-----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, Qdbi7g8hs0pey4XjdoJHL1RaPKwsW7u/VY4eto+hL4XAioglUljs/3vHY3Ho9jpO 2JVMaGczzzYt35CBRgjAyg== 0000101063-01-500032.txt : 20010409 0000101063-01-500032.hdr.sgml : 20010409 ACCESSION NUMBER: 0000101063-01-500032 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 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: 10-K405 SEC ACT: SEC FILE NUMBER: 001-01550 FILM NUMBER: 1589197 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848880 MAIL ADDRESS: STREET 1: CHIQUITA BRANDS INTERNATIONAL, INC. STREET 2: 250 EAST FIFTH STREET CITY: CINCINNATI STATE: OH ZIP: 45202 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 10-K405 1 edg10kbod00b.txt CHIQUITA BRANDS 2000 FORM 10-K - ------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K / 405 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended Commission File December 31, 2000 Number 1-1550 CHIQUITA BRANDS INTERNATIONAL, INC. Incorporated under the I.R.S. Employer I.D. Laws of New Jersey No. 04-1923360 250 East Fifth Street, Cincinnati, Ohio 45202 (513) 784-8000 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class On Which Registered - ------------------- ------------------- Common Stock ($.01 par value) New York, Pacific