . . . . . . 5 Environmental Law(s) . . . . . . . . . . . . . . 5 Environmental Losses . . . . . . . . . . . . . . 5 Equipment . . . . . . . . . . . . . . . . . . . . 5 ERISA . . . . . . . . . . . . . . . . . . . . . . 5 ERISA Affiliate . . . . . . . . . . . . . . . . . 5 Escrow Agent . . . . . . . . . . . . . . . . . . 6 i Escrow Agreement . . . . . . . . . . . . . . . . 6 Escrow Funds . . . . . . . . . . . . . . . . . . 6 Estimated Total Merger Consideration . . . . . . 6 Existing Bank Accounts . . . . . . . . . . . . . 6 Existing Contracts . . . . . . . . . . . . . . . 6 Existing Indebtedness . . . . . . . . . . . . . . 6 Existing Insurance Policies . . . . . . . . . . . 7 Existing Investments . . . . . . . . . . . . . . 7 Existing Liens . . . . . . . . . . . . . . . . . 7 Expenses Funds . . . . . . . . . . . . . . . . . 7 Farmco . . . . . . . . . . . . . . . . . . . . . 7 Final Pre-Closing Period Other Tax Returns . . . 7 GAAP . . . . . . . . . . . . . . . . . . . . . . 7 Goodhue . . . . . . . . . . . . . . . . . . . . . 7 Hazardous Substance(s) . . . . . . . . . . . . . 7 Historical Financial Statements . . . . . . . . . 7 IRS . . . . . . . . . . . . . . . . . . . . . . . 8 Indebtedness . . . . . . . . . . . . . . . . . . 8 Initial Merger Consideration . . . . . . . . . . 8 Initial Payment Funds . . . . . . . . . . . . . . 8 Intangible Assets . . . . . . . . . . . . . . . . 8 Inventory . . . . . . . . . . . . . . . . . . . . 8 Investment . . . . . . . . . . . . . . . . . . . 8 Investment Representative Agreement . . . . . . . 8 Knowledge of the Companies . . . . . . . . . . . 9 Law . . . . . . . . . . . . . . . . . . . . . . . 9 Letter of Intent . . . . . . . . . . . . . . . . 9 Letter of Transmittal . . . . . . . . . . . . . . 9 Lien . . . . . . . . . . . . . . . . . . . . . . 9 Majority Authorization . . . . . . . . . . . . . 9 Material Adverse Change . . . . . . . . . . . . . 9 Material Adverse Effect . . . . . . . . . . . . . 9 Merger . . . . . . . . . . . . . . . . . . . . . 9 Midwest . . . . . . . . . . . . . . . . . . . . . 9 Migrant Workers . . . . . . . . . . . . . . . . . 9 Net Book Value . . . . . . . . . . . . . . . . . 10 New Owatonna . . . . . . . . . . . . . . . . . . 10 Olivia . . . . . . . . . . . . . . . . . . . . . 10 OCC . . . . . . . . . . . . . . . . . . . . . . . 10 Partnership . . . . . . . . . . . . . . . . . . . 10 Person . . . . . . . . . . . . . . . . . . . . . 10 Post-Closing Partial Period . . . . . . . . . . . 11 Pre-Closing Partial Period . . . . . . . . . . . 11 Principal Shareholder Agreements . . . . . . . . 11 Private Placement Memorandum . . . . . . . . . . 11 Real Estate . . . . . . . . . . . . . . . . . . . 11 Real Estate Agreements . . . . . . . . . . . . . 11 Registration Rights Agreement . . . . . . . . . . 11 Related Documents . . . . . . . . . . . . . . . . 11 Release . . . . . . . . . . . . . . . . . . . . . 11 Shareholder Agreements . . . . . . . . . . . . . 11 Shareholders . . . . . . . . . . . . . . . . . . 11 ii Shareholders Certifications . . . . . . . . . . . 12 Shareholders Representatives . . . . . . . . . . 12 Shareholder's Share . . . . . . . . . . . . . . . 12 Stock . . . . . . . . . . . . . . . . . . . . . . 12 Subsidiary . . . . . . . . . . . . . . . . . . . 12 Supply Agreement . . . . . . . . . . . . . . . . 12 Survey . . . . . . . . . . . . . . . . . . . . . 12 Surviving Corporation . . . . . . . . . . . . . . 13 Tax . . . . . . . . . . . . . . . . . . . . . . . 13 Tax Claims . . . . . . . . . . . . . . . . . . . 13 Tax Settlement Amount . . . . . . . . . . . . . . 13 Temporary Access Agreement . . . . . . . . . . . 13 Title Commitment . . . . . . . . . . . . . . . . 13 Title Company . . . . . . . . . . . . . . . . . . 13 Title Policy . . . . . . . . . . . . . . . . . . 13 Total Merger Consideration . . . . . . . . . . . 13 Transferred Property . . . . . . . . . . . . . . 14 Value . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . 14 THE MERGER . . . . . . . . . . . . . . . . . . . . . . 14 2.1 Actions to be Taken . . . . . . . . . . . . 14 2.2 Conversion or Cancellation of Stock . . . . 16 2.3 Delivery of Initial Merger Consideration . . 17 2.4 Post-Closing Adjustment . . . . . . . . . . 19 2.5 Reorganization . . . . . . . . . . . . . . . 21 ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . 21 OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . 21 3.1 Shareholders Representatives . . . . . . . . 21 3.2 Disclosure Schedule . . . . . . . . . . . . 24 3.3 Escrow Agreement . . . . . . . . . . . . . . 24 3.4 Registration Rights Agreement . . . . . . . 24 3.5 Consulting Agreement . . . . . . . . . . . . 24 3.6 Drop-Down . . . . . . . . . . . . . . . . . 24 ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . 25 REPRESENTATIONS ANDWARRANTIES OF THE COMPANIES . . . . 25 4.1 Organization . . . . . . . . . . . . . . . . 25 4.2 Businesses . . . . . . . . . . . . . . . . . 25 4.3 Capitalization . . . . . . . . . . . . . . . 25 4.4 Authorization; Enforceability . . . . . . . 26 4.5 No Violation or Conflict . . . . . . . . . . 27 4.6 Title to Assets . . . . . . . . . . . . . . 27 4.7 Litigation . . . . . . . . . . . . . . . . . 27 4.8 Financial Statements . . . . . . . . . . . . 28 4.9 Absence of Certain Changes . . . . . . . . . 28 4.10 Buildings and Equipment . . . . . . . . . . 29 4.11 Existing Contracts . . . . . . . . . . . . . 29 4.12 Performance of Contracts . . . . . . . . . . 30 4.13 Contingent and Undisclosed Liabilities . . . 31 4.14 Existing Insurance Policies . . . . . . . . 31 iii 4.15 Employee Benefit Plans. . . . . . . . . . . 32 4.16 Existing Bank Accounts . . . . . . . . . . . 35 4.17 Permits; Compliance with Law . . . . . . . . 35 4.18 Environmental Matters . . . . . . . . . . . 35 4.19 Brokers . . . . . . . . . . . . . . . . . . 36 4.20 Tax and Other Returns and Reports . . . . . 37 4.21 Real Estate . . . . . . . . . . . . . . . . 39 4.22 Other Approvals . . . . . . . . . . . . . . 40 4.23 Investments . . . . . . . . . . . . . . . . 40 4.24 Labor Matters . . . . . . . . . . . . . . . 40 4.25 Articles; Bylaws . . . . . . . . . . . . . . 41 4.26 Indebtedness . . . . . . . . . . . . . . . . 41 4.27 Subsidiaries . . . . . . . . . . . . . . . . 41 4.28 Accounts . . . . . . . . . . . . . . . . . . 41 4.29 Inventory . . . . . . . . . . . . . . . . . 41 4.30 Unemployment Compensation . . . . . . . . . 41 4.31 Intangible Assets . . . . . . . . . . . . . 41 4.32 Customers . . . . . . . . . . . . . . . . . 42 4.33 Disclosure . . . . . . . . . . . . . . . . . 42 4.34 Ancillary Agreements . . . . . . . . . . . . 42 ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . 43 REPRESENTATIONS AND WARRANTIES OF CHIQUITA . . . . . . 43 5.1 Organization . . . . . . . . . . . . . . . . 43 5.2 Authorization; Enforceability . . . . . . . 43 5.3 No Violation or Conflict . . . . . . . . . . 43 5.4 Brokers. . . . . . . . . . . . . . . . . . . 43 5.5 Litigation . . . . . . . . . . . . . . . . . 43 5.6 Governmental Approvals . . . . . . . . . . . 44 5.7 Capitalization . . . . . . . . . . . . . . . 44 5.8 Securities Filings . . . . . . . . . . . . . 44 5.9 Disclosure . . . . . . . . . . . . . . . . . 45 5.10 Investment Intent . . . . . . . . . . . . . 45 ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . 45 CERTAIN MATTERS PENDING THE CLOSING . . . . . . . . . 45 6.1 Full Access. . . . . . . . . . . . . . . . . 45 6.2 Carry on in Regular Course . . . . . . . . . 46 6.3 Use of Assets . . . . . . . . . . . . . . . 46 6.4 Preservation of Relationships . . . . . . . 46 6.5 No Default . . . . . . . . . . . . . . . . . 46 6.6 Publicity . . . . . . . . . . . . . . . . . 46 6.7 Existing Insurance Policies . . . . . . . . 47 6.8 Employment Matters . . . . . . . . . . . . . 47 6.9 Contracts and Commitments . . . . . . . . . 47 6.10 Indebtedness; Investments . . . . . . . . . 47 6.11 Certain Transactions . . . . . . . . . . . . 47 6.12 Duties Concerning Covenants and Representations 47 6.13 Amendments . . . . . . . . . . . . . . . . . 48 6.14 Dividends; Redemptions; Issuance of Stock . 48 6.15 Reporting to Chiquita . . . . . . . . . . . 48 6.16 Blue Sky Approvals . . . . . . . . . . . . . 49 iv 6.17 Shareholders Meetings . . . . . . . . . . . 49 6.18 Notice of Dissenting Shareholders . . . . . 50 6.19 No Encouragement of Dissent . . . . . . . . 50 ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . 50 CONDITIONS PRECEDENT TO THE OBLIGATIONS OFCHIQUITA . . 50 7.1 Compliance with Agreement . . . . . . . . . 50 7.2 Proceedings and Instruments Satisfactory; Shareholders Approval . . . . . . . . . . . 50 7.3 No Litigation . . . . . . . . . . . . . . . 51 7.4 Representations and Warranties of the Companies 51 7.5 Material Adverse Change . . . . . . . . . . 51 7.6 Deliveries Prior to or At Closing . . . . . 51 7.7 Real Estate . . . . . . . . . . . . . . . . 52 7.8 Escrow Agreement . . . . . . . . . . . . . . 53 7.9 Affiliates . . . . . . . . . . . . . . . . . 53 7.10 Registration Rights Agreement . . . . . . . 53 7.11 Listing; Blue Sky . . . . . . . . . . . . . 53 7.12 Amendment of Certificate of Incorporation . 53 7.13 Ancillary Agreements . . . . . . . . . . . . 54 7.14 No Shareholder Dissents . . . . . . . . . . 54 7.15 Receipt of Shareholder Agreements, Shareholders Certifications, Investment Representative Agreements . . . . . . . . . . . . . . . . . 54 7.16 Nonoccurrence of Certain Conditions . . . . 54 7.17 Consents . . . . . . . . . . . . . . . . . . 55 7.18 Surveys . . . . . . . . . . . . . . . . . . 55 7.19 Leases, etc. . . . . . . . . . . . . . . . . 55 7.20 Transfer of Certain Properties . . . . . . . 55 7.21 Real Estate Agreements . . . . . . . . . . . 55 7.22 Lease Agreement . . . . . . . . . . . . . . 56 7.23 Fees of Dorsey & Whitney LLP . . . . . . . . 56 ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . 56 CONDITIONS PRECEDENT TO THEOBLIGATIONS OF THE COMPANIES 56 8.1 Compliance with Agreement . . . . . . . . . 56 8.2 Proceedings and Instruments Satisfactory; Shareholders Approval . . . . . . . . . . . 56 8.3 No Litigation . . . . . . . . . . . . . . . 56 8.4 Representations and Warranties . . . . . . . 57 8.5 Deliveries at Closing . . . . . . . . . . . 57 8.6 Escrow Agreement . . . . . . . . . . . . . . 57 8.7 Registration Rights Agreement . . . . . . . 57 8.8 Chiquita Common and Preferred Shares . . . . 57 8.9 Listing; Blue Sky . . . . . . . . . . . . . 58 8.10 Amendment of Certificate of Incorporation . 58 8.11 Companies Counsel Tax Opinion . . . . . . . 59 8.12 Shareholder Dissents . . . . . . . . . . . . 59 8.13 Real Estate Agreements . . . . . . . . . . . 59 8.14 Consulting Agreement . . . . . . . . . . . . 59 8.15 Business Name . . . . . . . . . . . . . . . 59 8.16 Receipt of Shareholder Agreements . . . . . 59 v ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . 59 INDEMNITIES . . . . . . . . . . . . . . . . . . . . . 59 9.1 Rights Against Escrow . . . . . . . . . . . 59 9.2 Indemnity by Chiquita . . . . . . . . . . . 60 9.3 Provisions Regarding Indemnity . . . . . . . 61 ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . 65 OBLIGATIONS OF CHIQUITA AFTER THE CLOSING DATE . . . . 65 10.1 Current Public Information . . . . . . . . . 65 10.2 Removal of Legend. . . . . . . . . . . . . . 65 10.3 Access to Books and Records . . . . . . . . 65 10.4 Employee Benefits . . . . . . . . . . . . . 65 10.5 Further Issuances of Chiquita Preferred Shares 66 ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . 66 INTERCOMPANY ARRANGEMENTS . . . . . . . . . . . . . . 66 ARTICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . 66 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . 66 12.1 Chiquita's Right to Reimbursement . . . . . 66 12.2 Chiquita Indemnity . . . . . . . . . . . . . 67 12.3 Allocation Between Partial Periods . . . . . 67 12.4 Filing of Tax Returns . . . . . . . . . . . 68 12.5 Post-Closing Audits . . . . . . . . . . . . 70 12.6 Closing Date Tax Balance Sheets . . . . . . 71 12.7 Cooperation . . . . . . . . . . . . . . . . 71 12.8 Refunds . . . . . . . . . . . . . . . . . . 72 ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . 72 TERMINATION; MISCELLANEOUS . . . . . . . . . . . . . . 72 13.1 Termination; Termination Fee . . . . . . . . 72 13.2 Rights on Termination; Waiver . . . . . . . 73 13.3 Entire Agreement; Amendment . . . . . . . . 74 13.4 Expenses . . . . . . . . . . . . . . . . . . 74 13.5 Indemnification . . . . . . . . . . . . . . 75 13.6 Governing Law . . . . . . . . . . . . . . . 75 13.7 Assignment . . . . . . . . . . . . . . . . . 75 13.7 Notices . . . . . . . . . . . . . . . . . . 75 13.8 Counterparts; Headings . . . . . . . . . . . 76 13.9 Interpretation . . . . . . . . . . . . . . . 77 13.10 Severability . . . . . . . . . . . . . . . 77 13.11 Specific Performance . . . . . . . . . . . 77 13.12 No Reliance . . . . . . . . . . . . . . . . 77 13.13 Further Assurances . . . . . . . . . . . . 78 vi EXHIBITS: A. Form of Chiquita Closing Certificate B. Form of Chiquita Counsel Opinion C. Terms and Conditions of Chiquita Preferred Stock D. Form of Companies Closing Certificates E. Forms of Companies Counsel Opinion and Companies Tax Counsel Opinion F. Form of Escrow Agreement G. Form of Letter of Transmittal H. Form of Registration Rights Agreement I. Form of Shareholder Agreement J. Form of Shareholders Certification K. Form of affidavit of Chadwick S. Lange and Dean Christiansen to be furnished pursuant to Section 7.6(h) SCHEDULES: 1. Persons To Whom "Knowledge of the Companies" Attributable 2. Title Commitments 3. List of Company Shareholders 4. Accounting Policies and Procedures 5. Properties to be Transferred to Farmco vii AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as of this 22nd day of August, 1997 by and among (i) CHIQUITA BRANDS INTERNATIONAL, INC., (ii) OWATONNA CANNING COMPANY, OLIVIA CANNING COMPANY, MIDWEST FOODS, INC. and GOODHUE CANNING COMPANY, and (iii) CHADWICK S. LANGE, KAREN E. LANGE, RICHARD JACKSON and ANN JACKSON, as Shareholders Representatives. Certain capitalized terms used in this Agreement are defined in Article 1 of this Agreement. RECITALS WHEREAS, the Companies are engaged in the businesses of processing and canning food products distributed from their plants in Minnesota and Illinois; and WHEREAS, the Companies and Chiquita desire to effect a merger transaction by which each Company shall be merged into Chiquita and all of the outstanding capital stock of each Company will be converted into shares of capital stock of Chiquita as the surviving corporation in such merger. NOW THEREFORE, in consideration of the Recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that: ARTICLE 1 DEFINITIONS When used in this Agreement, except as the context otherwise indicates, the following terms shall have the meanings specified: "1997 Financial Statements" means the audited Balance Sheet and Statement of Income and Retained Earnings of each of the Companies (other than Midwest) at and for the fiscal year ended on February 28, 1997 and of Midwest at and for the fiscal year ended August 31, 1996. "Accounts" shall mean all accounts receivable owned by any of the Companies or the Partnership on the relevant date of reference. "Act" shall mean the Securities Act of 1933, as the same may be in effect from time to time. "Adjustment Date" shall have the meaning specified in Section 2.3 of this Agreement. 1 "Affiliate" shall mean any Person: (a) who is an officer or director, or both, of any of the Companies; (b) who beneficially owns, or Controls a Person who beneficially owns, any of the issued and outstanding shares of capital stock of any of the Companies; (c) in which one or more Affiliates, or Persons controlled by one or more Affiliates, own fifty percent (50%) or more of the issued and outstanding shares of capital stock or equity interest; (d) which directly or indirectly Controls or is Controlled by or is under common Control with, any of the Companies; or (e) who is a Shareholder or a member of the immediate family of a Shareholder. "Agreement" shall mean this Agreement and Plan of Merger, together with the Exhibits and Schedules attached hereto and the Disclosure Schedule. "Announcement" shall mean any public notice, release, statement or other communication to employees, suppliers, distributors, customers, the general public, the press or any securities exchange or securities quotation system relating to the transactions described in this Agreement. "Articles of Merger" shall have the meaning specified in Section 2.1(e) of this Agreement. "Buildings" shall mean all buildings, fixtures, structures and improvements leased or owned by any of the Companies or the Partnership and located on the Real Estate. "Certificate" shall mean a certificate which immediately prior to the Effective Time of the Merger represented shares of Stock of a Company. "Certificate of Merger" shall have the meaning specified in Section 2.1(e) of this Agreement. "Chiquita" shall mean Chiquita Brands International, Inc., a New Jersey corporation. "Chiquita Closing Certificate" shall mean a Closing Certificate of Chiquita in the form of Exhibit A attached to this Agreement. 2 "Chiquita Common Shares" shall mean the shares of Capital Stock of Chiquita, par value $.33 per share, to be issued pursuant to this Agreement. "Chiquita Counsel Opinion" shall mean an opinion of Robert W. Olson, Esq. in the form of Exhibit B attached to this Agreement. "Chiquita Preferred Shares" shall mean the shares of $2.50 Convertible Preference Stock, Series C, to be issued pursuant to this Agreement, the terms and conditions of which are set forth in Exhibit C attached to this Agreement. "Claim Notice" shall have the meaning specified in Section 9.3(b) of this Agreement. "Closing" shall mean the consummation of the transactions contemplated by this Agreement, to be held at 10:00 A.M., Central Time, on the Closing Date at the offices of Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, or such other time and place as the parties may mutually agree to in writing. "Closing Balance Sheets" means the audited balance sheets of the Companies as at June 30, 1997 included in the Closing Financial Statements. "Closing Date" shall mean: (a) September 23, 1997, or (b) such other date as the parties may mutually agree to in writing. "Closing Financial Statements" shall mean the audited Balance Sheet of each of the Companies as at June 30, 1997 and the audited Statement of Income and Retained Earnings of each of the Companies for the period from March 1, 1997 (or August 31, 1996 in the case of Midwest) up to June 30, 1997, in each case as audited by the firm of Hutton Nelson & McDonald LLP and in each case including all adjustments recommended by Hutton Nelson & McDonald LLP, including those that might otherwise have been passed on grounds of immateriality. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Commission" shall mean the Securities and Exchange Commission. "Companies" shall mean OCC, Olivia, Midwest and Goodhue; provided, however, that following the Merger, the Companies shall mean Chiquita and that following the Drop- Down, "Companies" shall mean New Owatonna. 3 "Companies Closing Certificate" shall mean the Closing Certificates of the Companies in the form of Exhibit D attached to this Agreement. "Companies Counsel Opinion" and "Companies Counsel Tax Opinion" shall mean the opinions of Dorsey & Whitney LLP in the forms of Exhibits E-1 and E-2 attached to this Agreement. "Confidentiality Agreement" shall mean the agreement between Chiquita and OCC dated as of September 3, 1996. "Consulting Agreement" shall mean the Consulting Agreement between OCC and Stephens J. Lange. "Contracts" shall mean all of the contracts, agreements, leases, relationships and commitments, written or oral, to which any of the Companies or the Partnership is a party or by which any of the Companies or the Partnership or any of their assets are bound and which are required to be set forth in the Disclosure Schedule by Section 4.11 or 4.21 of this Agreement. "Control" (including the terms "Controlling," "Controlled by" and "under common Control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Disclosure Documents" shall have the meaning specified in Section 6.17 of this Agreement. "Disclosure Schedule" shall mean the Disclosure Schedule, dated the date of this Agreement, delivered by the Companies to Chiquita contemporaneously with the execution and delivery of this Agreement. "Drop-Down" shall mean the transaction, immediately following the Merger, by which Chiquita transfers all of the assets of the Companies as of the Effective Time of the Merger to New Owatonna and New Owatonna assumes all of the liabilities of the Companies as of the Effective Time of the Merger, pursuant to the terms of an assignment and assumption agreement which shall be in form and substance reasonably acceptable to the Companies. "Effective Time of the Merger" shall have the meaning specified in Section 2.1(e). "Employees" shall mean all of the employees, 4 including any Migrant Workers, of any of the Companies and the Partnership as of the relevant date of reference. "Employee Benefit Plans" shall mean any pension plan, profit sharing plan, bonus plan, incentive compensation plan, stock purchase plan, stock ownership plan, stock option plan, stock appreciation plan, employee benefit plan, employee benefit policy, retirement plan, fringe benefit program, insurance plan, severance plan, disability plan, sick leave plan, death benefit plan, or any other plan, program or policy to provide retirement income, fringe benefits or other benefits to former or current employees of any of the Companies or the Partnership. "Employee and Equipment Leasing Agreement" shall mean the Employee and Equipment Leasing Agreement between OCC and Farmco dated as of the date hereof. "Employment Agreement" shall mean the Employment Agreement between OCC and Chadwick S. Lange dated as of the date hereof. "Environmental Law(s)" shall mean any and all federal, state and local laws, statutes, codes, ordinances, regulations, rules, consent decrees, consent orders, judicial orders, administrative orders or other requirements of law relating to health, safety or the environment. The term Environmental Law includes, but is not limited to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA") 42 U.S.C. Section 9601-9675, the Resource Conservation and Recovery Act of 1976 ("RCRA") 42 U.S.C. Section 6901-6991, the Clean Water Act 33 U.S.C. Section 1321 et seq;., and the Clean Air Act 42 U.S.C. Section 7401 et seq;., the Occupational Safety and Health Act, the Toxic Substance Control Act, the Emergency Planning and Community Right to Know Act and any comparable or implementing state or local statutes or ordinances, and regulations and guidance promulgated or issued under any or all of the above, all as amended as of the Closing Date. "Environmental Losses" shall have the meaning set forth in Section 9.3(e)(ii) of this Agreement. "Equipment" shall mean all machinery, equipment, boilers, furniture, furnishings, parts, tools, office equipment, computers and other items of tangible personal property owned or used by any of the Companies or the Partnership as of the relevant date of reference. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. 5 "ERISA Affiliate" shall mean: (a) any corporation other than the Companies, i.e., either a subsidiary corporation or an affiliated or associated corporation of Chiquita , which together with Chiquita is a member of a "controlled group" of corporations; (b) any organization which together with the Companies or the Partnership is under "common control"; or (c) any organization which together with the Companies or the Partnership is an "affiliated service group"; as those terms are used in Sections 414(b), 414(c) and 414(m) of the Code. The term "ERISA Affiliate" also includes any other entity required to be aggregated with the Companies or the Partnership pursuant to regulations under Section 414(o) of the Code. "Escrow Agent" shall mean such company as shall be mutually agreed upon by the parties hereto prior to the Closing. "Escrow Agreement" shall mean the Escrow Agreement by and among Chiquita, the Escrow Agent and the Shareholders Representatives in the form of Exhibit F attached to this Agreement. "Escrow Funds" shall have the meaning specified in Section 2.3(b) of this Agreement. "Estimated Total Merger Consideration" shall mean an estimate of the Total Merger Consideration mutually agreed to by Chiquita and the Companies at or before the Closing Date, or, in the event Chiquita and the Companies do not so agree, $50,000,000, which amount will be allocated among the Companies as follows: (i) OCC - $41,700,000, (ii) Midwest - $1,850,000, (iii) Goodhue - $3,500,000 and (iv) Olivia - $2,950,000. "Existing Bank Accounts" shall mean any and all checking accounts, savings accounts, money market accounts, custodial accounts, certificates of deposit, safe deposit boxes and other bank or other similar accounts maintained by any of the Companies or the Partnership with any financial intermediary. "Existing Contracts" shall mean those Contracts which are listed on the Disclosure Schedule. 6 "Existing Indebtedness" shall mean all Indebtedness of any of the Companies or the Partnership. "Existing Insurance Policies" shall mean all of the insurance policies in effect and owned by any of the Companies or the Partnership. "Existing Investments" shall mean all Investments of any of the Companies or the Partnership. "Existing Liens" shall mean those Liens affecting any of the owned properties of any of the Companies or the Partnership on the relevant date of reference to the extent shown on the Disclosure Schedule or Schedule B-II (or in the case of the Title Commitment issued for Peoria County, Illinois real estate, Schedule B) of the Title Commitments; provided, the standard exceptions in the Title Commitments shall not be considered Existing Liens. "Expenses Funds" shall have the meaning set forth in Section 2.3(c) of this Agreement. "Farmco" shall mean Festal Farms Co., a Minnesota corporation. "Final Pre-Closing Period Other Tax Returns" shall have the meaning specified in Section 12.4 of this Agreement. "GAAP" shall mean generally accepted accounting principles in the United States consistently applied by the Companies and the Partnership prior to the Closing Date. "Goodhue" shall mean Goodhue Canning Company, a Minnesota corporation. "Hazardous Substance(s)" shall mean any pollutant, contaminant or waste, hazardous or toxic chemical, including without limitation the following: friable asbestos-containing materials; urea formaldehyde foam insulation; petroleum and its derivatives, by-products and other hydrocarbons; radioactive materials; radon gas; paint containing lead; polychlorinated biphenyls (PCB's) in any form or condition; or any explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous substance which is regulated under any Environmental Law. "Historical Financial Statements" shall mean the audited (except in the case of the Partnership, which shall mean unaudited) Consolidated Balance Sheet, Statement of Income and Retained Earnings and Statement of Cash Flows of each of the Companies and the Partnership at and for each of the fiscal years ended on February 28, 1995, February 29, 1996 7 and February 28, 1997 (or, in the case of Midwest, August 31, 1994, August 31, 1995 and August 31, 1996, and in the case of the Partnership, December 31, 1994, December 31, 1995 and December 31, 1996). "IRS" shall mean the Internal Revenue Service. "Indebtedness" shall mean all liabilities or obligations of any of the Companies or the Partnership, whether primary or secondary or absolute or contingent: (a) for borrowed money; or (b) evidenced by notes, bonds, debentures or similar instruments; or (c) secured by Liens on any assets of any of the Companies or the Partnership by means of a security agreement with a third party. "Initial Merger Consideration" shall have the meaning set forth in Section 2.3(a) of this Agreement. "Initial Payment Funds" shall have the meaning specified in Section 2.3(a) of this Agreement. "Intangible Assets" shall mean all of the United States and foreign patents, patent applications, trade names, trademarks, service marks, trademark registrations, service mark registrations, trademark applications, service mark applications, registered copyrights, copyright applications, formulas, trade secrets and knowhow owned or used by any of the Companies or the Partnership at the relevant date of reference. "Inventory" shall mean all inventories of the Companies and the Partnership, including raw materials, spare parts, supplies, ingredients, stored inventories, work in process and finished goods. "Investment" by any one or more of the Companies or the Partnership shall mean at the relevant date of reference: (a) any transfer or delivery of cash, stock or other property or value by any one or more of the Companies or the Partnership in exchange for debt, stock or any other security of another Person; (b) any loan, advance or capital contribution to or in any other Person; (c) any guaranty or assumption of any liability or obligation of any other Person; and (d) any investments in any fixed property or fixed assets other than fixed properties and fixed assets acquired and used in the ordinary course of the business of any of the Companies or the Partnership. "Investment" shall not include any guaranty or assumption of liability created pursuant to the deposit and collection of checks in the ordinary course of business or any account receivable, prepaid expense or other advance made in the ordinary course of business. 8 "Investment Representative Agreement" shall mean an agreement between Chiquita and a person appointed by a Shareholder as such Shareholder's investment representative in accordance with such Shareholder's Certification signed by such Shareholder. "Knowledge of the Companies" shall mean actual knowledge of any of the Persons identified in Schedule 1 attached to this Agreement. "Law" shall mean any federal, state, local or other law, rule, regulation or governmental requirement of any kind (other than Environmental Laws), including any rules, regulations and orders promulgated thereunder and any final orders, decrees, consents or judgments of any court of competent jurisdiction. "Letter of Intent" shall mean the letter of intent dated as of March 17, 1997, by and among Chiquita, each of the Companies, Chadwick S. Lange, Karen E. Lange, Stephens J. Lange, Gertrude H. Lange, the Olmsted Family Trust and Ann Jackson. "Letter of Transmittal" shall have the meaning specified in Section 2.3(d) of this Agreement. "Lien" shall mean, with respect to any asset: (a) any mortgage, pledge, lien, charge, claim, restriction, reservation, condition, easement, covenant, lease, encroach- ment, title defect, imposition, security interest or other encumbrance of any kind whether imposed by Law, by Contract or otherwise; and (b) the interest of a vendor or lessor under any conditional sale agreement, financing lease or other title retention agreement relating to such asset. "Majority Authorization" shall have the meaning set forth in Section 3.1(b) of this Agreement. "Material Adverse Change" and "Material Adverse Effect" shall mean a material adverse change in, or material adverse effect on, as the case may be, the results of operations, financial condition, business, assets, liabilities or, to the Knowledge of the Companies, prospects (excluding general economic or general market conditions) of the Companies, taken as a whole. "Merger" shall have the meaning specified in Section 2.1(a) of this Agreement. "Midwest" shall mean Midwest Foods, Inc., a Minnesota corporation. 9 "Migrant Workers" shall mean all Persons who provide services to any of the Companies or the Partnership and whose services, employment, housing or transportation are subject to any local, state or federal laws, statutes, ordinances, regulations or orders related to migrant or seasonal agricultural labor. "Net Book Value" of a Company shall mean the shareholders' equity of such Company as of June 30, 1997, as derived from the Closing Financial Statements; provided, however, that: -The Net Book Value of OCC shall mean the sum of (a) the Shareholders' equity of OCC as of June 30, 1997, as so derived, and (b) $1,700,000; increased by (c) 60% of the amount of OCC's LIFO inventory reserve included in the Closing Financial Statements if (A) OCC shall have continued to maintain sales levels from February 28, 1997 through June 30, 1997 in the ordinary course of business consistent with good business practice and (B) the inventory value resulting from the elimination of such LIFO reserve as of July 1, 1997 would pass the "lower of cost or market" test and by (d) $100,000 if all transaction costs incurred by or for the benefit of OCC or any of the other Companies on or prior to the Closing Date shall have been fully recorded in the Closing Financial Statements; and -there shall be excluded from the Net Book Value of each Company any gains subsequent to February 28, 1997 from the write-up of property, plant or equipment or from insurance claims or recoveries in excess of the carrying value of lost or damaged property, plant or equipment. "New Owatonna" shall mean a limited liability company to be organized by Chiquita under Delaware Law prior to the Closing as a wholly owned subsidiary of Chiquita, which shall be named Owatonna Canning Company. "Olivia" shall mean Olivia Canning Company, a Minnesota corporation. "OCC" shall mean Owatonna Canning Company, a Minnesota corporation. "Partnership" shall mean Hartle-Lange-Hammel Company, a Minnesota general partnership. "Partnership Amendment" shall mean the Agreement to Amend the Partnership Agreement of Hartle-Lange-Hammel Company dated as of the date hereof between OCC and Stephens J. Lange. "Person" shall mean a natural person, corporation, 10 limited liability company, joint stock company, trust, partnership, governmental entity, agency or branch or department thereof, or any other legal entity. "Post-Closing Partial Period" shall have the meaning specified in Section 12.3 of this Agreement. "Pre-Closing Partial Period" shall have the meaning specified in Section 12.1 of this Agreement. "Principal Shareholder Agreements" shall mean the agreements between Chiquita and certain of the Shareholders of the Companies obligating said Shareholders to vote to approve the Merger. "Private Placement Memorandum" shall have the meaning specified in Section 6.17 of this Agreement. "Real Estate" shall mean the real property interests identified in the Disclosure Schedule. "Real Estate Agreements" shall mean the silage spreading, irrigation, machinery parking, easement, warehouse, farm shop, carpenter shop and garages lease agreements, in form and substance reasonably satisfactory to the Companies and Chiquita, between Farmco and OCC, necessary to satisfy the requirements of Section 7.19. "Registration Rights Agreement" shall mean the Registration Rights Agreement by and among Chiquita and the Shareholders Representatives in the form of Exhibit H attached to this Agreement. "Related Documents" shall mean the Certificate of Merger, Articles of Merger, Registration Rights Agreement, Supply Agreement, Escrow Agreement, Employment Agreement, Partnership Amendment and Real Estate Agreements. "Release" means a release, as such term is defined in the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, and any similar or implementing state or local law. "Shareholder Agreements" shall mean agreements entered into between each of the Shareholders and Chiquita in the form of Exhibit I attached to this Agreement. "Shareholders" shall mean all Persons owning of record any shares of Stock immediately prior to the Effective Time of the Merger. 11 "Shareholders Certifications" shall mean Certifications completed and signed by Shareholders in the form of Exhibit J attached to this Agreement. "Shareholders Representatives" shall mean Chadwick S. Lange and Karen E. Lange for purposes of this Agreement and the Escrow Agreement and shall mean Richard Jackson and Ann Jackson for purposes of the Registration Rights Agreement. A "Shareholder's Share" of the Initial Merger Consideration shall mean that percentage of the Initial Merger Consideration which the aggregate Value of such Shareholder's Stock in all the Companies bears to the Initial Merger Consideration. A "Shareholder's Share" of the Total Merger Consideration shall mean that percentage of the Total Merger Consideration which the aggregate Value of such Shareholder's Stock in all the Companies bears to the Total Merger Consideration. "Stock" shall mean all capital stock of the Companies issued and outstanding at the date of this Agreement, consisting of: (a) 450 shares of Class A common voting stock of OCC, $100 par value; (b) 4,050 shares of Class B common non-voting stock of OCC, $100 par value; (c) 121 shares of capital stock of Olivia, $100 par value; (d) 1,000 Common Shares of Midwest, $10 par value; (e) 500 Participating Non-Voting Shares of Midwest, $10 par value; and (f) 140 common voting shares of Goodhue, $100 par value. "Subsidiary" shall mean any corporation, at least a majority of the outstanding capital stock of which (of any class or classes, however designated, having ordinary voting power for the election of at least a majority of the board of directors of such corporation) shall at the time be owned by the relevant Person directly or through one or more corporations which are themselves Subsidiaries. "Supply Agreement" shall mean the Supply Agreement between Farmco and OCC dated as of the date hereof. "Survey" shall mean a certified survey map prepared by a surveyor selected by Chiquita depicting Real Estate that Chiquita, in its sole discretion, chooses to have surveyed, which shall be sufficient to enable the Title Company to eliminate its standard survey exceptions relating to the surveyed real property and shall include those matters required to be included on a land survey in accordance with the Minimum Standard Detail Requirements and Classifications for ALTA/ACSM Land Title Surveys as jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992 (the "Requirements"), including those items of Table A of the 12 Requirements selected by Chiquita. "Surviving Corporation" shall have the meaning specified in Section 2.1(a) of this Agreement. "Tax" or "Taxes" shall mean all federal, state, territorial, local, foreign and other taxes, or assessments including, without limitation, income, estimated income, business, occupation, franchise, property, sales, employment, gross receipts, use, transfer, ad valorem, fuel, vehicle, profits, license, capital, payroll, escheat, excise, goods and services, severance, stamp, value add transfer value added and including, without limitation, interest, penalties and additions in connection therewith for which any of the Companies, any Subsidiary of any of the Companies or the Partnership, as applicable, is or may be liable. "Tax Claims" shall have the meaning specified in Section 12.5(a) of this Agreement. "Tax Settlement Amount" shall have the meaning specified in Section 12.5(b) of this Agreement. "Temporary Access Agreement" shall mean the Temporary Access Agreement by and among OCC, Olivia, Midwest, Goodhue and Chiquita dated April 1, 1997. "Title Commitments" shall mean the Title Commitments listed on the attached Schedule 2. "Title Company" shall mean First American Title Insurance Company or such other title insurance company which may be selected by Chiquita. "Title Policy" shall mean an owner's policy of title insurance on an American Land Title Association form consistent with the Title Commitments, to be dated the Closing Date, insuring the Companies as fee simple owners of the real estate listed in the Title Commitments. "Total Merger Consideration" shall mean the sum of (a) 100% of the Net Book Value of OCC, Midwest and Goodhue and (b) 66.942% of the Net Book Value of Olivia; provided, however, that in the event that the Closing is delayed until after October 1, 1997 because of the occurrence and continuation of a condition contemplated by Section 7.16 of this Agreement, Total Merger Consideration shall mean said sum plus interest on said sum at 8% per annum from October 1, 1997 to the Effective Time of the Merger, minus accrued dividends on Chiquita Preferred Shares from October 1, 1997 to the Effective Time of the Merger. 13 "Transferred Property" shall mean all property owned, operated or controlled by the Companies and the Partnership at the time of the execution of this Agreement including the Real Estate and all other properties or facilities of the Companies and the Partnership (including leased properties, underlying soils and groundwater and areas leased to tenants, if any). "Value" of Chiquita Common Shares shall mean $13.91 per share and the "Value" of Chiquita Preferred Shares shall mean $50 per share, except that for purposes of the reimbursement of Chiquita for Losses from the Escrow Funds and reimbursement of the Shareholders Representatives and Chiquita from the Expenses Funds for expenses incurred pursuant to Sections 2.4(c), 3.1(j) and 12.4, and for purposes of valuing the Chiquita Common Share component of (x) that portion of any delivery of Chiquita Common and Preferred Shares pursuant to Section 2.4(a)(i) which represents more than 95% of the Estimated Total Merger Consideration and (y) any delivery of Chiquita Common and Preferred Shares pursuant to Section 2.4(a)(ii), the "Value" of a Chiquita Common Share as of a particular date shall mean the average of the last sales prices of Chiquita Common Shares on the New York Stock Exchange Composite Tape for the 15 trading days ending on the second day preceding such particular date. The "Value" of a Shareholder's Stock in a particular Company shall mean that percentage of the Net Book Value of such Company which is equal to such Shareholder's total percentage equity interest in such Company, as set forth in Schedule 3 attached to this Agreement. ARTICLE 2 THE MERGER 2.1 Actions to be Taken. Subject to the terms and conditions of this Agreement, including the fulfillment (or waiver) of all conditions to the obligations of the parties contained herein, at the Effective Time of the Merger (as hereinafter defined) and pursuant to the New Jersey Business Corporation Act and the Minnesota Business Corporation Act, the following shall occur: (a) Each Company shall be merged with and into Chiquita (the "Merger"). Chiquita shall be the surviving corporation (the "Surviving Corporation") in the Merger. The separate corporate existence of each Company shall cease at the Effective Time of the Merger, and thereupon the Companies and Chiquita shall be a single corporation. The Surviving Corporation shall succeed to all of the rights, privileges, powers and franchises of a public or private nature of the Companies, all of the properties and assets of the Companies 14 and all of the debts, choses in action and other interests due or belonging to the Companies, and shall be subject to, and responsible for, all of the debts, liabilities and duties of the Companies with the effect set forth in the New Jersey Business Corporation Act and the Minnesota Business Corporation Act. If, at any time after the Effective Time of the Merger, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of the Companies acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or to otherwise carry out this Agreement, the officers and directors of the Surviving Corporation shall and will be authorized to execute and deliver, in the name and on behalf of the Companies or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of the Companies or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or to otherwise carry out this Agreement. (b) The Certificate of Incorporation of Chiquita at the Effective Time of the Merger shall be and remain the certificate of incorporation of the Surviving Corporation until amended as provided by law. (c) The by-laws of Chiquita at the Effective Time of the Merger shall be and remain the by-laws of the Surviving Corporation until amended as provided by law or by the certificate of incorporation or the by-laws of the Surviving Corporation. (d) The officers and directors of Chiquita at the Effective Time of the Merger shall be the officers and directors, respectively, of the Surviving Corporation until their successors shall have been elected and qualified or until otherwise provided by law or the certificate of incorporation or by-laws of the Surviving Corporation. (e) As soon as practicable after the terms and conditions of this Agreement have been satisfied, a Certificate of Merger, in proper form and properly executed in accordance with the New Jersey Business Corporation Act (the "Certificate of Merger") shall be filed with the Secretary of State of the State of New Jersey and Articles of Merger, in proper form and executed in accordance with the Minnesota Business Corporation Act (the "Articles of Merger"), shall be filed with the Secretary of State of the State of Minnesota. 15 The Merger shall become effective when the Certificate of Merger and Articles of Merger are so filed. (The date and time when the Merger becomes effective is referred to in this Agreement as the "Effective Time of the Merger".) (f) At the Effective Time of the Merger, the stock transfer books of the Companies shall be closed and there shall be no further registration of transfers of shares of Stock of the Companies thereafter on the records of the Companies. From and after the Effective Time of the Merger, the holders of certificates representing shares of Stock of the Companies immediately prior to the Effective Time of the Merger shall cease to have any rights with respect to such shares of Stock of the Companies except as otherwise provided in this Agreement or by law. 2.2 Conversion or Cancellation of Stock. As of the Effective Time of the Merger, by virtue of the Merger and without any action on the part of any Shareholder: (a) The shares of Stock of the Companies issued and outstanding immediately prior to the Effective Time of the Merger shall be converted into Chiquita Common Shares or Chiquita Preferred Shares, or a combination thereof, having an aggregate Value equal to the Total Merger Consideration, in accordance with the elections of the Shareholders set forth in the Shareholder Agreements; provided, however, that: (i) the maximum Value of Chiquita Preferred Shares which may be elected by a Shareholder of any one Company shall be 50% of such Shareholder's Share of the Total Merger Consideration attributable to such Company; (ii) the aggregate Value of Chiquita Common and Preferred Shares to be received by each particular Shareholder shall be equal to such Shareholder's Share multiplied by the Total Merger Consideration; (iii) in lieu of receiving any fractional Chiquita Common Share or Chiquita Preferred Share, the Shareholders shall receive an amount of cash determined by multiplying the Value of one Chiquita Common Share or Chiquita Preferred Share, as the case may be, by the fraction of a share otherwise issuable; and (iv) if any Shareholder shall not have made an election in a Shareholder Agreement delivered prior to the Effective Time of the Merger, such Shareholder shall be deemed to have elected to receive his or her share of the Total Merger Consideration entirely in Chiquita Common Shares. 16 (b) any shares of its own Stock held in the treasury of a Company shall be canceled and retired; and (c) the shares of Stock of Olivia held by OCC shall be canceled and retired. 2.3 Delivery of Initial Merger Consideration. (a) As of the Effective Time of the Merger, Chiquita shall deposit, or shall cause to be deposited, Chiquita Common Shares and Chiquita Preferred Shares with a Value of 92% of the Estimated Total Merger Consideration (the "Initial Merger Consideration") with the Escrow Agent in a fund (the "Initial Payment Funds") for the benefit of the Shareholders and in exchange for the outstanding shares of Stock of the Companies. Except as provided in Sections 2.3(b) and 2.3(c), the Initial Payment Funds shall not be used for any other purpose. The composition of the number of Chiquita Common Shares and Chiquita Preferred Shares to be deposited shall be pro rata to the elections of the Shareholders described in Section 2.2(a) and made in the Shareholder Agreements. (b) As of the Effective Time of the Merger, pursuant to the Escrow Agreement, the Escrow Agent shall withhold from the Initial Payment Funds in separate funds Chiquita Common Shares with a Value of $5,000,000 (the "Escrow Funds"). The Escrow Funds shall be available as security for the indemnification of Chiquita pursuant to Articles 9 and 12 of this Agreement and the Escrow Agreement. The Escrow Funds will not be used for any other purposes, and will be distributed by the Escrow Agent in accordance with Articles 9 and 12 of this Agreement and the Escrow Agreement. (c) As of the Effective Time of the Merger, pursuant to the Escrow Agreement, the Escrow Agent shall withhold from the Initial Payment Funds in separate funds (the "Expenses Funds") Chiquita Common Shares with a Value of $250,000. The Expenses Funds will be available for reimbursement of (i) out-of-pocket expenses incurred by the Shareholders Representatives in acting on behalf of the Shareholders in connection with the Merger before and after the Effective Time of the Merger,(ii) expenses incurred by Chiquita on behalf of the Shareholders pursuant to Sections 2.4(c) and 12.4, and (iii) transaction costs incurred by or for the benefit of any of the Companies prior to the Closing Date and not fully recorded in the Closing Financial Statements as described in Section 13.4. (d) At or before the Effective Time of the Merger, the parties shall calculate each Shareholder's Share of the Initial Merger Consideration based on the estimated Net 17 Book Value of each Company. Immediately before or within three business days after the Effective Time of the Merger, Chiquita shall instruct the Escrow Agent to mail to each Shareholder (A) a Letter of Transmittal in the form of Exhibit G hereto (which shall specify that delivery of the Certificates held by such Shareholder shall be effected, and risk of loss of such Certificates shall pass, only upon proper delivery of such Certificates to the Escrow Agent), and (B) instructions for use in effecting the surrender of such Certificates in exchange for the portion of the Initial Merger Consideration which the holder of the Stock represented by such Certificate is entitled to receive in the Merger. Upon surrender of a Certificate for cancellation to the Escrow Agent, together with such letter of transmittal, duly executed, and such other documents as may be reasonably required pursuant to such instructions, the holder of such Certificate shall receive in exchange, subject to Section 2.4(a),(i) prompt delivery of 60% of the portion of the Initial Merger Consideration which the holder of the Stock represented by such Certificate is entitled to receive in the Merger, (ii) the right to receive promptly after the Adjustment Date 40% of the portion of the Initial Merger Consideration which the holder of Stock represented by such Certificate is entitled to receive in the Merger (less a proportionate share, if any, of the Initial Merger Consideration recovered by Chiquita from the Initial Payment Funds pursuant to Section 2.4(a)(ii)) and less proportionate amounts withheld in the Escrow Funds and Expenses Funds on behalf of such holder with respect to the Stock represented by such Certificate pursuant to Sections 2.3(b) and 2.3(c), (iii) the right to receive a proportionate share of the excess, if any, of the Total Merger Consideration over the Initial Merger Consideration, and (iv) the right to receive a proportionate share of the remainder, if any, of the Escrow Funds and the Expenses Funds in accordance with the terms of the Escrow Agreement; and the Certificate so surrendered shall forthwith be canceled. Until surrendered as contemplated by this Section 2.3, each Certificate shall be deemed at any time after the Effective Time of the Merger to represent solely the right to receive the portion of the Total Merger Consideration attributable to the shares of Stock of the Companies formerly represented by such Certificate. (e) In the event any Certificates shall have been lost, stolen or destroyed, Chiquita shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of Chiquita Common or Preferred Shares and/or cash as may be required pursuant to this Article 3; provided, however, that Chiquita may, in its discretion and as a condition precedent to the delivery thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity 18 against any claim that may be made against Chiquita with respect to the Certificates alleged to have been lost, stolen or destroyed. 2.4 Post-Closing Adjustment. (a) As soon as practicable after the Closing Financial Statements become available and the procedures contemplated by paragraph (c) below are completed (the "Adjustment Date"): (i) In the event that the Total Merger Consideration exceeds the Initial Merger Consideration, Chiquita shall deliver to the Escrow Agent additional Chiquita Common and Preferred Stock having a Value equal to (A) the excess of the Total Merger Consideration over the Initial Merger Consideration, plus (B) interest at 8% per annum on the excess of the Total Merger Consideration over the Initial Merger Consideration from the Effective Time of the Merger. The composition of the number of Chiquita Common Shares and Chiquita Preferred Shares to be deposited shall be pro rata to the elections of the Shareholders described in Section 2.2(a) and made in the Shareholder Agreements. (ii) In the event that the Total Merger Consideration is less than the Initial Merger Consideration, Chiquita shall have the right to recover first from the Initial Payment Funds and second, in the event the Initial Payment Funds are exhausted, from the Shareholders, pursuant to the Shareholder Agreements, and in accordance with the Shareholders' respective elections and Shares: Chiquita Common and Preferred Stock and/or cash having a Value equal to (i) the excess of the Initial Merger Consideration over the Total Merger Consideration plus (ii) interest at 8% per annum on the amount of such excess from the Effective Time of the Merger. If a Shareholder's Share of the Total Merger Consideration shall be different than such Shareholders' Share of the Initial Merger Consideration, Chiquita and the Shareholders Representatives shall jointly give such instructions to the Escrow Agent and the Shareholders, and take such other actions, as shall be reasonably necessary in order to cause the deliveries of Chiquita Preferred and Common Shares and cash in lieu of fractional shares contemplated by this Section 2.4(a) to be made to and/or by the Shareholders in such manner as will result in each Shareholder receiving such Shareholder's Share of the Total Merger Consideration. (b) In lieu of delivering any fractional Chiquita Common or Preferred Shares pursuant to clause (a) of this Section 2.4, Chiquita or the Shareholders, as the case may be, shall deliver an amount of cash determined by multiplying the Value of one Chiquita Common or Preferred Share, as the case may be, by the fraction of a share 19 otherwise deliverable. (c) The Shareholders Representatives shall cause, at Chiquita's expense, the Closing Financial Statements, together with their calculation of the Total Merger Consideration, to be delivered to Chiquita as soon as practicable, and not later than one week after the Closing. The Shareholders Representatives shall cause, at Chiquita's expense, the Closing Financial Statements to be audited by, and accompanied by the unqualified report thereon of the firm of Hutton Nelson & McDonald LLP (except the report relating to the Closing Financial Statements of Midwest may be qualified to the same extent as the report relating to the 1997 Financial Statements of Midwest). Such report shall state that the Closing Financial Statements present fairly, in all material respects, the financial condition of the Companies as of June 30, 1997 and the results of their operations for the period from February 28, 1997 until June 30, 1997 in conformity with GAAP consistently applied (or from August 31, 1996 to June 30, 1997 in the case of Midwest) and in accordance with consistently applied accounting policies and methods, and the accounting policies and procedures set forth in the attached Schedule 4. The report will be accompanied by a separate statement by Hutton Nelson and McDonald LLP that the Total Merger Consideration has been determined in accordance with the provisions of this Agreement. Chiquita shall have 30 days after delivery of the Closing Financial Statements to notify the Shareholders Representatives of any disagreement Chiquita may have with the Shareholders Representatives' calculation of the Total Merger Consideration and/or with any amount in or underlying any of the Closing Financial Statements or the 1997 Financial Statements or the principles or methods for determining such amount (including that such amount was not determined in conformity with GAAP consistently applied). If there is no such disagreement, the Total Merger Consideration shall be as calculated by the Shareholders Representatives, and the Post- Closing Adjustment shall thereupon be carried out in the manner provided in Sections 2.4(a) through 2.4(b). If Chiquita notifies the Shareholders Representatives of its disagreement, Chiquita and the Shareholders Representatives will endeavor in good faith to resolve the disagreement. If such disagreement shall not have been resolved within 15 days of Chiquita's notice of disagreement, either party shall be entitled to submit the disagreement to the independent accounting firm of Price Waterhouse LLP (Chicago office), which shall resolve the disagreement by reporting on, and shall limit its review to, (A) whether, in its opinion, the amounts in the Closing Financial Statements or the 1997 Financial Statements as to which there is disagreement were determined in conformity with GAAP consistently applied and in accordance with consistently 20 applied accounting policies and methods and the accounting policies and procedures set forth in the attached Schedule 4 and, if not, what adjustments would be necessary in order for it to be able to render such an opinion and (B) whether the Total Merger Consideration was determined in accordance with this Agreement and, if not, what adjustments would be necessary in order for it to conclude that it was so determined. The Post-Closing Adjustment shall be completed as soon as practicable thereafter as provided in Sections 2.4(a) through 2.4(b) on the basis of such independent accounting firm's report. Said report shall be final and binding on the parties. The fees and expenses of the independent accounting firm shall be borne equally by Chiquita and the Shareholders. The portion of said fees and expenses payable by the Shareholders shall be paid initially by Chiquita, subject to the right of Chiquita to reimbursement for such expenses thereafter: first from the Expenses Funds; second, in the event the Expenses Funds are exhausted, from the Initial Payment Funds; and third, in the event the Initial Payment Funds are exhausted, from the Shareholders in accordance with their respective Shareholder's Shares. Chiquita and the Shareholders Representatives shall give the Escrow Agent such instructions as are necessary to carry out the purpose and intent of this paragraph (c). 2.5 Reorganization. The parties intend that this Agreement be a plan of reorganization within the meaning of Section 368(a)(1)(A) of the Code. ARTICLE 3 OTHER AGREEMENTS 3.1 Shareholders Representatives. (a) Chadwick S. Lange and Karen E. Lange (for purposes of this Agreement and the Escrow Agreement) and Richard Jackson and Ann Jackson (for purposes of the Registration Rights Agreement), and each of them, shall be the representatives of the Shareholders, as agents and attorneys in fact with full power of substitution to do any and all things and execute any and all documents which may be necessary, convenient or appropriate to facilitate the consummation of the transactions contemplated by this Agreement, including but not limited to: (i) execution of the Escrow Agreement and the Registration Rights Agreement; (ii) amendments to this Agreement, the Escrow Agreement and the Registration Rights Agreement, or any of them; (iii) execution of documents and certificates pursuant to this Agreement, the Escrow Agreement and the Registration Rights Agreement, including documents relating to the resolution of any disputes concerning the determination of the Total Merger Consideration in accordance with Section 2.4(c) 21 of this Agreement; (iv) receipt of payments or deliveries under or pursuant to this Agreement, the Escrow Agreement and the Registration Rights Agreement and disbursement thereof to the Shareholders and others, as contemplated by this Agreement, the Escrow Agreement or the Registration Rights Agreement or otherwise; (v) acting as agent for the Shareholders in connection with the registration rights set forth in the Registration Rights Agreement and taking any actions necessary or desirable with respect thereto including resolving any and all disputes among Shareholders with respect to the number of shares of Chiquita Common or Preferred Stock to be registered for the account of any Shareholder; and (vi) receipt and forwarding of notices and communications pursuant to this Agreement, the Escrow Agreement and the Registration Rights Agreement. This power of attorney shall not be affected by the disability or incapacity of the principal pursuant to any applicable Law. (b) In the event that the Shareholders Representatives are of the opinion that they require further authorization or advice from the Shareholders on any matters concerning this Agreement, the Shareholders Representatives shall be entitled to seek such further authorization from the Shareholders prior to acting on their behalf. In such event, each Shareholder shall have the number of votes equal to his Shareholder's Share with respect to voting Stock exchanged in connection with the Merger, and the authorization of a majority of the votes of the Shareholders (a "Majority Authorization") shall be binding on all of the Shareholders and shall constitute the authorization by the Shareholders. (c) Chiquita shall be fully protected in dealing with the Shareholders Representatives under this Agreement and the Escrow Agreement and may rely upon the authority of the Shareholders Representatives to act as the agents of the Shareholders. Any payment by Chiquita to the Shareholders Representatives under this Agreement and the Escrow Agreement shall be considered a payment by Chiquita to the Shareholders. The appointment of the Shareholders Representatives is coupled with an interest and shall be irrevocable by any Shareholder in any manner or for any reason. (d) Any act of the Shareholders Represen- tatives shall require the act of both of the Shareholders Representatives. Either of the Shareholders Representatives may resign from his capacity as a Shareholders Representative at any time by written notice delivered to Chiquita and all of the other Shareholders. If there is a vacancy at any time in either of the positions of Shareholders Representative for any reason, the remaining Shareholders Representative may act with full power and authority until such time as that remaining 22 Shareholders Representative shall select a successor to fill such vacancy. If at any time there is no Person acting as a Shareholder Representative for any reason, the Shareholders shall, by Majority Authorization, elect at least two Persons to act as Shareholders Representatives under this Agreement, and, if they fail to do so within 15 days after being requested to do so by Chiquita or any Shareholder, Chiquita shall designate the Shareholder(s) to become the Shareholders Representative(s). (e) In the event that the Shareholders Representatives are unable to agree, either Chiquita or one of the Shareholders Representatives shall have the right to request the Shareholders, by Majority Authorization, to appoint one or more additional Shareholders Representatives so as to break the deadlock. (f) Each of the Shareholders Representatives acknowledges that he or she has carefully read and understands this Agreement, hereby accepts such appointment and designation, and represents that he or she will act in his or her capacity as a Shareholders Representative in strict compliance with and conformance to the provisions of this Agreement. (g) The Shareholders Representatives shall not be liable to the Shareholders for any error of judgment, or any act done or step taken or omitted by them in good faith or for any mistake in fact or Law, or for anything which they may do or refrain from doing in connection with this Agreement, except for their own bad faith, willful misconduct or gross negligence. The Shareholders Representatives may seek the advice of legal counsel in the event of any dispute or question as to the construction of any of the provisions of this Agreement or their duties hereunder, and they shall incur no liability to the Shareholders and shall be fully protected with respect to any action taken, omitted or suffered by them in good faith in accordance with the opinion of such counsel. (h) Chiquita and the Shareholders Representatives acknowledge and agree that: (i) the Shareholders Representatives shall be acting as such only as the agents of the Shareholders and at the request of the Shareholders and not as the agents of, or at the request of, any one or more of Chiquita and the Companies; and (ii) the Shareholders Representatives shall not be entitled to any indemnification from any one or more of Chiquita or the Companies for any matter arising as a result of their acting as Shareholders Representatives, whether under Law or other- wise; provided this clause (ii) shall not affect or limit the right of the Shareholders Representatives to indemnification, in their capacities as Shareholders, pursuant to Article 9 of this Agreement or pursuant to Section 5 of the Registration 23 Rights Agreement. (i) The addresses set forth on the List of Shareholders attached to this Agreement as Schedule 3 shall be the addresses used for all notices to Shareholders by the Shareholders Representatives under this Agreement until notice of a different address is provided in writing in the procedural manner set forth in Section 13.8 of this Agreement. (j) The Shareholders Representatives shall be entitled to reimbursement from the Expenses Funds for out-of- pocket expenses incurred in acting on behalf of the Shareholders in connection with the transactions contemplated under this Agreement before and after the Merger. Reimbursable expenses will include, but not be limited to, expenses to engage legal counsel, accountants and other third parties to protect against liability of the Shareholders Representatives to the Shareholders, Chiquita or others for acts or omissions in the capacity as Shareholders Representatives (except for acts or omissions in bad faith, willful misconduct and gross negligence). In addition, by means of reimbursement from the Expenses Funds and directly from the Shareholders in the event such fund is exhausted, the Shareholders Representatives shall be indemnified and held harmless by the Shareholders from and against any liabilities, damages or obligations (including costs, fees and expenses of legal counsel relating thereto) which the Shareholders Representatives may incur as a result of their acts or omissions while serving as such Shareholders Representatives except for acts or omissions which constitute the bad faith, willful misconduct or gross negligence of the Shareholders Representative seeking such indemnification. 3.2 Disclosure Schedule. Contemporaneously with the execution and delivery of this Agreement, the Companies have delivered the Disclosure Schedule to Chiquita. 3.3 Escrow Agreement. At the Closing, Chiquita, the Escrow Agent and the Shareholders Representatives shall execute and deliver the Escrow Agreement in the form attached hereto as Exhibit E, with such changes therein requested by the Escrow Agent as Chiquita and the Shareholders Representatives approve, which approval shall not be unreasonably withheld. 3.4 Registration Rights Agreement. At the Closing, Chiquita and the Shareholders Representatives shall execute and deliver the Registration Rights Agreement in the form attached to this Agreement as Exhibit G, which contains provisions relating to, among other matters, certain covenants 24 of Chiquita and the Shareholders Representatives with respect to the registration of the Shareholders' Chiquita Common Shares under federal and state securities laws. 3.5 Consulting Agreement. At the Closing, OCC and Stephens J. Lange shall execute and deliver the Consulting Agreement. 3.6 Drop-Down. Chiquita shall cause the Drop-Down to occur immediately after the Effective Time of the Merger. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES The Companies represent and warrant to Chiquita that, except as set forth in the Disclosure Schedule: 4.1 Organization. (a) Each of the Companies is a corporation duly organized, validly existing and in good standing under the Laws of the State of Minnesota. Each of the Companies is duly qualified and licensed and in good standing as a foreign corporation in each jurisdiction set forth with reference to such Company in the Disclosure Schedule, which jurisdictions include each jurisdiction in which such qualification is required except for jurisdictions in which failure of any of the Companies to so qualify will not have a Material Adverse Effect. (b) Each of the Companies has full corporate power and authority to carry on its business as it is now conducted and to own its assets and properties. (c) The Partnership is a general partnership duly and validly organized and existing under the laws of the State of Minnesota. The general partners of the Partnership are OCC and Stephens J. Lange. The Partnership has full power to carry on its business as it is now conducted and to own its assets and properties. 4.2 Businesses. The only businesses conducted by the Companies and the Partnership are (i) processing and canning food products and selling and distributing such products, (ii) rental of residential housing, (iii) warehousing of other companies' products, (iv) leasing excess capacity on trucks, (v) leasing land, and (vi) agricultural farming in the State of Illinois. 4.3 Capitalization. (a) The entire authorized capital stock of OCC consists of: (i) 450 shares of Class A 25 common voting stock, $100 par value, all of which 450 shares are issued and outstanding; (ii) 9,000 shares of Class B common non-voting stock, $100 par value, of which 4,050 shares are issued and outstanding; and (iii) 550 shares of 6% cumulative preferred stock, $100 par value, none of which shares are issued and outstanding. (b) The entire authorized capital stock of Olivia consists of 500 shares of capital stock, $100 par value, of which 121 shares are issued and outstanding. (c) The entire authorized capital stock of Midwest consists of: (i) 4,000 Common Shares, $10 par value, of which 1,000 shares are issued and outstanding; and (ii) 6,000 Participating Non-Voting Shares, $10 par value, of which 500 shares are issued and outstanding. (d) The entire authorized capital stock of Goodhue consists of (i) 300 common voting shares, $100 par value, of which 140 are issued and outstanding; and (ii) 200 preferred nonvoting shares, $100 par value, none of which shares are issued and outstanding. (e) All of the outstanding capital stock of each of the Companies is duly authorized, validly issued, fully paid and nonassessable, and was not issued in violation of any preemptive rights. Except as set forth in the Disclosure Schedule, there are no options, warrants, conversion rights or other rights to subscribe for or purchase, or other contracts to which any of the Companies is a party with respect to, any capital stock of any of the Companies. All of the issued and outstanding shares of capital stock of the Companies are owned of record by the Shareholders. Schedule 3 attached to this Agreement sets forth the name and address of each Shareholder and the number of shares of capital stock of each of the Companies owned of record by each Shareholder, in each case as set forth on the books and records of the Company as of the date hereof and as of the time immediately prior to the Effective Time of the Merger. (f) OCC and Stephens J. Lange each own a 50% interest in the Partnership and share equally in the profits of the Partnership. 4.4 Authorization; Enforceability. The execution, delivery and performance by the Companies of this Agreement, the Certificate and Articles of Merger and all documents and instruments by any of the Companies required by this Agreement, are within the corporate power of such Company and have been duly authorized by the requisite vote of the board of directors of such Company. This Agreement is, and the 26 Certificate and Articles of Merger and all documents and instruments required by this Agreement to be executed and delivered by any of the Companies will be, when executed and delivered, duly executed and delivered by such Company, and are or will be, when executed and delivered, the valid and binding obligations of such Company, enforceable against such Company in accordance with their respective terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws generally affecting the rights of creditors and subject to general equity principles. Except for the approval of the transactions contemplated by this Agreement by the requisite vote of the shareholders of each Company, no further approvals of any kind are required for the Companies to perform this Agreement, the Certificate and Articles of Merger and all documents and instruments by any of the Companies required by this Agreement. 4.5 No Violation or Conflict. The execution, delivery and performance by the Companies of this Agreement, the Certificate and Articles of Merger and all documents and instruments by any of the Companies required by this Agreement do not and will not: (a) conflict with or violate any Law, the Articles of Incorporation or Bylaws of any of the Companies or any Existing Contract; or (b) result in the creation of (or give any party the right to create) any Lien upon any rights, properties or assets of any of the Companies; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, or create in any party the right to terminate, amend, modify, accelerate or postpone (or give any party the right, upon notice, with the passage of time, or otherwise, to terminate, amend, modify, accelerate or postpone) the time within which, or the terms and conditions under which, any liabilities, duties or obligations are to be satisfied or performed, or any rights or benefits are to be received, under any of the Existing Contracts. 4.6 Title to Assets. There are no Liens affecting any of the Real Estate covered by Title Commitments other than Existing Liens and Liens described in subsections (ii) and (v) below. One or more of the Companies and the Partnership owns good and valid title to the assets and properties reflected in "Assets" in the 1997 Financial Statements and the related fixed asset schedule previously delivered to Chiquita or acquired since the date thereof, free and clear of any and all Liens, except (i) the Existing Liens, (ii) Liens for current taxes not yet due and payable, (iii) the properties subject to real property leases, (iv) assets disposed of since the date of the 1997 Financial Statements in the ordinary course of business, (v) Liens imposed by law and incurred in the ordinary course of business for obligations not yet due to 27 carriers, warehousemen, laborers and materialmen, (vi) Liens in respect of pledges or deposits under workers' compensation laws, and (vii) with respect to the Real Estate for which no Title Commitment has been delivered to the Companies as of the date hereof, Liens which would not have a Material Adverse Effect. No Shareholder or Affiliate of a Shareholder (other than the Companies) has any direct or indirect interest in any material right, property or asset used or required by the Companies or the Partnership in the conduct of their respective businesses, except as disclosed in the Disclosure Schedule. 4.7 Litigation. Except for the matters listed on the Disclosure Schedule: (a) there is no pending, or to the Knowledge of the Companies, threatened suit, charge, audit inquiry of which the Companies have received notice, worker compensation claim, litigation, arbitration, proceeding, governmental investigation, or citation against or, to the Knowledge of the Companies, relating to any of the Companies or the Partnership or their respective properties or any Employee Benefit Plan; (b) there are no actions, suits or proceedings pending, or to the Knowledge of the Companies threatened, against any of the Companies or the Partnership or any Employee Benefit Plan by any Person which question the legality, validity or propriety of the transactions contem- plated by this Agreement; and (c) to the Knowledge of the Companies, there is no factual basis which is likely to result in any material litigation, arbitration, proceeding, governmental investigation or citation against or relating to any of the Companies or the Partnership or any Employee Benefit Plan. 4.8 Financial Statements. A true and complete copy of each Historical Financial Statement has been furnished to Chiquita. The Historical Financial Statements fairly present, and the Closing Financial Statements will fairly present, the financial condition of each of the Companies and the Partnership as of the dates of each of such Financial Statements and the results of operations and cash flows of each entity for the periods indicated on each of such Financial Statements in accordance with GAAP and accounting policies and methods consistently applied throughout the periods indicated, except as indicated therein or in the notes thereto, and except that the Closing Financial Statements will not contain prior period comparative data. The Historical Financial Statements of the Partnership accurately reflect the financial condition of the Partnership. 28 4.9 Absence of Certain Changes. Except as set forth in the Disclosure Schedule or in the Historical Financial Statements, since February 28, 1997 there has not been any: (a) Material Adverse Change (including but not limited to damage, destruction or loss to physical properties); (b) transactions by any of the Companies or the Partnership outside the ordinary course of business of such entity, except for the transactions contemplated by this Agreement; (c) bonus or incentive compensation paid or accrued by any of the Companies or the Partnership or any salary or wage increases, except in the ordinary course of business consistent with past practice and except for the payment to Chadwick S. Lange of a bonus of approximately $1,500,000 subsequent to March 1, 1997; (d) declaration or payment of any dividend or any distribution in respect to the capital stock of any of the Companies or the partnership interests of the Partnership or any direct or indirect redemption, purchase or other acquisition of any such stock by any of the Companies or partnership interests by the Partnership; or (e) payments or distributions by any of the Companies or the Partnership, other than salaries and rent consistent with past practice, to Shareholders or Affiliates. 4.10 Buildings and Equipment. Except as set forth in the Disclosure Schedule, the Buildings and the Equipment are in good operating condition and repair for use in a manner consistent with past practices, reasonable wear and tear excepted and their use in a manner consistent with past practices complies in all material respects with applicable Laws. The Buildings and Equipment constitute all buildings and equipment necessary for the operation of the business of the Companies and the Partnership, as currently conducted. No notice of any violation of any building, zoning or other Law relating to such assets or their use has been received by any of the Companies or the Partnership. 4.11 Existing Contracts. The Contracts listed on the Disclosure Schedule, true, complete and correct copies of which have been furnished to Chiquita, are the only Contracts which constitute: (a) a lease of, or agreement to purchase or 29 sell, any capital assets having an individual value in excess of $25,000; (b) union labor contracts; (c) management, consulting, employment, Migrant Worker, personal service, agency or other contracts or contracts providing for employment or rendition of services and which: (i) are in writing; or (ii) create other than an at will employment relationship; or (iii) provide for any commission, bonus, profit sharing, incentive, retirement, consulting or additional compensation; (d) an agreement with a migrant labor contractor or other Person for recruitment or referral of any Migrant Workers; (e) agreements or notes evidencing any Indebtedness; (f) an agreement relating to the distribution or marketing of the Companies' products with an agent, dealer, distributor, sales representative or franchisee; (g) an agreement for the storage, transportation, treatment or disposal of any Hazardous Substances; (h) a power of attorney (whether revocable or irrevocable) given to any Person by any one or more of the Companies or the Partnership that is in force; (i) an agreement by any one or more of the Companies or the Partnership not to compete in any business or in any geographical area; (j) an agreement restricting the right of any one or more of the Companies or the Partnership to use or disclose any information in its possession; (k) a partnership, joint venture or similar arrangement; (l) a license of Intangible Assets to another party; (m) a grower contract; (n) an agreement or arrangement with any Affiliate; (o) an Employee Benefit Plan; or 30 (p) other agreement which: (i) involves payments, commitments, obligations or liabilities to or from the Companies in an amount in excess of $100,000, or (ii) is not in the ordinary course of business of the Companies or the Partnership. 4.12 Performance of Contracts. Except as set forth in the Disclosure Schedule, the Companies and the Partnership have fully performed in all material respects each term, covenant and condition of each Existing Contract which is to be performed by them at or before the date hereof. Except as set forth in the Disclosure Schedule, each of the Contracts is in full force and effect and constitutes the legal and binding obligation of the Company or the Partnership which is a party to it and, to the Knowledge of the Companies, constitutes the legal and binding obligation of the other parties thereto. There is no existing material breach of or default by any of the Companies or the Partnership under any Existing Contract, and, no state of facts exists or event has occurred, is pending or is threatened, which, after the giving of notice, or the lapse of time, or otherwise, could constitute or result in a breach or default of any Existing Contract by any of the Companies or the Partnership or to the Knowledge of the Companies, any other person, firm or entity. 4.13 Contingent and Undisclosed Liabilities. Except as set forth in the Disclosure Schedule and except for liabilities that have arisen in the ordinary course of business since June 30, 1997, neither any of the Companies nor the Partnership has any liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent or otherwise), and will not have after the Closing any such liabilities of any nature arising out of events occurring prior to the Closing, except for liabilities or obligations (a) which have been fully recorded or reserved against in the Historical Financial Statements, or (b) which arose in the ordinary course of business since February 28, 1997 and which will be fully recorded or reserved against in the Closing Financial Statements; provided, however, that if any such liability or obligation is of such a nature that its existence or its non-disclosure on the Disclosure Schedule is specifically and directly covered by another representation and warranty in this Article 4 and would have resulted in a breach of such other representation and warranty but for a qualification for Knowledge or materiality or a minimum dollar amount contained in such other representation and warranty, then the representation and warranty contained in this Section 4.13 shall not be breached by the existence or non-disclosure of such liability or obligation on the Disclosure Schedule, and provided, further, that if a liability or obligation was incurred by one of the Companies on or before June 30, 1997, is related to the Companies' packing operations for the 1997 31 packing season and would not have reduced the Net Book Value of the Companies if such liability or obligation had been included in the Closing Balance Sheets in accordance with the procedures set forth in Section 2.4(c) and the attached Schedule 4, then the representation and warranty contained in this Section 4.13 shall not be breached by the non-disclosure of such liability or obligation on the Disclosure Schedule. 4.14 Existing Insurance Policies. All of the Existing Insurance Policies are listed on the Disclosure Schedule. The Existing Insurance Policies are in full force and effect. Neither any of the Companies nor the Partnership has received notice of and is not otherwise aware of any cancellation or threat of cancellation of such insurance. The Disclosure Schedule sets forth all property damage, personal injury, bodily injury or products liability claims in excess of $50,000 which have been made since March 1, 1997 or are pending against any of the Companies or the Partnership or, to the Knowledge of Companies, are threatened against any of the Companies or the Partnership. Within the past two years, no insurance company has canceled or materially increased the premiums for, any insurance (of any type) maintained by any of the Companies or the Partnership. 4.15 Employee Benefit Plans. (a) The Disclosure Schedule contains a list of each Employee pension benefit plan (within the meaning of section 3(2) of ERISA) to which any of the Companies or the Partnership contributes or is required to contribute on behalf of its employees, setting forth the names and addresses of such plans and the trustees of such plans, and the basis of the Companies' or the Partnership's contributions thereto. True, correct and complete copies of each of such plans and trusts, including all amendments thereto, are attached to the Disclosure Schedule. The Companies have previously delivered to Chiquita the most recent summary plan description, Form 5500s and the most recent IRS determination letter with respect to each such plan. With respect to each of the plans listed in the Disclosure Schedule and except as set forth on the Disclosure Schedule: (i) A determination letter has been received to the effect that any such qualified plan is qualified under Section 401 of the Code and the trusts maintained pursuant thereto are exempt from the Federal income taxation under Section 501 of the Code, and nothing has occurred to cause the loss of such qualification or exemption or to form the basis for imposition of an excise or penalty tax under the Code on such plan or the sponsor or any employer affiliated with the sponsor of the plan. (ii) All contributions required by the 32 Code to be made for such plan for the plan year most recently ended and for all prior plan years will have been made. (iii) No reportable event, as such term is defined in Section 4043(b) of ERISA, has occurred and is continuing with respect to any of such plans which are subject to Section 4043(b) of ERISA, other than those which might arise as a result of the transactions contemplated by this Agreement. (iv) Any applicable ERISA or Code requirements as to the filing of reports, returns, documents and notices with the Secretary of Labor and the Secretary of the Treasury, or the furnishing of such documents to participants or beneficiaries of such plans, have been complied with in all material respects by all of such plans, or their administrators or sponsors. (v) There are no pending or, to the Knowledge of the Companies, threatened claims, lawsuits or arbitrations which have been asserted or instituted against such plans or any fiduciaries or sponsors thereof respecting their duties to such plans or the assets of any of the trusts under any of such plans. (vi) Any amendments required to be adopted effective as of the date hereof or effective as of an earlier date to bring such plans into conformity with any of the applicable provisions of ERISA or the Code have been timely and duly adopted, and the amendments have been timely filed under Section 401(b) of the Code for a favorable determination letter thereon. (vii) Any bonding required by applicable provisions of ERISA with respect to any of such plans subject to ERISA has been obtained and is in full force and effect. (viii) All of such plans have been maintained in all material respects in accordance with the applicable terms and provisions of ERISA and the Code, including rules and regulations thereunder. (ix) In addition to the representation made in (viii) above, the plan has been operated and administered in accordance with all applicable law, including, but not limited to, the Federal Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964 and the Federal Equal Pay Act. (x) Neither any of the Companies or the Partnership nor any ERISA Affiliate of any of the Companies or 33 the Partnership has incurred any outstanding liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums) and will not incur any liability to the Pension Benefit Guaranty Corporation as a result of the transactions contemplated by this Agreement. (xi) No "prohibited transactions" as such term is defined in Section 4975 of the Code and Section 406 of ERISA, has occurred with respect to such plans which could subject such plans, or any of the Companies or the Partnership, to a tax or penalty for such prohibited transactions imposed by either Section 502 of ERISA or Section 4975 of the Code. (xii) With respect to any plan that is subject to Title IV OF ERISA, no such plan has an accumulated funding deficiency, and the assets of such plan are sufficient to discharge all liabilities of such plan on a termination basis. (xiii) As of the Closing Date, all contributions to each multiemployer plan covering employees of any of the Companies or the Partnership will have been made as required by such plan and any collective bargaining agreement. (xiv) Neither any of the Companies nor the Partnership nor any ERISA Affiliate of any of the Companies or the Partnership has incurred any withdrawal liability with respect to any multiemployer plan under Section 4201 of ERISA nor has received any notification that any multiemployer plan is in reorganization or has terminated. (b) The Disclosure Schedule contains a list of each unfunded deferred compensation plan, each supplemental death, disability, and retirement plan, each medical reimbursement plan, and, to the extent not included in the above, each employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) maintained by any of the Companies or the Partnership. With respect to each of the plans listed in the Disclosure Schedule and except as set forth on the Disclosure Schedule: (i) Each such plan that has been or is required to be funded has been fully funded based on reasonable actuarial assumptions. (ii) No such plan provides for non- terminable or non-alterable medical benefits for retirees or irrevocably commits any of the Companies or the Partnership to provide any such benefits for any person upon or following retirement, except for health care continuation benefits 34 described in clause (iii) below. (iii) The Companies and the Partnership and their ERISA Affiliates have complied with the health care continuation coverage requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA, including rules and regulations thereunder, and any applicable state law governing health care continuation coverage. (iv) Any applicable ERISA or Code requirements as to the filing of reports, returns, documents and notices with the Secretary of Labor and the Secretary of the Treasury, or the furnishing of such documents to participants or beneficiaries of such plans, have been complied with in all material respects by all of such plans, or their administrators or sponsors. (v) There are no parachute payments (within the meaning of Section 280G(b)(2) of the Code), severance payments, or other payments to employees that will result from any of the Companies or the Partnership entering into or performing under this Agreement. (c) Except as otherwise required pursuant to Section 10.4, the Companies and the Partnership can terminate any plan listed in the Disclosure Schedule at any time and regain any assets remaining under such plans after all liabilities to plan participants have been satisfied or provided for. Entry into this Agreement and performing the obligations hereunder will not violate any law, regulation, or contract relating to any employee benefit plan (within the meaning of Section 3(3) of ERISA) maintained by any of the Companies or the Partnership or subject or expose any of the Companies or the Partnership to any damages, excise tax, or recapture of investment tax credit. 4.16 Existing Bank Accounts. All of the Existing Bank Accounts are listed on the Disclosure Schedule. 4.17 Permits; Compliance with Law. The Companies and the Partnership hold all of the material governmental licenses, permits and authorizations that are required for the ownership or occupancy of their properties and assets and the operation of their businesses and to provide housing for Migrant Workers, each of which is listed on the Disclosure Schedule and is in full force and effect. There are no proceedings pending or, to the Knowledge of the Companies, threatened which may result in the revocation, cancellation, suspension, or modification of any such licenses, permits or authorizations. The Companies and the Partnership have in all material respects at all times in the past, duly complied, and are presently in all material respects duly complying, in 35 respect of the Companies' and the Partnership's businesses, operations and properties, with all applicable Laws, and all material required reports and filings with governmental authorities (including, without limitation, occupational safety and health laws and regulations) have been properly made, except where a past failure to so comply or file would not have a Material Adverse Effect. This representation and warranty does not apply to (a) licenses, permits and authorizations required by Environmental Laws, (b) compliance with Environmental Laws, or (c) reports and filings required under Environmental Laws, which matters are covered by Section 4.18. 4.18 Environmental Matters. Except as set forth in the Disclosure Schedule: (a) The Companies and the Partnership have complied and are in compliance with all Environmental Laws applicable to the ownership, condition and operation of the Transferred Property and with respect to the ownership and operation of the businesses of the Companies and the Partnership (including the consent order which is or will be entered in Peoria County Circuit Court, No. 95 CH 123, regarding the Princeville Canning Company) and no written action, demand or notice has been filed, issued or commenced against any of them and is now pending or, to the Knowledge of the Companies, is threatened alleging any such failure to comply or alleging any injury or damage caused by a Hazardous Substance; (b) The Companies and the Partnership have not Released any Hazardous Substances in violation of Environmental Laws or so as to require response under Environmental Laws nor to the knowledge of the Companies caused any person to be injured or damaged by any Hazardous Substance and, to the Knowledge of the Companies, there has been no Release of any Hazardous Substance by any other person beneath, above or into the environment from, onto, into or surrounding any of the Transferred Property; (c) The Companies and the Partnership have not filed or received any written notice of a Release or threatened Release of a Hazardous Substance or been notified that they may be a potentially responsible party or received any request for information regarding the shipment or disposal of Hazardous Substances at any site; (d) The Companies and the Partnership possess (or have timely filed applications which are pending for) all licenses and permits required by all Environmental Laws applicable to the ownership and operation of the Transferred Property and the Companies and the Partnership have complied 36 in all respects with the terms and conditions of such licenses and permits; (e) No underground storage tanks are present on or under the Transferred Property which contain or, to the Knowledge of the Companies, heretofore contained any Hazardous Substances. The Companies and the Partnership hereby inform Chiquita of the tank notification requirements set forth in Minn. Stat. Section 116.48. This disclosure is intended to satisfy Minn. Stat. Section116.48, Subd. 5; (f) The Transferred Property is not subject to any lien or other encumbrance arising from the operation or violation of any Environmental Law; (g) Except as set forth in this Section, the Companies make no warranties or representations concerning past or present compliance with Environmental Laws by the Companies or the Partnership. 4.19 Brokers. Neither any of the Companies nor the Partnership has any obligation to pay any brokers', finders' or any similar fee in connection with the transactions contemplated by this Agreement. 4.20 Tax and Other Returns and Reports. (a) Filing of Tax Returns. Except as set forth in the Disclosure Schedule, each of the Companies and the Partnership (and any affiliated group of which any of the Companies or the Partnership is now or has been a member) has timely filed with the appropriate taxing authorities all returns (including, without limitation, information returns and other material information) in respect of Taxes required to be filed through the date hereof and has paid the amount of Taxes shown to be due on such returns. Except for adjustments by governmental authorities, at the time they were filed and as of the date hereof, all such returns were and are complete and accurate in all Material respects. For purposes of this Section 4.20, the term "Companies" or "Partnership" shall be deemed to include any predecessor of the Companies or the Partnership or any Persons from which the Companies or the Partnership incurs a liability for Taxes as a result of transferee liability. Except as specified in the Disclosure Schedule, neither any of the Companies nor the Partnership nor any group of which any of the Companies and/or their Subsidiaries is now or was a member, has requested any extension of time within which to file returns (including, without limitation, information returns) in respect of any Taxes. (b) Payment of Taxes. Except as set forth in 37 the Disclosure Schedule: (i) all of the Companies' Taxes, in respect of periods through and including June 30, 1997, have been paid, or an adequate reserve on the Closing Financial Statements has been established by the Companies therefor, (ii) the Companies do not have any liability for Taxes, in respect of periods through and including June 30, 1997, in excess of the amounts so paid or reserves so established, (iii) the Companies have paid or will have paid all Taxes due on or prior to the Closing Date, and (iv) the Partnership has paid or will have paid all Taxes due on or prior to the Closing Date. (c) Audit History. The Disclosure Schedule sets forth all claims for deficiencies for Taxes including description, amount, and with respect to resolved claims, the resolution thereof asserted by any governmental authority against any of the Companies or the Partnership which remain unresolved as of the date hereof or which were resolved since the date of the 1996 Historical Financial Statements. Except as set forth in the Disclosure Schedule, no deficiencies for Taxes have been claimed, proposed, or assessed by any taxing or other governmental authority, which deficiencies have not been paid. Except as set forth in the Disclosure Schedule, there are no pending or, to the Knowledge of the Companies, threatened audits, investigations or claims for or relating to any liability in respect of Taxes, and there are no matters under discussion with one or more governmental authorities with respect to Taxes that will result in an obligation by the Companies or the Partnership or their Subsidiaries to pay additional Taxes, and no governmental authority is asserting any claims for Taxes. Except as set forth in The Disclosure Schedule, neither the Companies nor the Partnership have received any notice that any taxing authority intends to audit a return for any period. Except as set forth in The Disclosure Schedule, no extension of a statute of limitations relating to Taxes is in effect with respect to any of the Companies or the Partnership. (d) Affiliated Groups. Except as set forth in the Disclosure Schedule, the Companies and the Partnership have not been a member of any consolidated, combined or unitary group for Tax purposes for any tax periods, which remain subject to assessment. (e) Joint Ventures, Etc. Except as set forth in the Disclosure Schedule, since January 1, 1992, neither any of the Companies nor the Partnership is nor has been a party to any joint venture, partnership or other arrangement that could be treated as a partnership for Tax purposes. (f) Section 341(f). None of the Companies has consented to the application of Code Section 341(f). 38 (g) Foreign Operations. Except as set forth in the Disclosure Schedule, since February 28, 1994, neither any of the Companies nor the Partnership has had a permanent establishment in any foreign country and has not engaged in a trade or business in any foreign country. (h) Withholding Requirements. Neither the Code or any other provision of Law requires Chiquita to withhold Tax from any portion of the Purchase Price. (i) Tax Sharing Agreement. The Disclosure Schedule lists any Tax allocation or Tax sharing agreement or arrangement which was since February 28, 1994, and prior to the Closing is or was in existence. (j) Intercompany Transactions. A list of all intercompany transactions including deferred intercompany transactions, both terms as defined in the Income Tax Regulations Sec. 1.1502-13(a) of the Code, which will result in the payment of any tax after the Closing Date and which exist because of transactions between any of the Companies and the Partnership are set forth in the Disclosure Schedule, except those which arose in the ordinary course of business from the intercompany sale of inventory. (k) Withholding. Each of the Companies and the Partnership has paid to the proper taxing authorities or is withholding and will pay when due to the proper taxing authorities all amounts required to be withheld or paid with respect to all Taxes on income, unemployment, social security (FICA) or other similar programs or benefits with respect to salary and other compensation of its directors, officers and employees and any other Tax required to be withheld. (l) Independent Contractors. The Companies have reported to the Federal Government on Form 1099 all independent contractors of the Companies who have earned in excess of $600 in any calendar year, and the Disclosure Schedule sets forth all such independent contractors since January 1, 1994. (m) Regulation Section1-301.7701. No election has been made under Regulation Section 1-301.7701 to treat any of the Companies or the Partnership as a taxable entity other than a Corporation in its own right. 4.21 Real Estate. The Disclosure Schedule lists and briefly describes (i) all Real Estate covered by the Title Commitments delivered to the Companies as of the date hereof, and (ii) all real property or improvements leased or subleased by or to any of the Companies. Except for Existing Liens or as shown on the Surveys, the Real Estate covered by the Title 39 Commitments: (a) is not subject to any leases or tenancies of any kind; (b) is not in the possession of any adverse posses- sors; (c) has direct access to and from a public road or street except for easements necessary to satisfy Section 7.19 below; (d) is used in a manner which is consistent with applicable Law; (e) is in the peaceful possession of any one or more of the Companies; and (f) is served by all water, sewer, electrical, telephone, drainage and other utilities and has all necessary easements therefor as is currently required for the normal operations of the Buildings and the Real Estate except for easements necessary to satisfy Section 7.19 below. Except for Existing Liens or as shown on the Surveys, each of the Companies enjoys and is entitled to peaceful possession of all of the Real Estate owned or used by it except for leases or easements necessary to satisfy Section 7.19 below and, in the case of Real Estate leased by it, is entitled to peaceful possession as lessee for the term of the lease and for any renewal period provided for therein (upon exercise of any renewal option) in accordance with the terms of such lease. Except as set forth in the Disclosure Schedule or Title Commitments, the Companies have no Knowledge of real property owned by the Companies. 4.22 Other Approvals. No permission, approval, determination, consent or waiver by, or any declaration, filing or registration with, any Person is required in connection with the execution, delivery and performance of this Agreement, the Certificate and Articles of Merger and all of the other documents and instruments required by this Agreement by the Companies, except for compliance with the requirements of the Hart-Scott-Rodino Act (15 U.S.C. Section 18A) and the regulations promulgated thereunder and the filing of the Certificate of Merger with the State of New Jersey and the Articles of Merger with the State of Minnesota. 4.23 Investments. All of the Existing Investments are listed on the Disclosure Schedule. Except for the Existing Investments, none of the Companies owns, nor has any right or obligation to acquire, any Investment. 4.24 Labor Matters. (a) Except as set forth in the Disclosure Schedule, there is no present or former employee of any one or more of the Companies, who has made or filed any claim against any one or more of the Companies (whether under Law, under any employee agreement or otherwise) on account of or for: (i) overtime pay, other than overtime pay for the current payroll period; (ii) wages or salaries, other than wages or salaries for the current payroll period; or (iii) vacations, sick leave, time off or pay in lieu of vacation or time off, other than vacation, sick leave or time off (or pay in lieu thereof) earned in the period immediately preceding June 30, 1997, which will be fully recorded as a liability in 40 the Closing Financial Statements, or incurred in the ordinary course of business after June 30, 1997. (b) Except as set forth in the Disclosure Schedule: (i) there are no pending and unresolved claims by any Person against any of the Companies arising out of any statute, ordinance or regulation relating to discrimination to employees or employee practices or occupational or safety and health standards or Migrant Workers; (ii) there is no pending, nor has any of the Companies experienced since January 1, 1992, any, labor dispute, strike or work stoppage which adversely affects or is likely to adversely affect the business of any of the Companies or which is likely to or would interfere with the continued operation of any of the Companies; and (iii) to the Knowledge of the Companies there is no threatened labor dispute, strike or work stoppage which is likely to or would adversely affect the business of any of the Companies or which may or would interfere with the continued operation of any of the Companies. (c) Except as set forth in the Disclosure Schedule: (i) there is not now pending or, to the Knowledge of the Companies, threatened any charge or complaint against any one or more of the Companies by or before the National Labor Relations Board or any representative thereof, or any comparable state agency or authority; (ii) none of the Companies has committed any unfair labor practices which have not heretofore been corrected and fully remedied; (iii) to the Knowledge of the Companies, no union organizing activities are in process or have been proposed or threatened involving any employees of any of the Companies not presently organized; and (iv) to the Knowledge of the Companies no petitions have been filed, or have been threatened or proposed to be filed, for union organization or representation of employees of any of the Companies not presently organized. 4.25 Articles; Bylaws. True and correct copies of (a) the Articles of Incorporation and Bylaws of each of the Companies and (b) the Certificate of Partnership of the Partnership, all as in effect on the date of this Agreement, have been delivered to Chiquita. 4.26 Indebtedness. All of the Existing Indebtedness is listed on the Disclosure Schedule. 4.27 Subsidiaries. Neither any of the Companies nor the Partnership has any Subsidiaries. 4.28 Accounts. All of the Accounts of the Companies and the Partnership reflected in the Closing Balance Sheets will, in the aggregate, be collectable in full in the ordinary course of their respective businesses at face value, except to 41 the extent of reserves for doubtful accounts and discounts provided for in the Closing Balance Sheets. 4.29 Inventory. The Inventory of the Companies and the Partnership reflected in the Closing Balance Sheets will, in the aggregate, be of good, undamaged and merchantable quality and condition and usable and saleable in the ordinary course of business at an aggregate value at least equal to its carrying value on the Closing Balance Sheets, except to the extent of reserves for such matters reflected in the Closing Balance Sheets. 4.30 Unemployment Compensation. Each of the Companies has made all required payments to its unemployment compensation reserve accounts with the appropriate governmental departments. Except as set forth in the Disclosure Schedule, all such unemployment compensation accounts have positive balances. 4.31 Intangible Assets. (a) All of the patents, trademark registrations, service mark registrations, copyright registrations and applications therefor owned or used by any of the Companies are listed on the Disclosure Schedule. (b) Except as set forth in the Disclosure Schedule, to the Knowledge of the Companies each of the Companies owns the entire right, title and interest in and to each of its Intangible Assets and has not licensed or granted the right to use any of the Intangible Assets to any other person. (c) Except as set forth in the Disclosure Schedule: (i) to the Knowledge of the Companies there are no claims, demands or proceedings instituted or pending or threatened by any Person contesting or challenging the right of any one or more of the Companies to use any of the Intangible Assets; (ii) to the Knowledge of the Companies there are no patents, trademarks, trade names or copyrights owned by a Person which any one or more of the Companies is using without license or right to do so; (iii) to the Knowledge of the Companies each of the Companies owns or possesses adequate licenses or other rights to use all patents, trademarks, trade names or copyrights necessary to conduct its business as now conducted; and (iv) all patents, patent applications, trademarks, trade names, copyrights and rights to discoveries or inventions (whether or not patentable) owned or held by any Affiliate or any Employee used by the Companies in the conduct of their businesses have been duly and effectively transferred to one of the Companies. 4.32 Customers. Since March 1, 1997, there has been no termination, cancellation or material curtailment of the 42 business relationship of any one or more of the Companies with any customer or group of affiliated customers whose purchases individually or in the aggregate constituted more than five percent (5%) of the consolidated sales of the Companies as a whole for the fiscal year ended February 28, 1997, nor has any notice of intent to so materially curtail been given either (i) to any of the Companies in writing or (ii) orally to any of the Persons listed in Schedule 1. 4.33 Disclosure. No statement of fact by the Companies contained in this Agreement or in the Disclosure Schedule contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements herein or therein contained, in the light of the circumstances under which they were made, not misleading as of the date to which it speaks. 4.34 Ancillary Agreements. The Companies have delivered to Chiquita true and complete copies of the Consulting Agreement, the Employee and Equipment Leasing Agreement, the Employment Agreement, the Partnership Amendment and the Supply Agreement as executed on the date hereof. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CHIQUITA Chiquita hereby represents and warrants to the Companies that: 5.1 Organization. Chiquita is a corporation duly and validly organized and existing and in good standing under the Laws of the State of New Jersey. 5.2 Authorization; Enforceability. The execution, delivery and performance by Chiquita of this Agreement, the Related Documents and all of the other documents and instruments required by this Agreement to be executed and delivered by Chiquita are within the corporate power of Chiquita and have been duly authorized by all necessary corporate action by Chiquita. This Agreement is, and the Related Documents and the other documents and instruments required by this Agreement to be executed and delivered by Chiquita are or will be, when executed and delivered by Chiquita, the valid and binding obligations of Chiquita, enforceable against Chiquita in accordance with their respective terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws generally affecting the rights of creditors and subject to general equity principles. Except for the approval of the transactions contemplated by this 43 Agreement by the Board of Directors of Chiquita, no further approvals of any kind are required for Chiquita to perform this Agreement, the Related Documents and all documents and instruments by Chiquita required by this Agreement. 5.3 No Violation or Conflict. The execution, delivery and performance of this Agreement, the Related Documents and all of the other documents and instruments required by this Agreement by Chiquita do not and will not conflict with or violate any Law, the Articles of Incorporation or Bylaws of Chiquita or (except to the extent that it would not affect the validity or enforceability of this Agreement with respect to Chiquita) any contract or agreement to which Chiquita is a party or by which it is bound. 5.4 Brokers. Chiquita has no obligation to pay any brokers', finders' or any similar fee in connection with the transactions contemplated by this Agreement. 5.5 Litigation. There are no actions, suits or proceedings pending or, to the knowledge of Chiquita, threatened against Chiquita by any Person which question the validity, legality or propriety of the transactions contemplated by this Agreement. 5.6 Governmental Approvals. No permission, approval, determination, consent or waiver by, or any declaration, filing or registration with, any Person is required in connection with the execution, delivery and performance of this Agreement or the Related Documents by Chiquita, except for compliance with the requirements of the Hart-Scott-Rodino Act (15 U.S.C. Section 18A) and the regulations promulgated thereunder and the filing of the Certificate of Merger with the Secretary of State of the State of New Jersey and the Articles of Merger with the Secretary of State of the State of Minnesota. 5.7 Capitalization. (a) The entire authorized capital stock of Chiquita consists of: (i) 150,000,000 shares of Capital Stock, $.33 par value, of which 56,267,142 were issued and outstanding on July 16, 1997; (ii) 4,000,000 shares of Voting Cumulative Preference Stock, issuable in series, without nominal or par value, none of which are issued and outstanding; (iii) 10,000,000 shares of Non-Voting Cumulative Preferred Stock, $1.00 par value, of which (A) 2,875,000 shares have been designated $2.875 Non-Voting Cumulative Preferred Stock, Series A, all of which are issued and outstanding, and (B) 2,300,000 shares have been designated $3.75 Cumulative Convertible Preferred Stock, Series B, all of which are issued and outstanding. 44 (b) All of the Chiquita Common and Preferred Shares to be issued pursuant to this Agreement will be, when issued: (i) duly authorized, validly issued and fully paid; (ii) nonassessable, (iii) free of any preemptive rights or other rights to purchase securities of Chiquita (except as set forth in Exhibit C hereto), (iv) issued in full compliance with applicable securities laws assuming the accuracy of the information supplied and representations made by the Shareholders in the Shareholders Certifications and the Shareholder Agreements, and (v) in the case of the Chiquita Common Shares to be issued pursuant to this Agreement, listed on the New York Stock Exchange, the Pacific Stock Exchange and the Boston Stock Exchange. As of the Effective Time of the Merger, the Chiquita Preferred Shares will be entitled to the rights and preferences described in the attached Exhibit C. (c) As of the Effective Time, New Owatonna will be a limited liability company organized under the laws of the State of Delaware and wholly-owned by Chiquita, Chiquita will have no intent to transfer any of its ownership of New Owatonna to any Person, and New Owatonna will have no intent to issue any ownership interest to any Person other than Chiquita. 5.8 Securities Filings. Chiquita and its Subsidiaries have filed all documents required to be filed by them with the Commission as required by Law. 5.9 Disclosure. No statement of fact by Chiquita contained in this Agreement or the Related Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein contained, in the light of the circumstances under which they were made, not misleading as of the date to which it speaks. No statement of fact in the Disclosure Documents will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date of the Disclosure Documents and the Effective Time of the Merger. 5.10 Investment Intent. Chiquita is acquiring the shares of Stock being acquired by it for investment for its own account and not with a view to resale or distribution within the meaning of the Act. Chiquita does not presently intend to divide its participation with others or to resell or otherwise dispose of all or any part of the shares of Stock being acquired by it (other than possibly with or to an Affiliate of Chiquita) unless and until Chiquita determines at some future date that changed circumstances, not now anticipated, make such disposition advisable. Chiquita acknowledges that the shares of Stock being acquired by it 45 pursuant to this Agreement are not being registered under the securities Laws of the United States or any state thereof in reliance upon one or more exemptions from the registration requirements made available under such Laws, and that the statutory basis for such exemption(s). ARTICLE 6 CERTAIN MATTERS PENDING THE CLOSING From and after the date of this Agreement and until the Closing Date or the termination of this Agreement pursuant to Section 13.1, except as otherwise disclosed in the Disclosure Schedule: 6.1 Full Access. (a) Chiquita and its authorized agents, officers and representatives shall have full access to all properties, books, records, contracts, information and documents of the Companies to conduct such examination and investigation of the Companies as Chiquita reasonably deems necessary, provided that such examinations shall be during the Companies' normal business hours and shall not unreasonably interfere with the Companies' operations and activities. Such examination and investigation will be subject to the Confidentiality Agreement. (b) Chiquita shall have the right to conduct an environmental assessment at the Transferred Property prior to the Closing Date. Chiquita's environmental assessment shall be conducted by NES, Inc. Said environmental consultant shall be licensed, bonded and insured in accordance with applicable laws and regulations. Any such environmental assessment will be subject to the Temporary Access Agreement and the Confidentiality Agreement. 6.2 Carry on in Regular Course. The Companies shall carry on their businesses in the regular course and substantially in the same manner as past practices. 6.3 Use of Assets. The Companies shall use, operate, maintain and repair all of their assets and properties in the regular course and substantially in the same manner as past practices. 6.4 Preservation of Relationships. The Companies shall use their reasonable efforts to preserve their business organizations intact, to retain the services of the Employees and to conduct business with suppliers, customers, creditors and others having business relationships with the Companies in the regular course and substantially in the same manner as past practices. 46 6.5 No Default. The Companies shall not do any act or omit to do any act, or permit any act or omission to act, which will cause a breach of any of the Contracts. 6.6 Publicity. Whether or not the transactions contemplated by this Agreement are consummated, Announcements made prior to the Closing Date or, with respect to Announcements disclosing the aggregate value of the Total Merger Consideration (or information from which that aggregate value could be derived or calculated), on or after the Closing Date, shall be made only at such times and in such manner as may be mutually agreed upon by Chiquita and the Shareholders Representatives (or in the case of an Announcement made prior to the Closing Date, by Chiquita and the Companies), provided, however, that any party shall be entitled to make an Announcement if, in the opinion of its counsel, such Announcement is required to comply with any Law, regulatory authority or any rule or regulation of the Commission, any state securities regulatory agency or any securities exchange or securities quotation system without the consent of the other parties but, in such event, such party shall use reasonable efforts to provide the other parties with a copy of such Announcement and the opportunity to comment on such Announcement prior to its distribution or publication. 6.7 Existing Insurance Policies. The Companies shall use reasonable efforts to maintain all of their Insurance Policies in full force and effect. 6.8 Employment Matters. Without the prior consent of Chiquita, the Companies shall not: (a) grant any increase in the rate of pay of any of the Employees except for increases in the ordinary course of business of the Companies, consistent with past practice; (b) institute or amend any Employee Benefit Plan except as set forth on the Disclosure Schedule; or (c) enter into or modify any written employment arrangement with any Person, except for agreements with Migrant Workers entered into in the ordinary course of business. Chiquita acknowledges and consents to the payment of a bonus by the Companies to Chadwick S. Lange subsequent to March 1, 1997 in the amount of approximately $1,500,000. 6.9 Contracts and Commitments. Without the prior consent of Chiquita, the Companies shall not (a) enter into any contract or commitment or engage in any transaction not in the usual and ordinary course of business and consistent with their normal business practices, or (b) purchase, lease, sell, license or dispose of any capital asset or Intangible Asset except for purchases, sales, leases or dispositions in the ordinary course of business consistent with past practices. 6.10 Indebtedness; Investments. Without the prior 47 consent of Chiquita, the Companies shall not create, incur or assume any Indebtedness except for trade accounts payable incurred in the ordinary course of business or make any Investment. 6.11 Certain Transactions. Except for the transactions described in this Agreement, the Companies shall not (a) merge or consolidate with, or acquire all or substantially all of the properties and assets of, any other Person, (b) sell, lease or exchange all or any part of its assets and properties to any other Person except for sales of inventory by the Companies in the ordinary course of business; or (c) issue any Stock or other equity interests in the Company; or enter into any agreement, negotiations or discussions with, or encourage, solicit or accept any offers or proposals from, any Person with respect to any of the possible transactions referred to in clause (a), (b) or (c). 6.12 Duties Concerning Covenants and Repre- sentations. Each party to this Agreement shall: (a) use reasonable efforts, subject to the satisfaction of such party's own conditions precedent set forth in Articles 7 or 8, to take all actions and do all things reasonably necessary, proper or advisable to consummate the transactions described in this Agreement; (b) to the extent within its control, use reasonable efforts to cause all of its representations and warranties contained in this Agreement to be true and correct in all material respects on the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date; and (c) use reasonable efforts to obtain any third party consents or approvals required by this Agreement and to cause all of the conditions precedent set forth in Articles 7 and 8 of this Agreement to be satisfied including without limitation: (i) the filing of all materials reasonably required to be filed with (A) the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino Act and to request early termination of the applicable waiting periods under such Law, and (B) the New York Stock Exchange, the Pacific Stock Exchange and the Boston Stock Exchange to request the listings described in Sections 7.11 and 8.9 of this Agreement; and (ii) obtaining the consents or other actions required for the transfer, renewal or reissue to New Owatonna of all licenses, permits, authorizations, contracts and other rights listed under Sections 4.5(a) through 4.5(c) and Section 4.17 of the Disclosure Schedule as requiring the same; provided, however, that the Companies shall not be obligated to incur any 48 expenses in connection with such consents unless the funds therefor are furnished by Chiquita. 6.13 Amendments. The Companies shall not amend their respective Articles of Incorporation or Bylaws and the Partnership not to amend its partnership agreement. 6.14 Dividends; Redemptions; Issuance of Stock. Except as described in the Disclosure Schedule, the Companies shall not (a) issue any additional shares of stock of any class or grant any warrants, options or rights to subscribe for or acquire any additional shares of stock of any class, (b) declare or pay any dividend or make any capital or surplus distributions of any nature, or (c) directly or indirectly redeem, purchase or otherwise acquire, recapitalize or reclassify any of their capital stock or (d) dissolve or liquidate any of the Companies or the Partnership. 6.15 Reporting to Chiquita. The Companies and the Partnership shall (a) promptly deliver to Chiquita interim financial statements of the Companies and the Partnership including such reports, projections and budgets relating to the Companies and the Partnership as are prepared for internal use, and (b) confer with representatives of Chiquita on a regular and frequent basis to report on operational matters and the general status of ongoing operations. 6.16 Blue Sky Approvals. Chiquita will file all documents required to obtain, prior to the Effective Time of the Merger, all necessary approvals under state securities laws, if any, required to carry out the transactions contemplated by this Agreement, will pay all expenses incident thereto and will use its best efforts to obtain such approvals. 6.17 Shareholders Meetings. Each Company shall take all necessary action to convene a meeting of its Shareholders on September 23, 1997 (or such later date as shall be mutually agreed to by the parties hereto) to consider and vote upon the approval of this Agreement and the Merger in compliance with the Minnesota Business Corporation Act. Each Company will (a) recommend by the affirmative vote of all members of its Board of Directors that Shareholders vote in favor of approval of this Agreement and the Merger; and (b) solicit from Shareholders proxies in favor thereof. Chiquita and the Companies will jointly prepare a Private Placement Memorandum/Proxy Statement (the "Private Placement Memorandum") for use in connection with the offering of Chiquita Preferred and Common Shares to Shareholders in connection with the Merger and the solicitation of proxies for said meetings of Shareholders. The Companies will provide for use in, or in connection with the preparation of, the Private 49 Placement Memorandum any and all information in their possession concerning the Companies and the Shareholders which is necessary or desirable, as determined by Chiquita, in order to comply with federal and state securities and other laws applicable to such offering and solicitation, including financial statements of, and other financial information pertaining to, the Companies. In addition, the Companies shall provide for inclusion in the Private Placement Memorandum a description of this Agreement, the transactions contemplated hereby (including the terms of the Merger), the tax and other consequences of the transactions contemplated hereby for the Shareholders and information concerning the meetings of Shareholders to vote on the Merger and the solicitation of proxies for such meetings. Chiquita will provide all other information to be included in the Private Placement Memorandum, including a description of Chiquita's capital stock and risk factors to be considered in making an investment decision in connection with the Merger, Chiquita's Annual Report on Form 10-K for the year ended December 31, 1996, a copy of Chiquita's 1996 Annual Report to Shareholders, a copy of Chiquita's Proxy Statement for its Annual Meeting of Shareholders held on May 14, 1997, a copy of Chiquita's Quarterly Reports on Form 10-Q for the quarters and periods ended on March 31, 1997 and June 30, 1997, and a copy of each periodic or current report Chiquita files with the Securities and Exchange Commission under the Securities Exchange Act of 1934 at any time between the date of this Agreement and the Closing Date (collectively, the "Disclosure Documents"). The Companies will cause the Private Placement Memorandum, the form of Shareholder Agreement and, to the extent not previously furnished, the form of Shareholders Certification to be couriered to all Shareholders as promptly as practicable after the date hereof, and will use all reasonable efforts to obtain fully completed and signed Shareholder Agreements and Certifications prior to the scheduled date of the Shareholders' meetings to consider this Agreement and the Merger. Chiquita shall be solely responsible for determining whether the Private Placement Memorandum, including the extent of information contained in the Private Placement Memorandum, provides the disclosures necessary to satisfy Regulation D under or Section 4(2) of the Act and applicable state "Blue Sky" Laws in connection with the Merger. 6.18 Notice of Dissenting Shareholders. The Companies shall (a) promptly notify Chiquita of all written notices filed by Shareholders pursuant to Section 473 of the Minnesota Business Corporation Act to demand the fair value of Stock owned by them and (b) not enter into any negotiations or settlement with, or make or agree to make any payment to, such Shareholders without the prior written consent of Chiquita. 6.19 No Encouragement of Dissent. The Companies 50 will not, directly or indirectly, encourage or advise any of the Shareholders to exercise, or recommend to the Shareholders that they exercise, their right to dissent from the Merger and demand payment for the value of such Shareholder's shares of Stock pursuant to Section 471 of the Minnesota Business Corporation Act. ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CHIQUITA Each and every obligation of Chiquita to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 7.1 Compliance with Agreement. The Companies shall have performed and complied with, in all material respects, all of their obligations under this Agreement which are to be performed or complied with by them prior to or on the Closing Date. 7.2 Proceedings and Instruments Satisfactory; Shareholders Approval. All proceedings, corporate or other, to be taken in connection with the transactions contemplated by this Agreement by the Companies and the Partnership, and all documents incident thereto, shall be reasonably satisfactory in form and substance to Chiquita. This Agreement and the Merger shall have been approved by the Shareholders of each Company. 7.3 No Litigation. (a) There shall not be threatened, instituted or pending any action or proceeding, before any court or governmental authority or agency, domestic or foreign, (i) challenging or seeking to make illegal , or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the transactions contemplated by this Agreement, the Articles of Merger or the Certificate of Merger or seeking to obtain material damages in connection with such transactions, (ii) seeking to invalidate or render unenforceable any material provision of this Agreement, the Articles of Merger, the Certificate of Merger or any of the Related Agreements, or (iii) otherwise relating to and materially adversely affecting the transactions contemplated hereby or thereby. (b) There shall not be any action taken, or any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement, 51 the Articles of Merger or the Certificate of Merger by any federal, state or foreign court, government or governmental authority or agency, which would reasonably be expected to result, directly or indirectly, in any of the consequences referred to in paragraph (a) above. 7.4 Representations and Warranties of the Companies. The representations and warranties made by the Companies in this Agreement shall be true and correct in all material respects when made and as of the Closing Date with the same force and effect as though said representations and warranties had been made on the Closing Date. 7.5 Material Adverse Change. Between the date of this Agreement and the Closing Date, there shall not have been or occurred any Material Adverse Change. 7.6 Deliveries Prior to or At Closing. At or prior to the Closing, the Companies shall have delivered to Chiquita: (a) a copy of the Articles of Incorporation of each of the Companies, as amended to date, each certified as of a recent date by the Secretary of State of Minnesota; (b) all corporate minute books, stock transfer books, blank stock certificates and corporate seals of the Companies; (c) a certificate of the Secretary of State of Minnesota as to the existence and good standing of each of the Companies, each dated as of a recent date; (d) certificates of the Secretary of each of the Companies certifying to: (i) the accuracy of a copy of the Bylaws of that Company, as amended to date, attached thereto; and (ii) the names of all officers and directors of that Company; (e) a completed and validly executed Shareholders Certification from each of the Shareholders; (f) the Companies Closing Certificates, the Companies Counsel Opinion and the Companies Tax Counsel Opinion; (g) such certificates of the officers of the Company or public officials and other documents as shall be reasonably requested by Chiquita to establish the existence and good standing of the Companies, the due authorization of this Agreement and the transactions contemplated hereby; (h) such affidavits and certificates of the Companies as shall be reasonably requested by the Title Company for it to issue the Title Policy referred to in Section 7.7 in the form described in Article 1, as well as an affidavit of Chadwick S. Lange and Dean Christiansen in the form of the attached Exhibit K to the extent required to issue a non-imputation endorsement with respect to their knowledge concerning the Real Estate; and (i) an Illinois property transfer form sufficient to facilitate the transfer of all the Real Property located in Illinois; the well disclosure statement required pursuant to Minnesota Statues Section 103I.235, Subd. 1(a); the individual sewage treatment system disclosure statement required pursuant to Minnesota Statutes Section 115.55, Subd. 6, disclosing any 52 "individual sewage treatment system[s]" (as defined in Minnesota Statutes Section 115.55, Subd. 1(g)) located on the Real Property; any MPCA storage tank change in ownership notification required pursuant to Minnesota Statutes Section 116.48, Subd. 3; Chiquita's acceptance of the deliveries described in this clause (i) shall not be deemed a waiver by Chiquita of any statutory rights Chiquita may have pursuant to the statutes referred to in this clause (i). 7.7 Real Estate. On or prior to the Closing Date, Chiquita shall have received a Title Commitment from the Title Company on, and a Survey of, each parcel of the Real Estate requested by Chiquita, in each case dated as of a date which is no earlier than 30 calendar days prior to the Closing Date. On the Closing Date, Chiquita shall receive from the Title Company an irrevocable commitment to issue a Title Policy based on a date down of the Title Commitment to the Closing Date on the Real Estate, which shall: (i) be in the amount of the fair market value of the Real Estate of Chiquita's choice for which it has Title Commitments, as reasonably determined by Chiquita; and (ii) insure the Companies' titles to the Real Estate covered by Title Commitments in accordance with the provisions set forth in this Agreement and the Title Commitments. The Title Commitments, the Surveys and the date down of the Title Commitments described in the foregoing shall not disclose the existence of any Lien which is not an Existing Lien as of the date of this Agreement and which would have a Material Adverse Effect. 7.8 Escrow Agreement. The Escrow Agreement shall have been executed by the Escrow Agent and the Shareholders Representatives and delivered to Chiquita. 7.9 Affiliates. All Accounts owed as of June 30, 1997 by a Company or Farmco shall have been recorded in the Closing Financial Statements, and all Accounts owed as of June 30, 1997 by an Affiliate, other than one of the Companies or Farmco, shall have been paid in full. 7.10 Registration Rights Agreement. The Shareholders Representatives shall have executed and delivered to Chiquita the Registration Rights Agreement. 7.11 Listing; Blue Sky. Chiquita shall have received advice from the New York Stock Exchange, the Pacific Stock Exchange and the Boston Stock Exchange that the shares of Chiquita Common Stock to be issued pursuant to this Agreement are approved for listing on such exchanges subject to notice of issuance. Chiquita shall have received all state securities law and commission authorizations necessary to carry out the transactions contemplated by this Agreement. 53 7.12 Amendment of Certificate of Incorporation. The Board of Directors of Chiquita or its Executive Committee shall have adopted an amendment to its Second Restated Certificate of Incorporation as follows: (a) Section IV of such certificate shall have been amended to add a new Subsection F titled "Special Provisions Applicable to Series C Preference Stock," in the form attached hereto as Exhibit C; (b) paragraph (g) of Subsection D of Section IV of such certificate, titled "Equal Rank," shall have been amended to read in its entirety as follows: "(g) Equal Rank. All shares of Series A Preferred Stock shall be identical in all respects, andall shares of Series A Preferred Stock shall be of equal rank with (i) shares of $3.75 Convertible Preferred Stock, Series B, and (ii) $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." (c) paragraph (g) of Subsection E of Section IV of such certificate, titled "Equal Rank," shall have been amended to read in its entirety as follows: "(g) Equal Rank. All shares of Series B Preferred Stock shall be identical in all respects, and all shares of Series B Preferred Stock shall be of equal rank with (i) shares of $2.85 Non-Voting Cumulative Preferred Stock, Series A, and (ii) $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." (d) Either a certificate of amendment or a certificate of restatement of such certificate, reflecting the amendments set forth in paragraphs (a) through (c), shall have been filed in the office of the Secretary of State of the State of New Jersey, pursuant to Section 14A:9-4(5) or Section 14A:9-5(5) of the New Jersey Business Corporation Act. 7.13 Ancillary Agreements. The Consulting Agreement, the Employee and Equipment Leasing Agreement, the Employment Agreement, the Partnership Amendment and the Supply Agreement shall continue to be in full force and effect and 54 shall not have been amended in any respect from the copies thereof delivered to Chiquita pursuant to Section 4.34. 7.14 No Shareholder Dissents. No Shareholder shall have filed with the Companies, and not withdrawn, written notice of intent to demand the fair value of his or her Stock pursuant to Section 471 of the Minnesota Business Corporation Act. 7.15 Receipt of Shareholder Agreements, Shareholders Certifications, Investment Representative Agreements. Chiquita shall have received (i) properly executed and completed Shareholder Agreements and Shareholders Certifications from all Shareholders, and (ii) properly executed and completed Investment Representative Agreements from each investment representative appointed in accordance with a Shareholders Certification. 7.16 Nonoccurrence of Certain Conditions. The following shall not have occurred and be continuing: (a) in the sole judgment of Chiquita, based upon advice of counsel, it would be appropriate to disclose in an amendment or supplement to the Private Placement Memorandum information not otherwise then required by law to be publicly disclosed; and (b) in the sole judgment of Chiquita, such disclosure is likely to interfere with any existing or prospective business situation, transaction or negotiation of Chiquita or any of its subsidiaries or affiliates. 7.17 Consents. The Companies shall have obtained all third party consents or other actions required for the consummation of the transactions contemplated by this Agreement, including the Drop-Down and including the consents or other actions required for the transfer, renewal or reissue to New Owatonna of all licenses, permits, authorizations, contracts and other rights listed under Sections 4.5(a) through 4.5(c) and Section 4.17 of the Disclosure Schedule as requiring the same. Without limiting the generality of the foregoing, Midwest shall have obtained a waiver from Geo. A. Hormel & Company of its right, as a result of the transactions contemplated hereby, to give notice of termination of its Custom Manufacturing Agreement dated January 4, 1988 with Midwest pursuant to the last sentence of the first paragraph 6 of Article XVII thereof. 7.18 Surveys. Chiquita shall be satisfied, in its reasonable discretion, that none of the Surveys of the Real Estate which it has reviewed disclose any matter which would have a Material Adverse Effect. 55 7.19 Leases, etc. Chiquita shall be satisfied, in its reasonable discretion, that it has all leases, licenses, easements, operating agreements and other documents and agreements reasonably necessary to continue to operate the Real Estate in the ordinary course of business, including without limitation the proper agreements with Farmco regarding the real estate formerly owned by the Companies which has been conveyed to Farmco. 7.20 Transfer of Certain Properties. Farmco shall have acquired all of OCC's right, title and interest in, to and under the properties listed on Schedule 5 hereto for an aggregate consideration of $1.00, on a quitclaim basis without any representation or warranty by OCC as to any matter whatsoever and shall have agreed to indemnify OCC and hold it harmless from and against any and all liabilities, including environmental liabilities, associated with such properties or the ownership thereof. 7.21 Real Estate Agreements. Farmco and OCC shall have entered into the Real Estate Agreements. 7.22 Lease Agreement. OCC shall have exercised its option in timely fashion to renew the Lease Agreement between the Partnership and OCC dated November 1, 1977 for a period of five years, commencing on November 1, 1997. 7.23 Fees of Dorsey & Whitney LLP: The Companies shall have received a final statement of the fees and disbursements of Dorsey & Whitney LLP incurred by or for the benefit of the Companies in connection with the Merger or the other transactions contemplated by this Agreement, which statement shall indicate that as of the Closing Date no other fees and disbursements of Dorsey & Whitney LLP have been incurred by or for the benefit of the Companies in connection with the Merger or the other transactions contemplated by this Agreement. The fees and disbursements described in such final statement shall have been recorded in the Closing Financial Statements. ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANIES Each and every obligation of the Companies to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 56 8.1 Compliance with Agreement. Chiquita shall have performed and complied with, in all material respects, all of its obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date. 8.2 Proceedings and Instruments Satisfactory; Shareholders Approval. All proceedings, corporate or other, to be taken in connection with the transactions contemplated by this Agreement by Chiquita, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Companies, and Chiquita shall have made available to the Companies for examination the originals or true and correct copies of all documents which the Companies may reasonably request in connection with the transactions contemplated by this Agreement. This Agreement and the Merger shall have been approved by the Shareholders of each of the Companies. 8.3 No Litigation. (a) There shall not be threatened, instituted or pending any action or proceeding, before any court or governmental authority or agency, domestic or foreign, (i) challenging or seeking to make illegal , or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the transactions contemplated by this Agreement, the Articles of Merger or the Certificate of Merger or seeking to obtain material damages in connection with such transactions, (ii) seeking to invalidate or render unenforceable any material provision of this Agreement, the Articles of Merger, the Certificate of Merger or any of the Related Agreements, or (iii) otherwise relating to and materially adversely affecting the transactions contemplated hereby or thereby. (b) There shall not be any action taken, or any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement, the Articles of Merger or the Certificate of Merger by any federal, state or foreign court, government or governmental authority or agency, which would reasonably be expected to result, directly or indirectly, in any of the consequences referred to in paragraph (a) above. 8.4 Representations and Warranties. The representations and warranties made by Chiquita in this Agreement shall be true and correct in all material respects when made and as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. 8.5 Deliveries at Closing. Chiquita shall have de- livered to the Companies the following documents, each 57 properly executed and dated the Closing Date: (a) the Chiquita Closing Certificate; and (b) the Chiquita Counsel Opinion. Chiquita shall have also delivered to the Companies such certificates and documents of officers of Chiquita and of public officials as shall be reasonably requested by the Companies to establish the existence and good standing of Chiquita and the due authorization of this Agreement and the transactions contemplated by this Agreement by Chiquita. 8.6 Escrow Agreement. The Escrow Agreement shall have been executed by the Escrow Agent and Chiquita and delivered to the Companies. 8.7 Registration Rights Agreement. Chiquita shall have executed and delivered to the Shareholders Representatives the Registration Rights Agreement. 8.8 Chiquita Common and Preferred Shares. Chiquita shall have delivered to the Escrow Agent stock certificates representing that number of Chiquita Common and Preferred Shares having a Value equal to the Initial Merger Consideration in accordance with the terms and conditions of this Agreement. 8.9 Listing; Blue Sky. Chiquita shall have delivered to the Shareholders Representatives evidence that the shares of Chiquita Common and Preferred Stock to be issued pursuant to this Agreement are approved for listing on the New York Stock Exchange, the Pacific Stock Exchange and the Boston Stock Exchange, subject to notice of issuance. Chiquita shall have received all state securities law and commission authorizations necessary to carry out the transactions contemplated by this Agreement. 8.10 Amendment of Certificate of Incorporation. Not later than September 10, 1997, the Board of Directors of Chiquita or its Executive Committee shall have adopted an amendment to its Second Restated Certificate of Incorporation as follows: (a) Section IV of such certificate shall have been amended to add a new Subsection F titled "Special Provisions Applicable to Series C Preference Stock," in the form attached hereto as Exhibit C; (b) paragraph (g) of Subsection D of Section IV of such certificate, titled "Equal Rank," shall have been amended to read in its entirety as follows: 58 "(g) Equal Rank. All shares of Series A Preferred Stock shall be identical in all respects, and all shares of Series A Preferred Stock shall be of equal rank with (i) shares of $3.75 Convertible Preferred Stock, Series B, and (ii) $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." (c) paragraph (g) of Subsection E of Section IV of such certificate, titled "Equal Rank," shall have been amended to read in its entirety as follows: "(g) Equal Rank. All shares of Series B Preferred Stock shall be identical in all respects, and all shares of Series A Preferred Stock shall be of equal rank with (i) shares of $2.85 Non-Voting Cumulative Preferred Stock, Series A, and (ii) $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." (d) Either a certificate of amendment or a certificate of restatement of such certificate, reflecting the amendments set forth in paragraphs (a) through (c), shall have been filed in the office of the Secretary of State of the State of New Jersey, pursuant to Section 14A:9-4(5) or Section 14A:9-5(5) of the New Jersey Business Corporation Act. 8.11 Companies Counsel Tax Opinion. The Companies shall have received the executed Companies Counsel Tax Opinion, dated the Closing Date. 8.12 Shareholder Dissents. No Shareholder shall have filed with the Companies, and not withdrawn, written notice of intent to demand the fair value of his or her Stock pursuant to Section 471 of the Minnesota Business Corporation Act. 8.13 Real Estate Agreements. Farmco and OCC shall have entered into the Real Estate Agreements. 8.14 Consulting Agreement. OCC and Stephens J. Lange shall have entered into the Consulting Agreement. 8.15 Business Name. Farmco and OCC shall have entered into an agreement (in a form reasonably acceptable to counsel for the Companies and Chiquita) providing that Farmco 59 shall have a perpetual, royalty free right to use the name "Festal Farms Co." as a business name. 8.16 Receipt of Shareholder Agreements. Chiquita shall have received properly executed and completed Shareholder Agreements from all Shareholders. ARTICLE 9 INDEMNITIES 9.1 Rights Against Escrow. Subject to the limitations set forth in this Article 9, and, except as set forth in Section 9.3(a), solely by means of reimbursement from the Escrow Funds, Chiquita shall be indemnified and held harmless from and against any and all losses, damages, costs, expenses (including, without limitation, reasonable attorneys' fees and accounting fees and expenses, expenses incurred in discovery proceedings, as witnesses or in preparation for any judicial or administrative proceedings, and any other reasonable costs and expenses such as costs of investigations), liabilities, obligations, deficiencies and claims of any kind after taking account of (i) any insurance proceeds actually received (net of any expense incurred in obtaining such proceeds) and (ii) any current tax benefit actually realized (excluding any alleged benefit from additions to tax loss carryforwards), it being understood that no indemnified party shall have any obligation to claim any such tax benefit or to contest its denial by any governmental authority (collectively, "Losses") which Chiquita and the Companies, or any one or more of them, may at any time suffer or incur, or become subject to, as a result of or in connection with or related to: (a) any breach or inaccuracy of any of the representations and warranties made by the Companies in or pursuant to this Agreement; (b) any failure by the Companies to carry out, perform, satisfy and discharge any of their covenants, agree- ments, undertakings or obligations in this Agreement or under any of the documents and materials executed or to be executed by the Companies pursuant to this Agreement; (c) any disclosure made in Section 4.15 of the Disclosure Schedule pertaining to the exclusion of certain employees from participation in certain employee benefit plans of the Companies; and (d) any suit, action, order, inquiry letter or other proceeding (including administrative proceedings) brought by any Person arising out of, or in any way related 60 to, any of the matters referred to in Sections 9.1(a),9.1(b) or 9.1(c) of this Agreement. 9.2 Indemnity by Chiquita. Subject to the limitations set forth in this Article 9, Chiquita hereby indemnifies and holds each of the Shareholders harmless from and against, and agrees to promptly defend each of the Shareholders from and reimburse each of the Shareholders for, any and all Losses which each of the Shareholders may at any time suffer or incur, or become subject to, as a result of or in connection with or related to: (a) any breach or inaccuracy of any of the representations and warranties made by Chiquita in or pursuant to this Agreement or the Related Documents; (b) any failure by Chiquita to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings or obligations in this Agreement, the Related Documents or under any of the documents and materials executed and delivered or to be executed and delivered by Chiquita pursuant to this Agreement; and (c) any suit, action or other proceeding brought by any Person arising out of, or in any way related to, any of the matters referred to in Sections 9.2(a) or 9.2(b) of this Agreement. 9.3 Provisions Regarding Indemnity. (a) Except as set forth in the next following sentence, the rights to reimbursement from the Escrow Funds under this Article 9 and the Escrow Agreement shall be Chiquita's sole and exclusive remedy with respect to any Losses that Chiquita may suffer, sustain or become subject to pursuant to the terms of this Article 9, and Chiquita agrees that it shall not, and hereby waives all rights to, institute or maintain any suit, proceeding or action against the Shareholders or Shareholders Representatives or utilize or exercise any other legal or equitable remedy for the purpose of recovering damages or other relief with respect to any such Losses (including, without limitation, an action seeking to recover any portion of the purchase price previously paid to the Company's stockholders). The provisions of the preceding sentence shall not apply, or restrict Chiquita's rights and remedies against any Shareholder or Shareholders with respect to (a) any breach or inaccuracy of any Shareholder's respective representations, warranties, agreements (including the agreement to return such Shareholder's proportionate share of any amount due to Chiquita under Section 2.4(a)(ii)) or certifications set forth in (i) a Shareholder Agreement, (ii) a Shareholders Certification, (iii) a letter of transmittal for Certificates, or (iv) a Principal Shareholders Agreement executed and 61 delivered by such Shareholder or (b) any intentional and fraudulent breach or inaccuracy of any of the representations and warranties made by the Companies in or pursuant to this Agreement. Notwithstanding anything to the contrary in this Article 9, Chiquita shall not have the right to recover Losses directly from the Shareholders pursuant to the immediately preceding sentence to the extent Chiquita has recovered such Losses from the Escrow Funds, and Chiquita shall not have the right to recover Losses from the Escrow funds to the extent Chiquita has recovered such Losses directly from the Shareholders pursuant to the immediately preceding sentence. (b) If a claim or demand by a third party is made against an indemnified party, the indemnified party shall promptly notify the indemnifying party of such claim or demand, specifying the nature of such claim or demand and the amount or the estimated amount thereof to the extent then feasibly determinable (which estimate shall not be conclusive of the final amount of such claim and demand) (the "Claim Notice"). The indemnifying party shall have 15 business days from the personal delivery or mailing of the Claim Notice (the "Notice Period") to notify the indemnified party, (A) whether or not it disputes its liability to the indemnified party hereunder with respect to such claim or demand and (B) notwithstanding any such dispute, whether or not it desires, at its sole cost and expense, to defend the indemnified party against such claims or demand. If the indemnifying party fails to undertake the defense of any claim or demand, the indemnified party may undertake such matter at the expense of the indemnifying party. (c) If such claim, demand, action or proceeding is a third party claim, demand, action or proceeding, the indemnifying party will have the right at its expense to assume the defense thereof using counsel reasonably acceptable to the indemnified party. The indemnified party shall have the right to participate, at its own expense, with respect to any such third party claim, demand, action or proceeding. In connection with any such third party claim, demand, action or proceeding the parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. No such third party claims, demand, action or proceeding shall be settled without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld or delayed. It shall be deemed not unreasonable if an indemnified party is unwilling to consent to a settlement in the event that (i) such settlement includes any nonmonetary relief against the indemnified party or (ii) such settlement involves liability to the indemnified party in excess of liability for which the indemnified party is indemnified hereunder. Except in instances where a settlement restricts or negatively impacts 62 the indemnified party or its business after such settlement or results in liability to such party as a result of such settlement in excess of liability for which the indemnified party is indemnified hereunder, if a firm written offer is made to settle any such third party claim, demand, action or proceeding and the indemnifying party proposes to accept such settlement, then: (i) the indemnifying party shall be excused from, and the indemnified party shall be solely responsible for, all further defense of such third party claim, demand, action or proceeding; (ii) the maximum liability of the indemnifying party relating to such third party claim, demand, action or proceeding shall be the amount of the proposed settlement if the amount thereafter recovered from the indemnified party on such third party claims, demand, action or proceeding is greater than the amount of the proposed settlement; and (iii) the indemnified party shall pay all attorneys' fees and legal costs and expenses incurred after rejection of such settlement by the indemnified party. Notwithstanding the foregoing, the provisions of Sections 12.1 and 12.2 shall control with respect to the defense of any Tax audit or proceeding. (d) In the event an indemnified party should have a claim against the indemnifying party hereunder that does not involve a claim or demand being asserted against or sought to be collected from it by a third party, the indemnified party shall promptly send a Claim Notice with respect to such claim to the indemnifying party. If the indemnifying party does not notify the indemnified party within the Notice Period that it disputes such claim, the amount of such claim specified in a Claim Notice shall be conclusively deemed a liability of the indemnifying party hereunder. (e) (i) Chiquita shall not have the right to assert any claim for reimbursement from the Escrow Funds pursuant to Section 9.1(a) or (d) of this Agreement in respect of any breach or inaccuracy of any of the representations set forth in this Agreement, unless and until the aggregate amount of Losses suffered by Chiquita and the Companies is equal to or exceeds $300,000, in which event Chiquita shall be entitled to reimbursement from the Escrow Funds for all such Losses. Solely for purposes of the indemnification sections of this Agreement, the qualifications of certain representations and warranties as to materiality shall be disregarded for purposes of determining the amount of Losses suffered by Chiquita and the Companies as a result of a breach. (ii) Chiquita shall not have the right to assert any claim for reimbursement from the Escrow Funds pursuant to Section 9.1(a) or 9.1(d)(insofar as it relates to Section 9.1(a)) in respect of any breach or inaccuracy of any 63 of the representations and warranties set forth in Section 4.18 or any breach or inaccuracy of any of the other representations and warranties herein (including, without limitation, Section 4.13) which breach or inaccuracy relates to an environmental matter (collectively, "Environmental Losses") unless such Environmental Losses exceed $100,000, in which case Chiquita shall have the right to reimbursement only to the extent Environmental Losses exceed $100,000. Chiquita shall have no right to recover, in the aggregate, Environmental Losses in excess of $2,500,000. (f) All representations and warranties of the parties contained in this Agreement or made pursuant to this Agreement, and the right of an indemnified party to receive indemnity provided for breach of representations and warranties pursuant to Section 9.1(a) of this Agreement, shall survive the Closing Date and the consummation of the transactions contemplated by this Agreement, shall not be affected by any examination made for or on behalf of Chiquita or by the knowledge of any of Chiquita's officers, directors, shareholders, employees or agents, and shall terminate and be of no further force and effect at 11:59 P.M. Central Time on the first anniversary of the Closing Date, except that (i) the representations and warranties of the Companies in Section 4.18 and Chiquita's right to indemnification for a breach of such representations and warranties shall survive the Closing Date until 11:59 P.M. Central Time on the second anniversary of the Closing Date, and (ii) the representations and warranties of the Companies in Section 4.20 and Chiquita's right to indemnification for a breach of such representations and warranties shall survive the Closing Date in accordance with Section 12.1. (g) The termination of the rights of an indem- nified party to receive indemnity as provided for in Section 9.3(f) of this Agreement shall not affect any Person's right to prosecute to conclusion any Claim properly made by that Person pursuant to this Article 9 prior to the time that the relevant right of indemnity terminates. (h) Any claim or demand hereunder with respect to any environmental cleanup, remediation or removal activity involving a matter for which the indemnified party has sent a Claim Notice shall be limited to amounts reasonably related to attainment of federal or state cleanup requirements established pursuant to Environmental Laws. The indemnifying party shall have the right, at its own expense, to be consulted with regard to selection of any cleanup or removal remedy, provided that its comments, if any, shall not be unreasonably delayed. (i) The provisions of this Section 9.3 shall 64 not apply to any claims Chiquita may have for reimbursement from the Escrow Funds for or in respect of Taxes, which shall be governed by the provisions of Article 12. (j) For purposes of the provisions of this Section 9.3, in the case of claims relating to the indemnity of Chiquita pursuant to Section 9.1, the "indemnifying party" shall mean Shareholders Representatives. Any notices required to be delivered by Chiquita to the Shareholders Representatives as the "indemnifying party" shall also be delivered by Chiquita to the Escrow Agent. The parties agree that such the identification of Shareholders Representatives as the "indemnifying party" is solely for purposes of the notice and other procedures regarding the indemnification of Chiquita. (k) The parties acknowledge and agree that in exchange for a reduction of $800,000 in the Net Book Value of the Companies used for purposes of determining Total Merger Consideration, Chiquita has agreed to assume all liabilities and obligations relating to the matters described under Section 4.18 of the Disclosure Schedule and shall have no right of indemnification under this Article 9 or reimbursement from the Escrow Funds for any such matters. ARTICLE 10 OBLIGATIONS OF CHIQUITA AFTER THE CLOSING DATE 10.1 Current Public Information. Chiquita shall file with the Commission all reports required to be filed therewith pursuant to the Securities Exchange Act of 1934, as amended, including without limitation, all quarterly and annual reports. Upon any request therefor by the Shareholders Representatives, Chiquita shall provide the Shareholders Representatives with copies thereof promptly after the filing thereof. 10.2 Removal of Legend. The legend on the stock certificates representing the shares of Chiquita Common and Preferred Stock to be delivered to the Shareholders described in Section 2.3 of this Agreement may be removed (a) upon a sale of such shares pursuant to a registration effected as described in the Registration Rights Agreement, (b) for Persons who are not affiliates of Chiquita, as reasonably determined by Chiquita under the Act, on and after a date which is two years after the Closing Date, and (c) on and after a date which is one year after the Closing Date if and to the extent that such shares are sold in full compliance with Rule 144 under the Act and if the Shareholder delivers to Chiquita an opinion of Dorsey & Whitney LLP, or other counsel reasonably acceptable to Chiquita, to the effect that such 65 shares may be sold by such Shareholder without registration under the Act pursuant to Rule 144 promulgated under the Act. 10.3 Access to Books and Records. Chiquita agrees that the Shareholders Representatives may have reasonable access to, and the right to copy at their expense, the books and records of the Companies and the Partnership relating to the Companies and matters or events arising prior to the Closing Date relating to the Companies or the Partnership or the Shareholders. Such access shall be at the place where such books and records are regularly maintained by New Owatonna, shall be during normal business hours and shall not unreasonably interfere with the normal business operations of New Owatonna. Chiquita shall cause New Owatonna to maintain such books and records for at least three years after the Closing and thereafter to give the Shareholders Representatives at least 90 days notice of any intent to destroy or dispose of such books and records and provide the Shareholders Representatives an opportunity to take custody thereof during such 90 day period. 10.4 Employee Benefits. Chiquita shall directly or indirectly cause each of the tax qualified defined benefit pension plans and the tax qualified defined contribution profit sharing plans maintained by any of the Companies for the benefit of their employees to continue in existence for a period of two years after Closing (or for the shorter maximum period that such plans can so operate and retain their tax qualified status) for the benefit of those employees participating in such plans at the time of the Closing for so long as they continue to be employed by the Companies during such period. During such period, participants shall continue to accrue benefits to such defined benefit plans and the employers shall continue to contribute to such defined contribution plans on a basis substantially consistent with past practice. Nothing in this Section 10.4 shall be deemed to confer upon any employee a right of continued employment or to restrict the right of the Companies to make amendments to such plans after the Closing that are not inconsistent with the provisions of this Section 10.4. 10.5 Further Issuances of Chiquita Preferred Shares. Chiquita shall not issue or reissue any Chiquita Preferred Shares other than pursuant to the terms of this Agreement. ARTICLE 11 INTERCOMPANY ARRANGEMENTS Any Tax allocation agreement or arrangement which, prior to the date of this Agreement, may have existed between any of 66 (i) the Companies, (ii) the Partnership, (iii) any of the Shareholders, (iv) any Affiliates of the Companies, the Partnership or any of the Shareholders, or (v) any other person shall be terminated prior to the date of this Agreement, without further obligation or liability (including, but not limited to, any obligation or liability for Taxes) of any of the Companies or the Partnership or Chiquita. ARTICLE 12 TAX MATTERS 12.1 Chiquita's Right to Reimbursement. Solely by means of reimbursement from the Escrow Funds, Chiquita shall be indemnified and held harmless from and against all Taxes (including, without limitation, audits by any governmental authorities) (a) with respect to any periods ending on or prior to June 30, 1997 ( each a "Pre-Cutoff Period"), (b) with respect to any period beginning before June 30, 1997 and ending after June 30, 1997, but only with respect to the portion of such period up to and including June 30, 1997 (such portion, a "Pre-Cutoff Partial Period"), or (c) with respect to any period up to and including the Closing Date, of any entity, other than the Companies and the Partnership, which is or has been affiliated with the Companies or the Partnership, as a result of Treasury Regulation Section1.1502-6(a) or otherwise due to the affiliated relationship. Chiquita's right to reimbursement under this Section (whether arising before, on or after the Closing and whether paid with returns when due or as the result of audits or assessments) shall be after the application (only if required to be applied to the Tax being indemnified) of all applicable credits, net operating or capital loss deductions related to any of the Companies or the Partnership, which credits, net operating or capital loss deductions arose in the period ending on or prior to June 30, 1997 or in the Pre-Cutoff Partial Period and are available to reduce the Tax deficiency for which Chiquita has a right to reimbursement. In addition to the foregoing, Chiquita shall have the right to reimbursement from the Escrow Funds for any and all attorneys' fees and expenses incurred by Chiquita with respect to the matters covered by such indemnity and/or enforcement thereof. Notwithstanding any provision to the contrary to this Article 12, Chiquita shall have no right to reimbursement to the extent of any Tax provided for in the Closing Financial Statements. Chiquita's right to reimbursement from the Escrow Funds shall be Chiquita's sole and exclusive remedy with respect to any Taxes described in the foregoing paragraph. Chiquita agrees that it shall not, and hereby waives all rights to, institute or maintain any suit, proceeding or action against 67 the Shareholders or Shareholders' Representatives or utilize or exercise any other legal or equitable remedy for the purpose of recovering damages or other relief with respect to any such Taxes (including, without limitation, an action seeking to recover any portion of the purchase price previously paid to the Shareholders). Chiquita shall have no right to reimbursement from the Escrow Funds with respect to Taxes unless it notifies the Shareholders Representatives and the Escrow Agent on or before the date of expiration of the applicable statute of limitations of a claim for reimbursement relating to actual liability for such Taxes. 12.2 Chiquita Indemnity. Chiquita and the Companies will indemnify and hold harmless the Shareholders from and against (i) all Taxes with respect to periods beginning after June 30, 1997; (ii) all taxes with respect to any period beginning before June 30, 1997 and ending after June 30, 1997, but only with respect to Taxes attributable to the period after June 30, 1997; (iii) all Taxes attributable to and arising out of any transaction directed to occur by Chiquita after Closing even if such transaction occurs on the Closing Date; and,(iv) all Taxes for which adequate provision was made in the Closing Financial Statements. 12.3 Allocation Between Partial Periods. For purposes of this Agreement, any Taxes for a period beginning before June 30, 1997 and ending after June 30, 1997 shall be apportioned between the Pre-Cutoff Partial Period and the period following June 30, 1997 (a "Post-Cutoff Partial Period"), based, in the case of real and personal property Taxes, on a per diem basis with respect to Taxes payable in the respective periods, and, in the case of other Taxes, on the actual activities, taxable income or taxable loss of the Companies and the Partnership during such Pre-Cutoff Partial Period and such Post-Cutoff Partial Period. 12.4 Filing of Tax Returns. To the extent permitted by Law, the Shareholders shall include the Companies and the Partnership in the federal and state income tax returns of the Shareholders and the consolidated or unitary state income tax returns filed by the Shareholders or the Companies or the Partnership, consistent with past practices, for periods prior to and including the Closing Date and shall include the activity of the Companies and the Partnership up through and including the Closing Date in such returns. The returns shall be prepared by the Shareholders' Representatives and Hutton Nelson & McDonald LLP, on a basis consistent with past practices and shall not make or change any election applicable to any of the Shareholders or the Partnership without Chiquita's written consent (which shall not be unreasonably withheld or delayed). The Companies shall pay fees in the amount of $15,000 to Hutton Nelson & McDonald LLP on the 68 Closing Date as full payment for the engagement of Hutton Nelson & McDonald LLP to prepare such returns. The Shareholders Representatives shall provide Chiquita with separate pro forma returns for the Companies and the Partnership not less than thirty (30) days prior to the filing date or the expiration of any permissible extension thereof and accommodate reasonable comments made by Chiquita within fifteen (15) days after the delivery of such proforma returns to the Shareholders. Chiquita shall sign and timely file such Tax returns with the appropriate taxing authorities. The Shareholders Representatives, with the assistance of the Shareholders, shall prepare books and working papers (including a closing of the books) which will clearly demonstrate the income and activities of each Company for the period ending on the Closing Date and any partial period ending on the Closing Date. Chiquita shall include the activity of the Companies for periods beginning after the Closing Date in the consolidated federal income tax return filed by Chiquita. As set forth in this Agreement in more detail below, the Shareholders Representatives shall prepare any and all final Tax Returns of the Companies and the Partnership for taxable periods which ended on or prior to the Closing Date (other than federal and state income tax returns) (hereinafter the "Final Pre-Closing Period Other Tax Returns"). The Shareholders Representatives shall prepare and file all such Final Pre-Closing Period Other Tax Returns on a basis consistent with the Tax returns of the Companies and the Partnership for all previous years. Notwithstanding the foregoing, with respect to the Final Pre-Closing Period Other Tax Returns, to the extent there are any new elections to be made by any of the Companies or the Partnership or tax return positions with respect to new issues to be taken by any of the Companies or the Partnership which have not been previously addressed in any of the Companies' or the Partnership's prior tax returns, the Shareholders Representatives shall give Chiquita notice of such event and Chiquita shall be entitled to instruct the Shareholders as to whether or not to make any such elections or take any such tax return position in the Final Pre-Closing Period Other Tax Returns that the Shareholders Representatives are preparing. The Shareholders Representatives shall deliver each Final Pre-Closing Period Other Tax Return to Chiquita no later than thirty (30) days prior to the due date of such return or any permissible extension thereof for Chiquita's review. Chiquita shall review, approve (which approval may not be unreasonably withheld), sign and timely file such Tax return with the appropriate taxing authority. Chiquita or the Companies shall be responsible for and shall make the payment of any remaining 69 taxes due with the return, if any; provided, however, if Chiquita shall object to the return as prepared, Chiquita shall so notify the Shareholders Representatives in writing no later than fifteen (15) days after such return has been delivered to Chiquita as to the nature of such objection. If the parties are unable to resolve their differences regarding the preparation of the return, the Companies' accountants shall review the returns and any related workpapers and position papers of the parties and decide how the tax return should properly be filed, provided that the Companies' accountants shall take into account that such returns must be prepared on a basis consistent with prior tax returns subject to any elections by Chiquita pursuant to the immediately preceding paragraph. The determination of the Companies' accountants shall be binding on the parties. Notwithstanding anything in this Agreement to the contrary, if Chiquita or any of the Companies or the Partnership files any return which is inconsistent with the return as prepared by the Shareholders Representatives, as mutually agreed by the Shareholders Representatives and Chiquita, or as determined by the Companies' accountants, as the case may be, Chiquita shall no longer have any right to reimbursement pursuant to this Agreement with respect to any Taxes or other damages arising out of, or related to, the item or issues so altered on such tax return. Chiquita shall prepare and file all other Tax returns of the Companies and the Partnership which have not yet been filed prior to the Closing Date and shall be responsible for and make any remaining tax payments due with such returns, if any. Any expenses incurred by the parties in connection with the use of the Companies' accountants in connection with a resolution of a dispute under this Article shall be shared equally by Chiquita and the Shareholders. The portion of those expenses payable by the Shareholders shall be paid initially by Chiquita, subject to a right of Chiquita to reimbursement for such expenses thereafter: first from the Expenses Funds; second, in the event the Expenses Funds are exhausted, from the Initial Payment Funds; and third, in the event the Initial Payment Funds are exhausted, from the Shareholders in accordance with their respective Shareholder's Shares. 12.5 Post-Closing Audits. (a) Notwithstanding anything in this Agreement to the contrary, Chiquita shall have the right to assume the defense of any tax audit, proposed adjustment or claim made by the IRS or other taxing authority which will or could affect the tax liabilities of the Companies or the Partnership ("Tax Claims"). If Chiquita receives a notice or written inquiry from the IRS or other 70 taxing authority as to a Tax Claim, notice of such fact shall be promptly communicated to the Shareholders Representatives. Conversely, if one or more Shareholders receive a notice or written inquiry from the IRS or other taxing authority as to a Tax Claim, notice of such fact shall be promptly communicated to Chiquita. (b) Notwithstanding the provisions of subsection (a) of this Section, the Shareholders Representatives shall have the right, at their expense, to appoint such counsel and accountants deemed necessary by the Shareholders Representatives to consult with and remain advised by Chiquita in any contest of a Tax Claim and, to the extent requested by Chiquita and at the expense of the Shareholders Representatives, they shall cooperate with and assist Chiquita in the contest of any such Tax Claim. In connection therewith, Chiquita shall consider, in good faith, the written advice of such counsel and accountants together with the risk to which following such advice may result in an adverse judgment or decision. Notwithstanding the foregoing, Chiquita shall have the final authority to determine all matters in connection with the contest of any such Tax Claim; provided, however, that (i) Chiquita shall not settle any Tax Claim and thereafter seek reimbursement from the Escrow Funds unless the Shareholders Representatives shall have jointly consented to such settlement, which consent shall not be unreasonably withheld, and (ii) if (1) Chiquita determines not to accept a monetary settlement of any such Tax Claim following Chiquita receipt of written notice from the Shareholders' Representatives requiring Chiquita's acceptance of such a settlement for an amount (the "Tax Settlement Amount") acceptable to the Shareholders and the IRS or any other taxing authority, (2) such determination by Chiquita is not based, at least in part, on Chiquita's good faith decision that such a settlement may be prejudicial as a precedent to the general affairs, business, prospects, properties, financial position, results of operation or net worth of Chiquita or the Companies or the Partnership, and (3) a settlement or judgment in excess of the Tax Settlement Amount is thereafter rendered against Chiquita, the Company or any of the respective officers or directors, no claim for reimbursement from the Escrow Funds under Section 12.1 may thereafter be made with respect to such Tax Claim against the Shareholders in excess of the Tax Settlement Amount consented to by the Shareholders Representatives and Chiquita shall indemnify and hold the Shareholders Representatives harmless with respect to any such excess amount and any other costs associated therewith. (c) After the Closing, Chiquita will not (nor will Chiquita cause any of the Companies or the Partnership to) file any amended Tax returns or claims for refunds for the 71 Companies or the Partnership for any Tax periods ending on or before the Closing Date without the prior written consent of the Shareholders Representatives, which consent will not be unreasonably withheld; provided, however, that if the Shareholders Representatives consent to the filing of an amended return, and such amended return creates additional tax liability for the Shareholders, Chiquita shall seek reimbursement from the Escrow Funds only if in Chiquita's good faith judgment the failure to file such an amended return could cause a penalty under federal or state laws or regulations to be imposed on any of the Companies or the Partnership, and in all other cases, the Companies shall be responsible for such additional tax liability and will indemnify and hold the Shareholders harmless with respect thereto and any other costs associated therewith. 12.6 Closing Date Tax Balance Sheets. No later than thirty (30) days after the Companies file their federal income tax return for the tax period ending on the Closing Date, the Shareholders shall deliver to Chiquita copies of the respective federal income tax balance sheets of each of the Companies and the Partnership as of the Closing Date setting forth (a) the tax bases of the Companies' and the Partnership's assets and liabilities which were used in the preparation of the Shareholders', the Companies' and the Partnership's federal and state income tax returns for the tax period ending on or including the Closing Date; (b) the deferred tax workpapers reflecting the conversion of the book balance sheets of the Companies and the Partnership as of such date to such tax balance sheets; and (c) such other schedules and information used in the preparation of the state, and federal income tax returns of the Companies and the Partnership for such period. 12.7 Cooperation. The Shareholders Representatives, on the one hand, and Chiquita, the Companies and the Partnership, on the other hand, agree to furnish or cause to be furnished to each other upon request, as promptly as practicable, such information, records and assistance (including access to books and records) relating to any of the Companies and the Partnership as is reasonably necessary for the preparation of any return for Taxes, audit, examination or claim for refund, and the prosecution or defense of any claim, suit or proceeding relating to any proposed Tax adjustment. Such assistance shall include making employees available on a mutually convenient basis to provide additional information and explanation of any material to be provided hereunder and shall include furnishing to or permitting the copying by the requesting party of any records, returns, schedules, documents, workpapers or other relevant materials which might reasonably be expected to be of use in connection 72 with such return, audit, examination or proceedings. The party requesting assistance hereunder shall reimburse the party whose assistance is requested for the reasonable out-of- pocket expenses incurred by it in providing such assistance, but shall not be required to reimburse the party providing such assistance with respect to time of employees made available pursuant to this Section. 12.8 Refunds. Any Tax refunds received by Chiquita or the Companies after the Closing Date for which accruals were made on the Closing Balance Sheets shall be the property of Chiquita and the Companies. All other Tax refunds received by Chiquita or the Companies that relate to Tax periods or portions thereof ending on or before the Closing Date shall be deposited in the Escrow Funds, net of expenses incurred in securing said refunds. ARTICLE 13 TERMINATION; MISCELLANEOUS 13.1 Termination; Termination Fee. (a) This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing whether before or after approval of the Merger by the Shareholders of the Companies, as follows: (a) by mutual written agreement of the Companies and Chiquita; (b) by either the Companies or Chiquita if the Closing has not occurred on or before October 15, 1997; provided, however, that if a condition contemplated by Section 7.16 occurs and is continuing, none of the parties shall have the right to terminate this Agreement until the earlier of (x) November 15, 1997, or (y) the date which is seven days after such condition ceases to exist in the event that no amendment or supplement is made to the Private Placement Memorandum as a result of the circumstances giving rise to such condition and until the date which is 21 days after such condition ceases to exist and the parties have finalized such amendment or supplement in the event that such an amendment or supplement is made. (b) If: (i) all of the conditions precedent to the Companies' obligations set forth in Article VIII are satisfied except the condition set forth in Section 8.12 and/or the condition set forth in Section 8.16, (ii) Chiquita is willing to waive in writing the conditions set forth in Section 7.14 and 7.15(i), and (iii) this Agreement terminates because the Companies do not waive the conditions set forth in Section 8.12 and/or Section 8.16, as the case may be, then: 73 (A) if a Change of Control (as defined below) occurs within one year after the termination of this Agreement, the Companies will immediately after such Change of Control pay to Chiquita an aggregate amount of $3,000,000 in immediately available funds, or (B) if a Change of Control occurs more than one year, but less than two years, after the termination of this Agreement, the Companies will immediately after such Change of Control pay to Chiquita an aggregate amount of $1,000,000 in immediately available funds. Any payments required by this Section 13.1(b) will be the joint and several obligation of the Companies. For the purposes of this Section 13.1(b), "Change of Control" means any transaction or series of transactions resulting in: (1) the acquisition by any person (other than a Shareholder or one of the Companies), or any affiliated group of persons (other than one or more Shareholders or Companies), of the beneficial ownership of more than 50% of the voting Stock of one or more of the Companies or more than 50% of the voting and non-voting Stock of one or more of the Companies, (2) any merger of one or more of the Companies with or into, or any consolidation of one of more of the Companies with, another corporation or other entity (other than a merger or consolidation in which at least 80% of the equity of the resulting corporation or entity is owned by the Shareholders of the merging or consolidating Company or Companies), or (3) the sale by one or more of the Companies of all or substantially all of its or their assets (other than sales of assets between or among the Companies). 13.2 Rights on Termination; Waiver. If this Agreement is terminated pursuant to Section 13.1 of this Agreement, all further obligations of the parties under or pursuant to this Agreement shall terminate without further liability of any party to the others, provided that: (a) the obligations of the parties under the Confidentiality Agreement, the Temporary Access Agreement and Section 13.4 of this Agreement shall survive any such termination; and (b) notwithstanding any other provision in this Agreement to the contrary, each party to this Agreement shall retain any and all remedies which it may have for breach of contract provided by Law based on another party's failure to comply with the terms of this Agreement. If any of the conditions set forth in Article 7 of this Agreement have not been satisfied, Chiquita may nevertheless elect to proceed with the consumma- tion of the transactions contemplated by this Agreement and if any of the conditions set forth in Article 8 of this Agreement have not been satisfied, the Companies may nevertheless elect to proceed with the consummation of the transactions 74 contemplated by this Agreement. Any such election to proceed shall be evidenced by a certificate signed by the waiving party which shall include an express waiver of such condition. 13.3 Entire Agreement; Amendment. This Agreement and the documents referred to in this Agreement and required to be delivered pursuant to this Agreement constitute the entire agreement among the parties pertaining to the subject matter of this Agreement, and supersede the Letter of Intent and all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 13.4 Expenses. Whether or not the transactions contemplated by this Agreement are consummated, Chiquita, the Companies and the Shareholders shall pay the costs, fees and expenses of their respective counsel, accountants, brokers, consultants, investment bankers and other experts incident to the negotiation and preparation of this Agreement and consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, Chiquita shall be responsible for expenses incurred as a result of, filing fees related to compliance with the Hart-Scott-Rodino Act (15 U.S.C. Section 18A) and the regulations promulgated thereunder, the expenses of obtaining the Surveys, the Title Commitment and the Title Policy, the fees of Hutton Nelson & McDonald LLP in connection with preparing the Closing Financial Statements, actuarial fees not to exceed $8,000 for reviews of the Employee Benefit Plans required in order for Hutton Nelson and McDonald LLP to render its opinion with respect to the Closing Financial Statements, and the fees of the Escrow Agent. Except for the fees and expenses described in the immediately preceding sentence, all other fees, expenses or transaction costs incurred by or for the benefit of the Companies on or before the Closing Date, including the attorneys fees of Dorsey & Whitney LLP and the accountants fees of Hutton Nelson and McDonald LLP for representation on or before the Closing Date, shall be recorded in the Closing Financial Statements. Any such fees, expenses and transaction costs incurred by or for the benefit of any of the Companies 75 on or before the Closing Date and not recorded in the Closing Financial Statements shall be considered expenses of the Shareholders and shall be paid out of the Expenses Funds. 13.5 Indemnification. Chiquita agrees to cause New Owatonna to agree, effective as of the Closing Date, to indemnify each and every person who is at the date hereof a director or officer of OCC against any and all liabilities arising out of such person's service in such capacity or capacities prior to the Closing Date to the extent set forth in Subdivision 2 and Subdivision 3 of Section 521 of the Minnesota Business Corporation Act, regardless of whether Section 521 of the Minnesota Business Corporation Act is by its terms applicable to such director or officer after the Closing Date. 13.6 Governing Law. This Agreement shall be construed and interpreted according to the Laws of the State of Ohio. 13.7 Assignment. (a) Prior to the Closing, this Agreement may not be assigned by the Companies, except with the prior written consent of Chiquita. (b) Prior to the Closing, this Agreement may not be assigned by Chiquita, except: (i) with the prior written consent of the Companies; or (ii) if the assignee is a wholly-owned Subsidiary of Chiquita and Chiquita remains fully liable to the Companies and the Shareholders under this Agreement and Chiquita delivers a copy of the assignment to the Shareholders Representatives. 13.7 Notices. All communications or notices required or permitted by this Agreement shall be in writing and shall be deemed to have been given at the earlier of the date when actually delivered to an officer of a party by personal delivery or telephonic facsimile transmission or when deposited in the United States mail, certified or registered mail, postage prepaid, return receipt requested, and addressed as follows, unless and until any of such parties notifies the others in accordance with this Section of a change of address: If to the Companies: Owatonna Canning Company 900 North Cedar Avenue Owatonna, MN 55060 Attention: Chadwick S. Lange 76 Fax No. 507-451-5607 with a copy to: Phillip H. Martin, Esq. Dorsey & Whitney LLP 220 South Sixth Street Minneapolis, MN 55402-1498 Fax No. 612-340-8827 If to Chiquita: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, OH 45202 Attention: Steven G. Warshaw President and Chief Operating Officer Fax No. 513-784-8856 with a copy to: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, OH 45202 Attention: Robert W. Olson, Esq. Senior Vice President, General Counsel and Secretary Fax No. 513-784-6691 If to the Shareholders Representatives: (at the address set forth below his or her name on this List of Shareholders attached to this Agreement as Schedule 1) 13.8 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 13.9 Interpretation. Unless the context requires otherwise, all words used in this Agreement in the singular number shall extend to and include the plural, all words in the plural number shall extend to and include the singular, and all words in any gender shall extend to and include all genders. The phrase "relevant date of reference" shall refer 77 to either the date of this Agreement or the Closing Date, as the case may be, or any other date as of which an inquiry regarding the subject matter of the relevant provision of this Agreement is made. 13.10 Severability. If any provision, clause, or part of this Agreement, or the application thereof under certain circumstances, is held invalid, the remainder of this Agreement, or the application of such provision, clause or part under other circumstances, shall not be affected thereby unless such invalidity materially impairs the ability of the parties to consummate the transactions contemplated by this Agreement. 13.11 Specific Performance. The parties agree that the assets and business of the Companies and the Partnership as a going concern constitute unique property. There is no adequate remedy at Law for the damage which any party might sustain for failure of the other parties to consummate the transactions contemplated by this Agreement, and accordingly, each party shall be entitled, at its option, to the remedy of specific performance to enforce the consummation of the transactions described in this Agreement. 13.12 No Reliance. Except for the parties to this Agreement and any assignees permitted by Section 13.7 of this Agreement: (a) no Person is entitled to rely on any of the representations, warranties and agreements of the parties contained in this Agreement; and (b) the parties assume no liability to any Person because of any reliance on the repre- sentations, warranties and agreements of the parties contained in this Agreement. 78 13.13 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other parties may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of Merger to be duly executed as of the day and year first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By /s/ Robert W. Olson Robert W. Olson Senior Vice President, General Counsel and Secretary Attest: /s/ Donna K. Leonard Donna K. Leonard, Assistant Secretary OWATONNA CANNING COMPANY By /s/ Chadwick S. Lange Chadwick S. Lange President OLIVIA CANNING COMPANY By /s/ Chadwick S. Lange Chadwick S. Lange President MIDWEST FOODS, INC. By /s/ Stephens J. Lange Stephens J. Lange President 79 GOODHUE CANNING COMPANY By /s/ Stephens J. Lange Stephens J. Lange President /s/ Chadwick S. Lange Chadwick S. Lange* /s/ Karen E. Lange Karen E. Lange* /s/ Richard Jackson Richard Jackson* /s/ Ann Jackson Ann Jackson* *Solely in their capacities as Shareholder Representatives. 80 EX-3.1 3 EXHIBIT 3.1 FILED SEPTEMBER 23, 1997 LONNA R. HOOKS SECRETARY OF STATE SECOND CERTIFICATE OF AMENDMENT TO THE SECOND RESTATED CERTIFICATE OF INCORPORATION OF CHIQUITA BRANDS INTERNATIONAL, INC. To: Secretary of State State of New Jersey Pursuant to the provisions of N.J.S. 14A:7-2(2) and 14A:9-1, the undersigned corporation, Chiquita Brands International, Inc. (the "Corporation"), executes the following Second Certificate of Amendment to its Second Restated Certificate of Incorporation (the "Certificate of Incorporation"). 1. The name of the corporation is Chiquita Brands International, Inc. 2. The following resolutions, establishing and designating a new series of shares and fixing and determining the relative rights and preferences thereof, were duly adopted by the Executive Committee of the Board of Directors of the Corporation as of the 5th day of September, 1997, pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation, exercised on behalf of the Board of Directors by the Executive Committee pursuant to resolutions of the Board of Directors so authorizing it to act: RESOLVED, that pursuant to the authority expressly vested in the Executive Committee by resolution of the Board of Directors dated May 16, 1990 and pursuant to the Corporation's Second Restated Certificate of Incorporation, as amended, the Executive Committee hereby classifies One Hundred Thousand (100,000) shares of the Corporation's Voting Cumulative Preference Stock, without nominal or par value, as a new series designated "$2.50 Convertible Preference Stock, Series C" (the "Series C Preference Stock"). RESOLVED, that the terms and conditions of the Series C Preference Stock, including its rights, preferences, privileges, voting powers, restrictions, qualifications, limitations, and other terms and conditions shall be as set forth in Exhibit 1 attached hereto. RESOLVED, that the Corporation's Second Restated Certificate of Incorporation, as amended, is further amended as follows: (a) Section IV of such certificate is amended to add a new Subsection F titled "Special Provisions Applicable to Series C Preference Stock," in the form attached hereto as Exhibit 1; (b) Paragraph (g) of Subsection D of Section IV of such certificate titled "Special Provisions Applicable to Series A Preferred Stock" is amended to read in its entirety as follows: "(g) Equal Rank. All shares of Series A Preferred Stock shall be identical in all respects, and all shares of Series A Preferred Stock shall be of equal rank and on a parity with shares of $3.75 Convertible Preferred Stock, Series B, and $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." (c) Paragraph (g) of Subsection E of Section IV of such certificate titled "Special Provisions Applicable to Series B Preferred Stock" is further amended to read in its entirety as follows: "(g) Equal Rank. All shares of Series B Preferred Stock shall be identical in all respects, and all shares of Series B Preferred Stock shall be of equal rank and on a parity with shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A, and $2.50 Convertible Preference Stock, Series C, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation." and the officers of the Corporation are authorized to execute and file, as necessary, any documents or certificates with the New Jersey Secretary of State to effect such amendments. 4. The resolutions set forth in numbered paragraph 2 were adopted by unanimous written consent of the Executive Committee of the Board of Directors as of September 5, 1997. 5. The Certificate of Incorporation is further amended so that the designation and number of shares of each class and series acted upon in the resolutions, and the relative rights, preferences and limitations of each such class and series are as stated in Exhibit 1 attached hereto, which is the same exhibit referred to in the foregoing resolutions. IN WITNESS WHEREOF, the undersigned has signed this Second Certificate of Amendment to the Certificate of Incorporation this 5th day of September, 1997. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ Robert W. Olson Robert W. Olson Senior Vice President, General Counsel and Secretary SUBSECTION F. SPECIAL PROVISIONS APPLICABLE TO SERIES C PREFERENCE STOCK There is hereby established a series of the Corporation's Voting Cumulative Preference Stock, without nominal or par value, which shall be designated "$2.50 Convertible Preference Stock, Series C" ("Series C Preference Stock") and shall consist of One Hundred Thousand (100,000) shares, and no more. The relative, participating, optional and other special rights and the qualifications, limitations and restrictions of the Series C Preference Stock shall be as follows: (a) Dividends. (i) The holders of outstanding shares of the Series C Preference Stock shall be entitled to receive (subject to the rights of holders of shares of (a) $2.875 Non-Voting Cumulative Preferred Stock, Series A, (b) $3.75 Convertible Preferred Stock, Series B, or (c) any other series of Non-- Voting Cumulative Preferred Stock or Series Preference Stock and/or any other class or series of preferred or preference stock which the Corporation may in the future issue which ranks senior to or on a parity with the Series C Preference Stock as to dividends), when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative preferential cash dividends at the per share rate of $0.6250 per quarter and no more ("Preferential Dividends"), payable on the seventh (7th) day of March, June, September and December of each year (each such date being hereinafter referred to as a "Series C Preferential Dividend Payment Date") commencing December 7, 1997; provided, however, that the Series C Preferential Dividend payable on December 7, 1997 (the "Initial Series C Preferential Dividend") with respect to any share of Series C Preference Stock outstanding on the record date for the Initial Series C Preferential Dividend shall be computed in accordance with Subsection F(a)(iv). If December 7, 1997 or any other Series C Preferential Dividend Payment Date shall not be a business day, then the Series C Preferential Dividend Payment Date shall be on the next succeeding business day. Each such dividend will be payable to holders of record as they appear on the stock books of the Corporation on such record date, not less than 10 nor more than 60 days preceding the Series C Preferential Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends on the Series C Preference Stock shall accrue from June 30, 1997, and dividends accrued as of each Series C Preferential Dividend Payment Date shall accumulate to the extent not paid on such date. Accumulated unpaid dividends shall not bear interest. All payments of Series C Preferential Dividends to holders of Series C Preference Stock shall be rounded up to the nearest whole cent. (ii) So long as any shares of Series C Preference Stock are outstanding: (A) no dividend (other than a dividend or distribution paid in shares of, or warrants or rights to subscribe for or purchase shares of, Capital Stock or any other stock of the Corporation ranking junior to the Series C Preference Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other distribution declared or made upon the Capital Stock or upon any other stock of the Corporation ranking junior to or (except as provided in the following sentence) on a parity with the Series C Preference Stock as to 3 dividends, (B) nor shall any Capital Stock nor any other stock of the Corporation ranking junior to or on a parity with the Series C Preference Stock as to dividends be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the Series C Preference Stock as to dividends and upon liquidation), (C) nor shall the Corporation purchase or otherwise acquire (except pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Series C Preference Stock), or convert in part, but not in whole, into shares of Capital Stock at the option of the Corporation pursuant to Subsection F(c)(ii) outstanding shares of Series C Preference Stock, unless, in each case, the full Series C Preferential Dividends, if any, accumulated on all outstanding shares of the Series C Preference Stock through the most recent Series C Preferential Dividend Payment Date shall have been paid or deposited for payment or contemporaneously are declared and paid or deposited for payment. When dividends have not been paid in full upon the shares of Series C Preference Stock, all dividends and other distributions declared upon the Series C Preference Stock and any other shares of the Corporation ranking on a parity as to dividends and such other distributions with the shares of Series C Preference Stock shall be declared pro rata so that the amount of dividends and other distributions declared and paid per share on the Series C Preference Stock and such other shares shall in all cases bear to each other the same ratio that accumulated unpaid dividends per share on the shares of Series C Preference Stock and such other shares bear to each other. Holders of the shares of Series C Preference Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided. (iii) Any dividend payment made on shares of Series C Preference Stock shall first be credited against the earliest accumulated unpaid dividend due with respect to shares of Series C Preference Stock. (iv) Any dividends payable for any period greater or less than a full quarterly dividend period shall be computed on the basis of a 360-day year consisting of four 90-day quarters or twelve 30-day months. (b) Liquidation. (i) Upon any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary (collectively, a "Liquidation"), the holders of shares of Series C Preference Stock shall be entitled to receive out of the assets of the Corporation available for distribution to shareholders, after payment of all debts and other liabilities of the Corporation and all liquidation preferences of holders 4 of shares of any class or series of preferred or preference stock which the Corporation may issue in the future which ranks prior to the Series C Preference Stock with respect to liquidation rights, but before any distribution or payment is made to holders of Capital Stock of the Corporation or on any other shares of the Corporation ranking junior to the shares of Series C Preference Stock upon liquidation, liquidating distributions in the amount of $50 per share (appropriately adjusted to reflect stock splits, stock dividends, reorganizations, consolidations and similar changes hereafter effected), plus an amount equal to all accumulated unpaid Series C Preferential Dividends thereon to the date of Liquidation, and no more. If upon any Liquidation the assets of the Corporation are insufficient to pay in full the amounts payable with respect to the Series C Preference Stock and any other shares of the Corporation ranking as to any such distribution on a parity with the Series C Preference Stock, the holders of shares of Series C Preference Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full respective distributable amounts, to the extent not distributed, to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Series C Preference Stock will not be entitled to any further participation in any distribution or payments by the Corporation. (ii) Neither the merger nor consolidation of the Corporation into or with any other corporation or other entity, nor the merger or consolidation of any other corporation or other entity into or with the Corporation, nor a sale, transfer or lease of all or any part of the assets of the Corporation for cash, securities or other property, shall be deemed to be a Liquidation for purposes of this Subsection F(b). (c) Conversions. (i) Automatic Conversion Upon the Occurrence of Certain Events. Immediately prior to the effectiveness of a merger or consolidation of the Corporation that results in the conversion or exchange of the Capital Stock into or for, or that results in the holders of Capital Stock obtaining the right to receive, cash, securities or other assets, whether of the Corporation or of any other person or entity (any such merger or consolidation is referred to herein as a "Merger or Consolidation"), other than a Merger or Consolidation in which the Series C Preference Stock remains outstanding and holders of Series C Preference Stock obtain the right to receive upon conversion of their shares into Capital Stock or any other security the same cash, securities or other assets that they would have received with respect to the maximum number of shares of Capital Stock which such holders would have received (other than in payment of accumulated unpaid dividends) upon conversion of their shares of Series C Preference Stock (at the option of the Corporation pursuant to clause (ii) of this Subsection F(c) or at the option of the holder pursuant to clause (iii) of this Subsection F(c), whichever is greater) immediately prior to the effectiveness of the Merger or Consolidation, each outstanding share of Series C Preference Stock shall automatically convert into the maximum number of shares of Capital Stock which such holders would have received 5 (other than in payment of accumulated unpaid dividends) upon conversion of their shares of Series C Preference Stock (at the option of the Corporation pursuant to clause (ii) of this Subsection F(c) or at the option of the holder pursuant to clause (iii) of this Subsection F(c), whichever is greater), plus the right to receive an amount of cash equal to the accumulated unpaid dividends on such share of Series C Preference Stock to and including the immediately preceding Series C Preferential Dividend Payment Date. (ii) Conversion at the Option of the Corporation. At any time and from time to time on and after June 30, 2000, and upon notice given as provided herein, the Corporation may convert, in whole or in part, the outstanding shares of Series C Preference Stock. On the date fixed for conversion, each outstanding share of Series C Preference Stock to be converted pursuant to this Subsection F(c)(ii) shall convert into: (A) the lesser of (x) that number of shares of Capital Stock as shall equal the applicable amount set forth in the table below divided by the Current Market Price (as defined in Subsection F(c)(viii)(C)) per share of Capital Stock on the date of conversion:
If Converted During Current Market Value The 12-month Period of Common Stock Beginning June 30: To Be Issued 2000 $51.50 2001 50.75 2002 and thereafter 50.00
or (y) 10 shares of Capital Stock, subject to adjustment as provided below (the "Maximum Conversion Rate"); plus (B) the right to receive an amount of cash equal to the accumulated unpaid dividends on such share of Series C Preference Stock to and including the immediately preceding Series C Preferential Dividend Payment Date; plus (C) the right to receive an amount of cash equal to dividends accrued since the immediately preceding Series C Preferential Dividend Payment Date to and including the effective date of conversion of the shares, calculated in accordance with Subsection F(a)(iv); provided, however, that no amount shall be due and payable pursuant to this clause (C) if the conversion date follows a record date for the payment of a Series C Preferential Dividend and precedes the next succeeding Series C Preferential Dividend Payment Date (which date shall be considered the immediately preceding Series C Preferential Dividend Payment Date for purposes of Subsection F(c)(ii)(B)). The Maximum Conversion Rate shall be proportionately adjusted when, as and if the Conversion Rate (as defined in Subsection F(c)(iv)) shall be adjusted pursuant to Subsection F(c)(iv). 6 (iii) Conversion at the Option of the Holder. At any time and from time to time after the date of issuance of Series C Preference Stock, each holder of Series C Preference Stock shall have the right to convert, in whole or in part, the outstanding shares of Series C Preference Stock; provided, however, that if the shares of Series C Preference Stock to be converted have been earlier called for conversion at the option of the Corporation, the right of the holder to convert such shares will terminate as of 5:00 P.M., New York City time, on the business day immediately preceding the date fixed for such conversion. Each outstanding share of Series C Preference Stock to be converted at the option of the holder shall convert into that number of shares of Capital Stock as shall be determined in accordance with the Conversion Rate in effect on the date upon which the certificates representing shares of Series C Preference Stock are surrendered for conversion, plus the right to receive an amount of cash equal to the accumulated unpaid dividends on such share of Series C Preference Stock to be converted to and including the immediately preceding Series C Preferential Dividend Payment Date. In order to convert shares of Series C Preference Stock into Capital Stock the holder thereof shall surrender, at the office in the United States designated by the Corporation in writing from time to time for registration of transfers and conversion, the certificate or certificates therefor, duly endorsed to the Corporation or in blank, and give written notice to the Corporation at said office that such holder elects to convert such shares and shall state in writing therein the name or names (with addresses) in which such holder wishes the certificate or certificates for Capital Stock to be issued. Shares of Series C Preference Stock surrendered for conversion after the close of business on a record date for payment of Series C Preferential Dividends and before 9:00 A.M., New York time, on the next succeeding Series C Preferential Dividend Payment Date must be accompanied by payment of an amount equal to the Series C Preferential Dividend thereon which is to be paid on such Series C Preferential Dividend Payment Date. Shares of Series C Preference Stock shall be deemed to have been converted on the date of the surrender of such certificate or certificates for shares for conversion as provided above, and the person or persons entitled to receive the Capital Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Capital Stock on such date. As soon as practicable on or after the date of conversion as aforesaid, the Corporation will issue and deliver a certificate or certificates for the number of full shares of Capital Stock issuable upon such conversion, together with cash for any fraction of a share, as provided in Subsection F(c)(vi), to the person or persons entitled to receive the same. (iv) Conversion Rate; Adjustments. The Conversion Rate to be used to determine the number of shares of Capital Stock to be delivered on the conversion of the Series C Preference Stock into shares of Capital Stock pursuant to Subsection F(c)(iii) shall be initially 2.922 shares of Capital Stock for each share of Series C Preference Stock; provided, however, that such Conversion Rate shall be subject to adjustment from time to time as provided below in this Subsection F(c)(iv). All adjustments to the Conversion Rate shall be calculated in 1/100ths of a share of Capital Stock. No adjustment of less than one percent (1%) of 7 the Conversion Rate shall be required; however, any such adjustment not made due to such limitation shall be carried forward and shall be taken into account in any subsequent adjustment. Such rate in effect at any time is herein called the "Conversion Rate." (A) If the Corporation shall: (1) pay a dividend or make a distribution with respect to the Capital Stock in shares of Capital Stock (other than a dividend or distribution which is also paid to holders of Series C Preference Stock and in which such holders shall receive, with respect to each share of Series C Preference Stock, the same number of shares of Capital Stock as shall be distributed with respect to the maximum number of shares of Capital Stock into which such share of Series C Preference Stock shall then be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater), (2) subdivide or split its outstanding shares of Capital Stock, (3) combine its outstanding shares of Capital Stock into a smaller number of shares, or (4) issue by reclassification of its shares of Capital Stock any shares of Capital Stock of the Corporation, then, in any such event, the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the date of such event by a fraction, of which the numerator shall be the number of outstanding shares of Capital Stock immediately following such event, and of which the denominator shall be the number of outstanding shares of Capital Stock immediately prior to such event. Such adjustment shall become effective at the opening of business on the business day next following the record date for determination of shareholders entitled to receive such dividend or distribution in the case of a dividend or distribution and shall become effective immediately after the effective date in case of a subdivision, split, combination, or reclassification. (B) If the Corporation shall issue rights or warrants to all holders of its outstanding shares of Capital Stock entitling them to subscribe for or purchase shares of Capital Stock at a price per share less than the Current Market Price on the record date fixed for determination of stockholders entitled to receive such rights or warrants (in each case other than instances when such rights or warrants are also issued to holders of shares of Series C Preference Stock in which such holders shall receive, with respect to each share of Series C Preference Stock, the same rights or warrants as shall be issued with respect to the maximum number of shares of Capital Stock into which each share of Series C Preference Stock shall then be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater), then the Conversion Rate shall be adjusted by multiplying the Conversion Rate in 8 effect at the opening of business on the date after such record date by a fraction, of which the numerator shall be the number of shares of Capital Stock outstanding at the close of business on such record date plus the total number of additional shares of Capital Stock issuable upon exercise of such rights or warrants, and of which the denominator shall be the number of shares of Capital Stock outstanding on the close of business on such record date plus the number of shares that the aggregate exercise price of the total number of rights or warrants so issued would purchase at such Current Market Price. Such adjustment shall become effective immediately after the opening of business on the day following the record date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Capital Stock are not delivered after the expiration or termination of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Capital Stock actually delivered. In the event that such rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Capital Stock at less than such Current Market Price, and in determining the aggregate exercise price of such rights or warrants, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. (C) If the Corporation shall pay a dividend or make a distribution to all holders of its Capital Stock of evidences of its indebtedness or other assets (including securities of the Corporation but excluding dividends or other distributions paid exclusively in cash, and excluding any portion of distributions and dividends to the extent referred to in clauses (A) or (B) above), (in each case other than a dividend or distribution which is also paid or made to holders of Series C Preference Stock in which such holders shall receive, with respect to each share of Series C Preference Stock, the same evidences of indebtedness or other assets as shall be paid or distributed with respect to the maximum number of shares of Capital Stock into which each share of Series C Preference Stock shall then be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater), then in each such case the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the date of such distribution by a fraction, of which the numerator shall be the Current Market Price per share of Capital Stock on the record date mentioned below, and of which the denominator shall be such Current Market Price per share of Capital Stock less the fair market value (as determined by the Board of Directors of the Corporation, whose determination shall be conclusive) as of such record date of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Capital Stock. Such adjustment shall become effective on the opening of business on the business day 9 next following the record date for the determination of shareholders entitled to receive such distribution. (D) If the Corporation shall pay a dividend or make a distribution consisting exclusively of cash (excluding any cash portion of distributions referred to in Subsection F(c)(iv)(C)) (collectively, "All- Cash Distributions") to all holders of Capital Stock, then, to the extent such All-Cash Distribution, combined with (A) all other All-Cash Distributions made within the preceding 12 months in respect of which no adjustment has been made, plus (B) any cash and the fair market value of other consideration payable in respect of any Corporation Tender Offer (as defined in Subsection F(c)(viii)) concluded within the preceding 12 months in respect of which no adjustment has been made, exceed ten percent (10%) of the product of (x) the Current Market Price of the Capital Stock, times (y) the number of issued and outstanding shares of Capital Stock (assuming the conversion into Capital Stock of each outstanding security or debt instrument which is by its terms convertible into Capital Stock at the option of the holder, without the payment of additional consideration therefor, regardless of whether or not such security or debt instrument shall be so convertible on such date), each as measured on the record date for such All-Cash Distribution (such excess being herein called the "Excess Distribution"), then the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the date of such All-Cash Distribution by a fraction, of which the numerator shall be the Current Market Price of the Capital Stock, and of which the denominator shall be the Current Market Price of the Capital Stock less the quotient of the Excess Distribution divided by the number of issued and outstanding shares of Capital Stock (measured as described in clause "(y)" above), each as measured on the record date. Such adjustment shall become effective on the opening of business on the business day next following the record date for the determination of shareholders entitled to receive such All-Cash Distribution (provided, however, that no such adjustment shall be made in respect of any All-Cash Distribution described in this Subsection which was also paid or made to holders of shares of Series C Preference Stock in which such holders shall receive, with respect to each share of Series C Preference Stock, the same All-Cash Distribution as shall be paid or made with respect to the maximum number of shares of Capital Stock into which each share of Series C Preference Stock shall be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater). (E) If the Corporation shall make payment of any cash or other consideration payable in respect of any Corporation Tender Offer, then, to the extent such Corporation Tender Offer involves payment of an aggregate consideration that combined with (A) All-Cash Distributions made within the preceding 12 months in respect of which no adjustment has been made, plus (B) any cash and the fair market value of other consideration payable in respect of any Corporation Tender Offer concluded within the preceding 12 months in respect of which no adjustment has been made, exceeds ten percent (10%) of the product of (x) 10 the Current Market Price of the Capital Stock, times (y) the number of issued and outstanding shares of Capital Stock (assuming the conversion into Capital Stock of each outstanding security or debt instrument which is by its terms convertible into Capital Stock at the option of the holder, without the payment of additional consideration therefor, regardless of whether or not such security or debt instrument shall be so convertible on such date), each as measured on the expiration date of such Corporation Tender Offer (such excess being herein called the "Excess Consideration"), then the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the expiration date of such Corporation Tender Offer by a fraction, of which the numerator shall be the Current Market Price of the Capital Stock, and of which the denominator shall be the Current Market Price of the Capital Stock less the quotient of the Excess Consideration divided by the number of issued and outstanding shares of Capital Stock (measured as described in clause "(y)" above), each as measured on such expiration date (provided, however, that no such adjustment shall be made in respect of any Corporation Tender Offer described in this Subsection which was also made to holders of shares of Series C Preference Stock in which such holders shall receive, with respect to each share of Series C Preference Stock, the same payment in respect of a Corporation Tender Offer with respect to the maximum number of shares of Capital Stock into which each share of Series C Preference Stock shall then be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater). (F) From time to time, to the extent permitted by law, the Corporation may make temporary upward adjustments to the Conversion Rate by any amount for any period of at least 20 days, in which case the Corporation shall give not less than 15 nor more than 60 days' notice of such adjustment, if the Board of Directors has made a determination that such adjustment would be in the best interests of the Corporation, which determination shall be conclusive. (G) Anything in this Subsection F(c)(iv) notwithstanding, the Board of Directors shall be entitled to make such upward adjustments in the Conversion Rate, in addition to those required by this Subsection F(c)(iv), (1) as the Board of Directors in its discretion shall determine to be advisable, in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or a distribution of securities convertible into or exchangeable for stock (or any transaction which could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended, or any successor section thereto) hereafter made by the Corporation to its shareholders shall not be taxable; and (2) as the Board of Directors in its discretion shall determine to be necessary or appropriate in order to preserve the relative rights of the holders of Capital Stock, on the one hand, and the holders of Series C Preference Stock, on the other hand, as such rights are set forth in this Certificate of Incorporation. 11 (H) In any case in which this Subsection F(c)(iv) shall require that an adjustment as a result of any event become effective at the opening of business on the business day next following a record date, and the date fixed for conversion pursuant to Subsection F(c)(i), (ii) or (iii) occurs after such record date, but before the occurrence of such event, the Corporation may in its sole discretion elect to defer the following until after the occurrence of such event: (1) issuing to the holder of any shares of the Series C Preference Stock surrendered for conversion the additional shares of Capital Stock issuable upon such conversion over and above the shares of Capital Stock issuable upon such conversion on the basis of the Conversion Rate prior to adjustment; and (2) paying to such holder any amount in cash in lieu of a fractional share of Capital Stock pursuant to Subsection F(c)(vi). (v) Notice of Adjustments. Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall: (A) forthwith compute the adjusted Conversion Rate in accordance with Subsection F(c)(iv) and the adjusted Maximum Conversion Rate in accordance with Subsection F(c)(ii) and prepare a certificate signed by the Chief Executive Officer, the Chairman, the President, any Vice President or the Treasurer of the Corporation setting forth the adjusted Conversion Rate and the Maximum Conversion Rate and the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, and file such certificate forthwith with the transfer agent or agents for the Series C Preference Stock and the Capital Stock; and (B) mail a notice stating that the Conversion Rate and the Maximum Conversion Rate have been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Conversion Rate and the Maximum Conversion Rate to the holders of record of the outstanding shares of the Series C Preference Stock at or prior to the time the Corporation mails a financial statement to its shareholders covering the quarterly fiscal period during which the facts requiring such adjustment occurred, but in any event within 120 days after a fourth quarter/fiscal year-end period or 60 days after the end of any other quarterly fiscal period. In addition to the foregoing, the Corporation will calculate and provide notice to the transfer agent or agents for the Series C Preference Stock and the Capital Stock within 30 days after (1) the date of initial issuance of the shares of Series C Preference Stock, or (2) the occurrence of any event triggering an adjustment of the Maximum Conversion Rate, of the number of shares of Capital Stock required to be reserved for issuance upon conversion of the issued and outstanding shares of Series C Preference Stock; provided that no such notice need be sent if the number of shares of Capital Stock then reserved is in excess of the number of shares of Capital Stock required to be reserved as so calculated. 12 (vi) No Fractional Shares. No fractional shares of Capital Stock shall be issued upon conversion of shares of Series C Preference Stock but, in lieu of any fraction of a share of Capital Stock which would otherwise be issuable in respect of the aggregate number of shares of the Series C Preference Stock surrendered by the same holder for conversion on any conversion date, the holder shall have the right to receive an amount in cash equal to the same fraction of the Current Market Price of the Capital Stock on the date of conversion. (vii) Cancellation. All Shares of Series C Preference Stock which shall have been converted into shares of Capital Stock or which shall have been purchased or otherwise acquired by the Corporation may not be reissued as Series C Preference Stock and shall assume the status of authorized but unissued shares of Non-Voting Cumulative Preference Stock undesignated as to series. (viii) Definitions. As used in this Subsection F: (A) The term "business day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the States of New York or Ohio are authorized or obligated by law or executive order to close. (B) The term "Corporation Tender Offer" shall mean a tender offer (as such term has been defined by the applicable rules, regulations and interpretations of the Securities and Exchange Commission and by courts interpreting the relevant provisions of the Securities Exchange Act of 1934, as amended) by the Corporation and/or any of its subsidiaries for Capital Stock. (C) The term "Current Market Price" per share of Capital Stock on any date shall mean the average of the daily Market Prices for the fifteen consecutive Trading Dates ending on the second Trading Date immediately preceding such date (appropriately adjusted to take into account the occurrence during such fifteen-day period, or following such fifteen-day period and prior to such date, of any event that results in an adjustment of the Conversion Rate). (D) The term "Market Price" for any day shall mean (1) if the Capital Stock is listed or admitted for trading on the New York Stock Exchange (or any successor to such exchange) or, if not so listed or admitted, on any national or regional securities exchange, the last sale price, or the closing bid price if no sale occurred, of the Capital Stock on the principal securities exchange on which the Capital Stock is listed, or (2) if not listed or traded as described in clause (1), the last reported sales price of the Capital Stock on the National Market System of the National Association of Securities Dealers Automated Quotations System, or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted, or (3) if not quoted as described in clause (2), the mean between the high bid and the low asked quotations for the Capital Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the Capital Stock on at least 13 five of the ten preceding days. If the Capital Stock is quoted on a national securities or central market system in lieu of a market or quotation system described above, then the closing price shall be determined in the manner set forth in clause (1) of the preceding sentence if actual transactions are reported and in the manner set forth in clause (3) of the preceding sentence if bid and asked quotations are reported but actual transactions are not. If none of the conditions set forth above is met, the closing price of Capital Stock on any day or the average of such closing prices for any period shall be the fair market value of the Capital Stock as determined by a member firm of the New York Stock Exchange, Inc. (or any successor to such exchange) selected by the Corporation. (E) The term "Notice Date" shall mean the following: with respect to any notice given by the Corporation in connection with a conversion (including any potential conversion upon the effectiveness of a Merger or Consolidation) of any of the Series C Preference Stock, the date of mailing of such notice to the holders of Series C Preference Stock. (F) The term "Trading Date" shall mean (1) a date on which the New York Stock Exchange (or any successor to such exchange) is open for the transaction of business, or (2) if the Capital Stock is not at such time listed or admitted for trading on the New York Stock Exchange (or any successor to such Exchange), a date upon which the principal national or regional securities exchange upon which the Capital Stock is listed or admitted to trading is open for the transaction of business, or (3) if not listed or admitted to trading as described in clauses (1) or (2), and if at such time the sales price of Capital Stock is quoted on The Nasdaq Stock Market of the National Association of Securities Dealers Automated Quotations System, or any similar system of automated dissemination of quotations of securities prices then in common use, a date for which such system provides quotations with respect to securities upon which it reports, or (4) if not so quoted, and if at such time the bid and asked prices of the Capital Stock are reported by the National Quotation Bureau Incorporated, a date for which the National Quotation Bureau Incorporated provides bid and asked prices with respect to securities upon which it reports, or (5) if not so quoted, any business day. (ix) Notice of Conversion. The Corporation shall provide notice of any exercise of its right to convert shares of Series C Preference Stock to holders of record of the Series C Preference Stock to be converted by mailing a notice of conversion to such holders, which notice will specify an effective date of conversion that is not less than 15 nor more than 60 days after the date of such notice. The Corporation will provide notice of any potential conversion upon the effectiveness of a Merger or Consolidation not less than 15 nor more than 60 days prior to the effective date thereof; provided, however, that if the timing of the effectiveness of a Merger or Consolidation makes it impracticable to provide at least 15 days' notice, the Corporation shall provide such notice as soon as practicable prior to such effectiveness. Each such notice shall be provided by mailing notice of such conversion first class postage prepaid, to each holder of record of the Series C Preference Stock 14 to be converted, at such holder's address as it appears on the stock register of the Corporation. Each such notice shall state, as appropriate, the following: (A) the conversion date; (B) the number of shares of Series C Preference Stock to be converted and, if less than all the shares held by such holder are to be converted, the number of such shares to be converted; (C) the number of shares of Capital Stock deliverable upon conversion, or a description of the formula pursuant to which such number shall be determined; (D) the place or places where certificates for such shares are to be surrendered for conversion; and (E) that dividends on the shares of Series C Preference Stock to be converted will cease to accrue on the effective date of conversion. The Corporation's obligation to deliver shares of Capital Stock and provide cash in accordance with this Subsection F(c) shall be deemed fulfilled if, on or before an effective date of conversion, the Corporation shall deposit, with a bank or trust company having an office or agency in the Borough of Manhattan in New York City, or which has an affiliate or correspondent having an office or agency in the Borough of Manhattan in New York City, which depository has a capital and surplus of at least $50,000,000, such number of shares of Capital Stock as are required to be delivered by the Corporation pursuant to this Subsection F(c) upon the occurrence of such conversion, together with cash sufficient to pay all accumulated unpaid dividends, cash in lieu of fractional share amounts and/or any additional payment pursuant to Subsection F(c)(ii)(C), if applicable, on the shares to be converted as required by this Subsection F(c), in trust for the account of the holders of the shares to be converted, with irrevocable instructions and authority to such bank or trust company that such shares and cash be delivered, upon conversion of the shares of Series C Preference Stock so converted. Any interest accrued on such cash shall be paid to the Corporation from time to time. Any shares of Capital Stock or cash so deposited and unclaimed at the end of three years from such conversion date shall be repaid and released to the Corporation, after which the holder or holders of such shares of Series C Preference Stock so converted shall look, subject to applicable state escheat or unclaimed funds laws, only to the Corporation for delivery of shares of Capital Stock and cash, if applicable. Each holder of shares of Series C Preference Stock to be converted shall surrender the certificates evidencing such shares to the Corporation at the place designated in the notice of such conversion and shall thereupon be entitled to receive certificates evidencing shares of Capital Stock and cash, if applicable, following such surrender and following the date of such conversion. In case fewer than all the shares of Series C Preference Stock represented by any such surrendered certificate are converted, a new certificate shall be issued at the expense of the Corporation representing 15 the unconverted shares. If such notice of conversion (if required) shall have been duly given, then, notwithstanding that the certificates evidencing any shares of Series C Preference Stock subject to conversion shall not have been surrendered, the shares represented thereby subject to conversion shall be deemed no longer outstanding after the effective date of the conversion, dividends with respect to the shares of Series C Preference Stock subject to conversion shall cease to accrue after such date and all rights with respect to such shares subject to conversion shall forthwith after such date cease and terminate, except for the right of the holders to receive the shares of Capital Stock and/or any applicable cash amounts without interest upon surrender of their certificates therefor; provided that if on the date fixed for conversion shares of Capital Stock and cash, if applicable, necessary for the conversion shall have been deposited by the Corporation in trust for the account of the holders of the shares of Series C Preference Stock so to be converted as provided above, then the holder or holders of such shares of Series C Preference Stock so converted shall look only to such bank or trust company for delivery of shares of Capital Stock and cash, if applicable, unless and until such shares of Capital Stock and cash are repaid and released to the Corporation. No holder of a certificate of shares of Series C Preference Stock shall be, or have any rights as, a holder of the shares of Capital Stock issuable in connection with the conversion thereof, including, without limitation, voting rights or the right to receive any dividend from the Corporation with respect to such shares of Capital Stock, until surrender of such certificate for a certificate representing such Capital Stock. Upon such surrender, there shall be paid to the holder the amount of any dividend or other distribution (without interest) which became payable in respect of the number of whole shares of Capital Stock issuable upon such surrender on or after the conversion date, but which was not paid by reason of any earlier failure to surrender certificates that represented shares of Series C Preference Stock. If fewer than all the outstanding shares of Series C Preference Stock are to be converted at the option of the Corporation, shares to be converted shall be selected by the Corporation from outstanding shares of Series C Preference Stock by lot, pro rata (as nearly as may be) or by any other method reasonably determined by the Board of Directors of the Corporation to be appropriate and fair to the holders of Series C Preference Stock. (x) Corporation's Option to Pay Accumulated Unpaid Dividends in Common Stock Upon Conversion on or after June 30, 2000. Notwithstanding anything to the contrary contained herein, if the effective date of any conversion is on or after June 30, 2000 and if on such date there are accumulated unpaid dividends with respect to the Series C Preference Stock to be so converted, then on such effective date the Corporation may deliver, in lieu of any cash payment in respect of accumulated unpaid dividends and, if applicable, any additional payment pursuant to Subsection F(c)(ii)(C), that number of shares of Capital Stock the aggregate Current Market Price of which on such date shall equal the amount of such cash payment. Such option may be exercised by the Corporation for all or part of such cash payment. 16 (xi) No Interest on Accumulated Unpaid Dividends. Any payment with respect to accumulated unpaid dividends upon conversion of shares of Series C Preference Stock, whether such payment is made in cash or, pursuant to Subsection F(c)(x), in shares of Capital Stock, shall not provide for any interest on such accumulated unpaid dividends. (d) Voting Rights. (i) Except as otherwise provided in Subsection F(d)(ii), (iii) or (iv) of this Certificate of Incorporation or by applicable law, each outstanding share of Series C Preference Stock is entitled to one vote on all matters submitted to a vote of shareholders of the Corporation. Except as otherwise provided in Subsection F(d)(ii), (iii) or (iv) of this Certificate of Incorporation or by applicable law, the Series C Preference Stock and the Capital Stock shall vote together as a single class on all matters submitted to a vote of shareholders of the Corporation. (ii) In addition to the voting rights set forth in Subsection F(d)(i), whenever, at any time, Series C Preferential Dividends payable on the Series C Preference Stock shall be in arrears with respect to six (6) or more Series C Preferential Dividend Payment Dates, whether or not consecutive, the holders of shares of Series C Preference Stock shall have the right, voting separately as a class with holders of shares of any one or more series of Non-Voting Cumulative Preferred Stock, Series Preference Stock and/or any other class or series of shares ranking on a parity with shares of Series C Preference Stock as to dividends and upon which like voting rights have been conferred and are exercisable, to elect two directors of the Corporation at the Corporation's next meeting of shareholders at which directors are to be elected and at each subsequent meeting of shareholders at which directors are to be elected until such right is terminated as provided in this Subsection F(d). Upon the vesting of such voting right in the holders of shares of Series C Preference Stock, the maximum authorized number of members of the Board of Directors shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of shares of Series C Preference Stock (voting as a class with the holders of shares of any one or more other class or series of shares ranking on such a parity and upon which like voting rights have been conferred and are exercisable) as set forth herein. The right of the holders of shares of Series C Preference Stock to elect members of the Board of Directors of the Corporation as aforesaid shall continue until such time as all dividends accumulated on shares of Series C Preference Stock shall have been paid or deposited for payment in full, with a bank or trust company having an office or agency in the Borough of Manhattan in New York City, or which has an affiliate or correspondent having an office or agency in the Borough of Manhattan in New York City, which depository has a capital and surplus of at least $50,000,000, in trust for the account of the holders of the shares of Series C Preference Stock on which dividends are payable, with irrevocable instructions and authority to such bank or trust company that such cash (and shares, if applicable) be delivered to such holders, at which time such right shall terminate, except as by law expressly provided, subject to revesting in the event of each and every subsequent default of the 17 character above mentioned. (iii) Upon any termination of the right of the holders of Series C Preference Stock and, if applicable, the holders of shares of any one or more other series of Non-Voting Cumulative Preferred Stock, Series Preference Stock and/or other class or series of shares ranking on such a parity to vote as a class for directors as herein provided, the term of office of all directors then in office elected by shares of Series C Preference Stock and such other series voting as a class shall terminate immediately. If the office of any director elected by the holders of shares of Series C Preference Stock and, if applicable, the holders of shares of one or more other series of Non-Voting Cumulative Preferred Stock, Series Preference Stock and/or other class or series of shares on such a parity, voting as a class, becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the remaining director elected by the holders of shares of Series C Preference Stock and, if applicable, the holders of shares of any one or more other series of Non-Voting Cumulative Preferred Stock, Series Preference Stock and/or other class or series of shares ranking on such a parity, voting as a class, may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred. Whenever the special voting powers vested in the holders of shares of Series C Preference Stock and the holders of shares of any one or more other series of Non-Voting Cumulative Preferred Stock, Series Preference Stock and/or other class or series of shares ranking on such a parity to vote as a class for directors as provided in this Subsection F(d)(iii) shall have expired, the number of directors shall become such number as may be provided for in the By-Laws, or resolution of the Board of Directors thereunder, irrespective of any increase made pursuant to the provisions of this Subsection F(d)(iii). (iv) While any Series C Preference Stock is outstanding, the Corporation shall not, without the affirmative consent (given in writing or at a meeting duly called for that purpose) of the holders of at least two-thirds (2/3rds) of the aggregate number of votes entitled to be exercised by holders of all affected series of Series Preference Stock then outstanding (provided that each other series shall have voting rights similar or identical to the voting rights set forth in this Subsection F(d)(iv)): (A) amend the Certificate of Incorporation of the Corporation to authorize the creation of any class or series of stock having a preference as to dividends or upon liquidation senior to or on a parity with the Series C Preference Stock (hereinafter in this Subsection F(d)(iv) referred to as "Senior Stock"); provided, however, that no such approval of holders of Series C Preference Stock (or other affected series of Series Preference Stock having similar voting rights) shall be required to amend the Certificate of Incorporation of the Corporation to authorize the creation of any series of Senior Stock that may be authorized out of the Non-Voting Cumulative Preferred Stock or the Series Preference Stock, the terms of which may be established by any amendment to the Certificate of Incorporation of the Corporation which may be adopted by the Board of Directors of the Corporation without shareholder approval, or (B) amend, alter or repeal the Certificate of Incorporation of the Corporation in a 18 manner that would adversely affect the terms of Series C Preference Stock. (v) With respect to any matter upon which holders of Series C Preference Stock shall be entitled to vote pursuant to Subsection F(d)(ii), (iii) or (iv), each such holder shall be entitled to exercise the number of votes equal to the maximum number of shares of Capital Stock into which the shares of Series C Preference Stock held by such holder shall then be convertible at the option of the Corporation pursuant to Subsection F(c)(ii) or at the option of the holder pursuant to Subsection F(c)(iii), whichever is greater, on the record date for determining the shareholders of the Corporation entitled to vote. (e) No Increase in Shares. The number of shares of Series C Preference Stock may not be increased. (f) Exclusive Rights. Each holder of shares of Series C Preference Stock shall hold such Series C Preference Stock subject to the right of the Corporation to effect a conversion in accordance with the provisions of Subsection F(c) hereof and, in the event of such a conversion, shall have the right to receive, as full payment, discharge and satisfaction of the obligations of the Corporation with respect to such Series C Preference Stock, only those shares of Capital Stock and cash, if applicable, delivered as provided in accordance with Subsection F(c) hereof. (g) Equal Rank. All shares of Series C Preference Stock shall be identical in all respects, and all shares of Series C Preference Stock shall be of equal rank and on a parity with shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A, and $3.75 Convertible Preferred Stock, Series B, in respect of the preference as to dividends and to payments upon the Liquidation of the Corporation. 19 EX-3.2 4 EXHIBIT 3.2 FILED SEPTEMBER 24, 1997 LONNA R. HOOKS SECRETARY OF STATE CERTIFICATE OF MERGER OF OWATONNA CANNING COMPANY OLIVIA CANNING COMPANY MIDWEST FOODS, INC. AND GOODHUE CANNING COMPANY together the "Constituent Corporations" INTO CHIQUITA BRANDS INTERNATIONAL, INC. the "Surviving Corporation" To: The Secretary of State State of New Jersey Pursuant to the provisions of Section 14A:10-7 Corporations, General, of the New Jersey Statutes, the undersigned corporations hereby execute the following Certificate of Merger. ARTICLE ONE The names of the corporations proposing to merge and the names of the states under the laws of which such corporations are organized, are as follows: Name of Corporation State of Incorporation Owatonna Canning Company Minnesota Olivia Canning Company Minnesota Midwest Foods, Inc. Minnesota Goodhue Canning Company Minnesota Chiquita Brands International, Inc. New Jersey ARTICLE TWO The laws of Minnesota, the state under which the Constituent Corporations are organized, permit such merger and the applicable provisions of the laws of said jurisdiction under which the Constituent Corporations are organized have been, or upon compliance with filing and recording requirements will have been, complied with. ARTICLE THREE The name of the surviving corporation shall be Chiquita Brands International, Inc. and it shall be governed by the laws of the State of New Jersey. The aggregate number of shares which the Surviving Corporation is authorized to issue is 164,000,000 shares divided into: (i) 150,000,000 shares of Capital Stock, par value $.33 per share ("Capital Stock"), (ii) 4,000,000 shares of Cumulative Preference Stock, issuable in series, without nominal or par value ("Series Preference Stock"), and (iii) 10,000,000 shares of Non-Voting Cumulative Preferred Stock, issuable in series, par value $1 per share ("Non-Voting Preferred Stock"). The address of the Surviving Corporation's registered office in the State of New Jersey is 820 Bear Tavern Road, West Trenton, County of Mercer, New Jersey 08628 and the name of the registered agent at such address is The Corporation Trust Company. ARTICLE FOUR The Plan of Merger, attached as Exhibit A, was approved by the 2 directors of the undersigned Surviving Corporation in the manner prescribed by the New Jersey Business Corporation Act, and no vote of the shareholders of the Surviving Corporation was required because of the applicability of the provision of Section 14A:10-3(4) of the New Jersey Business Corporation Act. The merger was approved by the shareholders of the undersigned Constituent Corporations in the manner prescribed by the laws of the State of Minnesota on September 23, 1997. ARTICLE FIVE As to each corporation whose shareholders are entitled to vote on the merger, the number of shares entitled to vote thereon, and if the shares of any class or series are entitled to vote thereon as a class, the designation and number of shares of each such class or series, is as follows:
Designation of Total Number Class or Series of Shares Entitled To Vote Number of Shares Entitled To as a Class of Such Class or Name of Corporation Vote (if any) Series (if any) Owatonna Canning Company 4,500 Class A Stock 450 Class B Stock 4,050 Olivia Canning Company 121 Capital Stock 121 Midwest Foods, Inc. 1,500 Common Shares 1,000 Participating Non-Voting Shares 500 Goodhue Canning Company 140 Common Shares 140
ARTICLE SIX 3 As to each corporation whose shareholders are entitled to vote, the number of shares that voted for and against the merger, respectively, and the number of shares of any class or series entitled to vote as a class that voted for and against the merger are:
Total Shares Total Shares Voted Shares Shares Voted For Against Class Voted Voted Name of Corporation For Against - ---------------------------------------------------------------------------------------------------------- Owatonna Canning Company 4,500 0 Class A Stock 450 0 Class B Stock 4,050 0 Olivia Canning Company 121 0 Capital Stock 121 0 Midwest Foods, Inc. 1,500 0 Common 1,000 0 Shares Participating Non-Voting Shares 500 0 Goodhue Canning Company 140 0 Common 140 0 Shares
ARTICLE SEVEN The effective date of this Certificate shall be the date of filing hereof. IN WITNESS WHEREOF each of the undersigned corporations has caused this Certificate of Merger to be executed in its name as of the 24th day of September, 1997. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/ Robert W. Olson Title: Robert W. Olson Senior Vice President, General Counsel and Secretary 4 OWATONNA CANNING COMPANY By: /s/ Chadwick S. Lange Title: President OLIVIA CANNING COMPANY By: /s/ Chadwick S. Lange Title: President MIDWEST FOODS, INC. By: /s/ Stephens J. Lange Title: President GOODHUE CANNING COMPANY By: /s/ Stephens J. Lange Title: President SCHEDULE A PLAN OF MERGER OF OWATONNA CANNING COMPANY OLIVIA CANNING COMPANY MIDWEST FOODS, INC. GOODHUE CANNING COMPANY INTO CHIQUITA BRANDS INTERNATIONAL, INC. FIRST: (a) The name of each constituent corporation is as follows: 1. Owatonna Canning Company, a corporation organized under the laws of the State of Minnesota ("Owatonna"); 2. Olivia Canning Company, a corporation organized under the laws of Minnesota ("Olivia"); 3. MidWest Foods, Inc., a corporation organized under the laws of Minnesota ("MidWest"); 4. Goodhue Canning Company, a corporation organized under 5 the laws of Minnesota ("Goodhue" and, together with Owatonna, Olivia and MidWest, the "Owatonna Companies"); and 5. Chiquita Brands International, Inc., a corporation organized under the laws of the State of New Jersey. (b) The name of the surviving corporation is Chiquita Brands International, Inc., a New Jersey corporation, and following the merger its name shall be Chiquita Brands International, Inc. (hereinafter sometimes referred to as "Chiquita" or as the "Surviving Corporation"). SECOND: The terms and conditions of the merger, including the manner and basis of converting the shares of the Owatonna Companies into shares of the Surviving Corporation, are as follows: 1. Effective Date. The effective date of the merger (the "Effective Date") shall be upon the later of the filing of the Certificate of Merger with the Secretary of State of the State of New Jersey and the filing of Articles of Merger with the Secretary of State of the State of Minnesota. 2. Conversion of Shares. As of the Effective Date, by virtue of the Merger and without any action on the part of any Shareholder of the Surviving Corporation or any of the Owatonna Companies, except as provided below, the shares of stock of each of the Owatonna Companies issued and outstanding immediately prior to the Effective Date shall be converted into Capital Stock, par value $.33 per share ("Capital Stock"), of the Surviving Corporation or $2.50 Convertible Preference Stock, Series C ("Series C Preference Stock") of the Surviving Corporation (or a combination thereof). The number of shares of Capital Stock and\or Series C Preference Stock into which each share of stock of the Owatonna Companies shall be converted shall be determined in accordance with the election of each Shareholder of each of the Owatonna Companies, which election shall be made in accordance with that certain Agreement and Plan of Merger (the "Agreement"), dated as of August 22, 1997, by and among Chiquita Brands International, Inc., Owatonna Canning Company, Olivia Canning Company, MidWest Foods, Inc. and Goodhue Canning Company and the Shareholder Representatives (as defined in the Agreement). Notwithstanding the foregoing, any shares of its own stock held in treasury of any of the Owatonna Companies and any shares of stock of Olivia owned by Owatonna shall be canceled and retired as of the Effective Date. 3. Governing Documents; Directors and Officers. The Certificate of Incorporation and By-Laws of the Surviving Corporation as in effect immediately prior to the Effective Date shall from and after the Effective Date be the Certificate of Incorporation and By-Laws of the Surviving Corporation. All persons who are directors and officers of the Surviving Corporation immediately prior to the Effective Date shall be the directors and officers of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and the By-Laws of the Surviving Corporation. 4. Succession. On the Effective Date, the separate 7 corporate existence of the Owatonna Companies shall cease, the Owatonna Companies shall be merged into the Surviving Corporation, and the Surviving Corporation, without further action, shall succeed to and shall possess all the rights, privileges, powers and franchises of the Owatonna Companies, and all property, real, personal and mixed, and all debts due to the Owatonna Companies on whatever account, and all other things in action or belonging to the Owatonna Companies, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises of the Owatonna Companies and all and every other interest of the Owatonna Companies shall be thereafter effectively the property of the Surviving Corporation as they were of the Owatonna Companies; and the title to any real estate whether by deed or otherwise, under the laws of any jurisdiction, vested in the Owatonna Companies shall not revert or be in any way impaired by reason of the merger in accordance with the laws of the States of Minnesota or New Jersey providing therefor; but all rights of creditors and all liens upon any property of the Owatonna Companies shall be preserved unimpaired, and all debts, liabilities and duties of the Owatonna Companies shall thenceforth attach to the Surviving Corporation. All corporate acts of the Owatonna Companies which were valid and effective immediately prior to the Effective Date shall be as effective and binding on the Surviving Company as the same were with respect to the Owatonna Companies. 5. Further Assurances. At any time, or from time to time, 8 after the Effective Date, the last acting officers of the Owatonna Companies or the officers of the Surviving Corporation may, in the name of the Owatonna Companies, execute and deliver all such proper deeds, assignments and other instruments and take or cause to be taken all such further or other action as the Surviving Corporation may deem necessary or desirable in order to vest, perfect or confirm the Surviving Corporation's title to and possession of all of the property, rights, privileges, powers, and franchises of the Owatonna Companies and otherwise to carry out the purposes of this Plan of Merger. 9 EX-3.3 5 EXHIBIT 3.3 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of this 24th day of September, 1997 between CHIQUITA BRANDS INTERNATIONAL, INC., a New Jersey corporation ("Chiquita"), and Ann Jackson and Richard Jackson, acting in their capacity as shareholders representatives ("Shareholders Representatives") for the individuals listed on the attached Exhibit A ("Shareholders"). Premises: The Shareholders are entitled to receive shares (the "Common Shares") of Chiquita's issued and outstanding capital stock, par value thirty-three cents ($.33) per share ("Common Stock") and shares (the "Preferred Shares") of Chiquita's issued and outstanding $2.50 Convertible Preferred Stock, Series C (liquidation preference of $50.00 per share) ("Preferred Stock")in connection with the merger of each of Owatonna Canning Company, Olivia Canning Company, Midwest Foods, Inc. and Goodhue Canning Company (collectively the "Companies") into Chiquita. In connection with the issuance of the Common Shares and the Preferred Shares to the Shareholders, Chiquita agreed to provide the Shareholders with certain rights to require Chiquita to register with the Securities and Exchange Commission (the "Commission") and applicable state securities law agencies the sale by the Shareholders of Common Shares and shares of Common Stock into which the Preferred Shares are converted (collectively the "Registrable Shares"). Pursuant to Section 3.1 of the Agreement and Plan of Merger between Chiquita and the Companies dated as of August 22, 1997 ("Plan of Merger"), Ann Jackson and Richard Jackson have been designated the representatives of the Shareholders for the purposes of this Agreement. Section 3.1 of the Plan of Merger provides for and describes the authority, rights and responsibilities of the Shareholders Representatives and gives the Shareholders Representatives the authority to execute this Agreement on behalf of each Shareholder. Based on these premises, the parties agree as follows: Agreement: 1. Demand Registration Rights. 1.1.On one occasion, after completion of the process set forth in Section 2 to determine which Registrable Shares are to be included in the request and upon the written request of the Shareholders Representatives given no later than 45 days before the first anniversary of the Closing Date, as that term is defined in the Plan of Merger, Chiquita will prepare and file with the Commission and any state securities law agencies as the Shareholders Representatives may reasonably request, promptly after such request and in no case more than thirty (30) days after receipt of such 1 request, and thereafter use its best efforts to cause to become effective a registration statement (the "Registration Statement") on Form S-3 (or such other form then available for such registration) under and complying with the Securities Act of 1933, as amended (the "Act"), covering such number of Registrable Shares as shall be specified in the Shareholders Representatives' request; provided, however, that such request shall not include more than 500,000 or less than 200,000 Registrable Shares, appropriately adjusted to reflect stock splits, stock dividends, reorganizations, consolidations and similar changes hereafter effected. The right to request the preparation and filing of the Registration Statement is limited to one (1) request to Chiquita by the Shareholders Representatives on behalf of all of the Shareholders collectively, whether or not all the Shareholders participate in the request. For the purposes of this Agreement, all Shareholders whose Registrable Shares are covered by the Registration Statement shall be referred to as "Selling Shareholders" and all such Registrable Shares shall be referred to as "Registration Shares". 1.2.Chiquita does not guarantee or provide any assurance that the Selling Shareholders will be able to sell any Registration Shares nor, if sold, at what price they may be sold. Moreover, Chiquita has no obligation to provide an underwriter to assist the Selling Shareholders in selling Registration Shares. However, Chiquita will cooperate with a managing underwriter engaged by the Shareholders Representatives or the Selling Shareholders for the purpose of selling the Registration Shares, provided the managing underwriter is a nationally recognized investment banking firm and is consented to by Chiquita, which consent will not be unreasonably withheld. 1.3.Chiquita shall be entitled to postpone the filing with the Commission of the Registration Statement, or any pre-effective amendment thereto, or a request for the acceleration of the effectiveness of the Registration Statement for a period to be specified by Chiquita in a notice to the Shareholders Representatives if: (a)(i) in the sole judgment of Chiquita, based on advice of counsel, it would be appropriate to disclose in the prospectus forming a part of the Registration Statement information not otherwise then required by law to be publicly disclosed, and (ii) in Chiquita's sole judgment, such disclosure or the filing of the Registration Statement, or any amendment thereto, is likely to interfere with any existing or prospective business situation, transaction or negotiation of Chiquita or any of its subsidiaries or affiliates, or (b) Chiquita or any of its subsidiaries would be required, as a result of the filing of the Registration Statement, to prepare any financial statements other than those which it or they customarily prepare in the ordinary course of its or their business, or (c) in Chiquita's sole judgment, it would be detrimental to a pending or proposed material equity financing by Chiquita to proceed with the filing of the Registration Statement; provided, that the duration of all such postponements shall not exceed, in the aggregate, ninety (90) days; and provided further, that Chiquita shall promptly make such filing as soon as the conditions which permit it to postpone such filing no longer exist (or the 90-day aggregate postponement period shall have otherwise expired); and provided further, that in the event of any such postponement, the requesting Shareholders shall have the right to withdraw their request for registration at any time prior to five business days before the end of the postponement period specified in Chiquita's notice to the Shareholders Representatives, and such withdrawn request shall not be considered the request for registration provided for under Section 1.1 hereof. 1.4. If the method of distribution of the Registration Shares proposed to be used is not reflected in the prospectus (including any supplements thereto) forming a part of the Registration Statement, the Shareholders Representatives shall promptly provide Chiquita with a description of such method of distribution contemplated by the Selling Shareholders, and Chiquita shall file any and all amendments and supplements necessary to include such description in the Registration Statement. 2. Covenants of the Shareholders. 2.1If a Shareholder wishes the Shareholders Representatives to request a registration as provided for under Section 1.1 hereof, that Shareholder shall notify the Shareholders Representatives who shall promptly give notice of such request to Chiquita and to all Shareholders at the last address known to such Shareholders Representatives. No later than 15 days after the Shareholders Representatives send such notice to Chiquita and the Shareholders, each Shareholder who desires to sell Registrable Shares pursuant to such request shall notify the Shareholders Representative in writing indicating the number of Registrable Shares such Shareholder desires to sell. If the aggregate number of Registrable Shares requested to be registered exceeds the limit provided for in Section 1.1 hereof, the Shareholders Representatives shall allocate the number of Registrable Shares to be sold on a basis proportionate to the number of Registrable Shares owned by the requesting Shareholders on the date of the notice (the "Notice Date") from the Shareholders Representatives; provided, that, in the event the Adjustment Date (as defined in the Plan of Merger) occurs after the Notice Date and before the effective date of the Registration Statement, such allocation shall be on a basis proportionate to the number of Registrable Shares owned by the requesting Shareholders on the date immediately following the Adjustment Date. 2.2.The request for registration made by the Shareholders Representatives pursuant to Section 1.1 shall specify the number of Registrable Shares included in the request, express the requesting Shareholders' present intention to offer such Registrable Shares for distribution and contain an undertaking by the Shareholders Representatives on behalf of the requesting Shareholders to provide all such information and materials and take all such actions and execute all such documents as may be required in order to permit Chiquita to comply with its obligations under this Agreement and all applicable requirements of the Commission and to obtain acceleration of the effective date of the Registration Statement. 2.3 If Chiquita gives the Shareholders Representatives a notice as provided for in Section 3.4, the Shareholders Representatives and the 3 Selling Shareholders will immediately cease any disposition of Registration Shares pursuant to the Registration Statement until Chiquita notifies the Shareholders Representatives pursuant to Section 3.5 that a prospectus supplement has been filed or an amendment to the Registration Statement has been declared effective by the Commission or that any stop order or other suspension has been lifted, provided that, if such supplement or amendment relates to a misstatement or omission relating to any information included in the Registration Statement by or about Chiquita, then the effectiveness period required under Section 3.1 shall be deemed tolled from the date of Chiquita's notice pursuant to Section 3.4 through the date of Chiquita's notice pursuant to Section 3.5 that such amendment or supplement has been declared effective by the Commission. 2.4 If the Shareholders Representatives believe, or receive information to the effect that, the prospectus (including any supplements thereto) forming part of the Registration Statement contains an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, to the extent such facts or statements relate to information provided to Chiquita by, or on behalf of, the Shareholders for inclusion in the Registration Statement, then the Shareholders Representatives will promptly notify Chiquita in writing. 3.Covenants of Chiquita. So long as Chiquita is under an obligation pursuant to the provisions of Section 1 hereof: 3.1.Chiquita will prepare and file with the Commission such amend- ments and supplements to the Registration Statement and the prospectus forming part of the Registration Statement as may be necessary to keep the Registration Statement effective for such period as shall be necessary to complete the distribution of the Registration Shares, but in no event for longer than the earlier to occur of 90 days after the Registration Statement has been declared effective by the Commission (subject to extensions as are contemplated by Section 2.3) and one year after the Closing Date; 3.2.Once the Registration Statement has been declared effective by the Commission, Chiquita will cause copies of the prospectus forming a part of the Registration Statement, and any supplement thereto, to be mailed or delivered to the New York Stock Exchange so that the Selling Shareholders may rely on Rule 153 under the Act. Notwithstanding the immediately preceding sentence, Chiquita will furnish to the Shareholders Representatives such number of copies of the prospectus forming a part of the Registration Statement, including, without limitation, a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as the Shareholders Representatives may reasonably request in order to facilitate the sale of the Registration Shares; 4 3.3.Chiquita will use reasonable efforts: (a) to register or qualify, not later than the effective date of the Registration Statement, the Registration Shares under the securities or Blue Sky laws of such jurisdictions within the United States as the Shareholders Representatives may reasonably request, and (b) to do any and all other reasonable acts or things which may be necessary or advisable to enable the Selling Shareholders to consummate the public sale or other disposition in such jurisdictions of such Registration Shares; provided, however, that Chiquita will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or taxation in any jurisdiction where it is not then so subject; 3.4.Chiquita will promptly notify the Shareholders Representatives in writing if (a) a stop order has been issued by the Commission or any other suspension of effectiveness of the Registration Statement has occurred or (b) Chiquita believes the prospectus (including any supplements thereto) forming part of the Registration Statement may contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 3.5 As soon after the occurrence of an event specified in Section 3.4 or 2.4 as may be practicable, at the request of the Shareholders Representatives, Chiquita will, in the case of an event specified in Section 3.4(a), use reasonable efforts to cause the withdrawal of any order suspending the effectiveness of the Registration Statement to be obtained and, in the case of an event specified in Section 3.4(b) or 2.4, prepare and file with the Commission and the New York Stock Exchange, and provide copies to the Shareholders Representatives of, a supplement to the prospectus or an amendment to the Registration Statement as may be necessary to meet the requirements of the Act. After any order suspending the effectiveness of the Registration Statement has been withdrawn or any supplement to the prospectus has been filed or any amendment to the Registration Statement has been declared effective, Chiquita will immediately notify the Shareholder Representatives. 3.6.Chiquita will use reasonable efforts to furnish, at the request of the Shareholders Representatives or any underwriter of the Registration Shares, an opinion of legal counsel to Chiquita, covering such matters as are typically covered by opinions of issuer's counsel in underwritten offerings under the Act; and 3.7.Chiquita will enter into an underwriting agreement with a managing underwriter retained by the Shareholders Representatives or the Selling Shareholders in connection with an offering pursuant to the Registration Statement, which agreement will contain representations, warranties and agreements customarily included by an issuer in underwriting agreements with respect to a secondary distribution. 4. Costs and Expenses. 5 4.1.With respect to the registration request under Section 1.1 hereof, Chiquita shall bear all Preparation Costs and Registration Costs (as defined below) and the Selling Shareholders shall bear all Selling Shareholder Costs (as defined below). 4.2.For purposes hereof, (a) "Preparation Costs" means the entire cost and expense of preparing the Registration Statement, including, without limitation, all printing expenses, the fees and expenses of Chiquita's counsel and its independent accountants, the fees and expenses of counsel and accountants of the Selling Shareholders in an amount up to $7,500, all other out-of-pocket expenses incident to the preparation and printing of the Registration Statement and all amendments and supplements thereto, the cost of furnishing copies of each preliminary prospectus, each final prospectus and each amendment or supplement thereto to underwriters, brokers and dealers and other purchasers of the Registration Shares, and the costs and expenses incurred in connection with the qualification of the Registration Shares under Blue Sky or other state securities laws of such jurisdictions within the United States as the Shareholders Representatives reasonably request, (b) "Registration Costs" means all registration and filing fees payable to the Commission or any state securities law agency, and (c) "Selling Shareholder Costs" means the fees and expenses of counsel and accountants of the Selling Shareholders in excess of $7,500 and all transfer taxes, underwriting discounts and commissions attributable to Registration Shares. 5.Indemnification. 5.1.Chiquita will indemnify the Shareholders Representatives, the Selling Shareholders and each underwriter of Registration Shares, as well as any persons, if any, who control such Selling Shareholders or underwriters, against all claims, losses, damages, liabilities, costs and expenses (including reasonable attorney and accountant fees and all reasonable expenses incurred in discovery proceedings, as witnesses or in preparation for any judicial or administrative proceedings) incurred by any such indemnified party arising out of or related to any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the prospectus forming a part of the Registration Statement or any related notification or similar filing under the securities laws and the rules and regulations thereunder of any jurisdiction or from any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, except insofar as the same may have been based upon information furnished in writing to Chiquita by the Selling Shareholders, the Shareholders Representatives or such underwriter expressly for use therein and used in accordance with such writing. 5.2.The Selling Shareholders will: (a) furnish to Chiquita, through the Shareholders Representatives, such information concerning them as may be requested by Chiquita and which, Chiquita is advised by its legal counsel, is necessary or required by then applicable securities laws and the rules and regulations thereunder in connection with the Registration 6 Statement or qualification of the Registration Shares, and (b) indemnify Chiquita, its officers and directors and each underwriter of the Registration Shares (and any persons who control Chiquita or any such underwriter) against all claims, losses, damages, liabilities, costs and expenses (including reasonable attorney and accountant fees and all reasonable expenses incurred in discovery proceedings, as witnesses or in preparation for any judicial or administrative proceedings) incurred by any such indemnified party arising out of or related to any untrue statement or alleged untrue statement of material fact contained in such information or from any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances then existing, but only to the extent such information is furnished in writing to Chiquita by the Selling Shareholders or the Shareholders Representatives or, on behalf of the Selling Shareholders or the Shareholders Representatives, by an underwriter of Registration Shares, in any event expressly for use in the Registration Statement, the prospectus forming a part of the Registration Statement or any related notification or similar filing under the securities laws and the rules and regulations thereunder of any jurisdiction and such information is used in accordance with such writing. 5.3.If any action is brought or any claim is made against any party entitled to be indemnified pursuant to this Section 5 in respect of which indemnity may be sought against the indemnitor pursuant to this Section 5, such party shall promptly notify the indemnitor in writing of the institution of such action or the making of such claim and the indemnitor shall assume the defense of such action or claim, including the employment of counsel and payment of expenses. Any such indemnified party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party, unless the employment of such counsel shall have been authorized in writing by the indemnitor in connection with the defense of such action or claim or such indemnified party shall have reasonably concluded that there may be defenses available to it which are different from or additional to those available to the indemnitor (in which case the indemnitor shall not have the right to direct any different or additional defense of such action or claim on behalf of such indemnified party), in either of which events such fees and expenses of not more than one additional counsel for such indemnified party shall be paid by the indemnitor. The failure to deliver written notice to the indemnitor within a reasonable time of the commencement of any such action or the making of any such claim, if materially prejudicial to the indemnitor's ability to defend such action, shall relieve such indemnitor of any liability to the indemnified party under this Section 5.3, but the failure to deliver any such written notice to the indemnitor will not relieve it of any liability that it may have to any indemnified party otherwise than pursuant to this Section 5.3 of this Agreement. Anything in this Section 5 to the contrary notwithstanding, the indemnitor shall not be liable for any settlement of any such claim or action effected without its written consent, which consent will not be unreasonably withheld. 7 5.4.If the indemnification provided for in this Agreement is unavailable or insufficient to hold harmless an indemnified party in respect of any claims, losses, damages, liabilities or expenses referred to herein, as determined by a court of competent jurisdiction, then each indemnitor shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such claims, losses, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnitor, on the one hand, and the indemnified party, on the other, in connection with the statements or omissions which resulted in such claims, losses, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnitor, on the one hand, or the indemnified party on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Chiquita and the Shareholders agree that it would not be just and equitable if contributions pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which would not take account of the equitable considerations referred to in this Section 5.4. The amount paid or payable by an indemnitor as a result of the claims, losses, damages, liabilities or expenses referred to in this Section 5.4 shall include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentations (within the meaning of Section ll(f) of the Act) shall be entitled to contribution from any person who is not also guilty of such fraudulent misrepresentation. 6. Miscellaneous. 6.1.Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given only if: (a) delivered personally or by courier, or (b) sent by registered or certified mail, postage prepaid, or (c) sent by confirmed facsimile with the original to follow by first-class mail, postage prepaid, as follows: If to Chiquita: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: General Counsel Facsimile No.: 513-784-6691 If to the Shareholders Representatives: Ann Jackson 2415 Addison 8 Houston, Texas 77030 and Richard Jackson 6648 Rutgers Houston, Texas 77005 or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication will be deemed to have been given as of the date it is delivered, received by facsimile transmission or three days after it has been mailed. 6.2.This Agreement shall be binding upon, and shall inure to the benefit of, Chiquita and the Shareholders Representatives and their respective permitted successors and assigns. 6.3.This Agreement shall be governed by and construed under the laws of the State of Ohio. 6.4.The rights granted to the Shareholders under this Agreement: (a) apply only to the Registrable Shares and the Preferred Shares, (b) are personal to the Shareholders and shall not be assignable in whole or in part by any of the Shareholders, except by will or applicable law in the event of death, (c) shall terminate as to any Registrable Shares or Preferred Shares which are sold, assigned or otherwise transferred by the Shareholders, except as permitted by Section 6.4(b), and (d) shall terminate in full on the first anniversary of the Closing Date. 6.5.This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 6.6 The Shareholders Representatives shall be entitled to reimbursement for out-of-pocket expenses incurred by them in acting on behalf of the Shareholders pursuant to this Agreement from the Expenses Fund (as defined in the Plan of Merger). Section 3.1 of the Plan of Merger (which sets forth, among other things, the authority of the Shareholders Representatives and limitations on the liability of the Shareholders Representatives) shall be deemed incorporated into this Agreement by reference. Intending to be legally bound, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL,INC. By: /s/ Robert W. Olson Title: Senior Vice President, General Counsel and Secretary 9 /s/ Ann Jackson Ann Jackson Shareholders Representative /s/ Richard Jackson Richard Jackson Shareholders Representative 10 EX-23.1 6 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements and related prospectuses of Chiquita Brands International, Inc. of our report dated March 26, 1997, with respect to the financial statements of Owatonna Canning Company for the years ended February 28, 1997, February 29, 1996 and February 28, 1995 included on pages 6 through 21 of this Current Report on Form 8-K dated September 15, 1997.
Registration Form No. Description S-3 33-58424 Dividend Reinvestment Plan S-3 33-41057 Common Stock issuable upon conversion of Convertible Subordinated Debentures S-3 333-00789 Debt Securities, Preferred Stock, Preference Stock, Depositary Shares, Common Stock and Securities Warrants S-8 33-2241 Chiquita Savings and Investment Plan 33-16801 33-42733 33-56572 S-8 33-14254 1986 Stock Option and Incentive Plan 33-38284 33-41069 33-53993 S-8 33-25950 Individual Stock Option Plan S-8 33-38147 Associate Stock Purchase Plan
/s/ Hutton, Nelson & McDonald LLP Oakbrook Terrace, Illinois October 3, 1997 -----END PRIVACY-ENHANCED MESSAGE-----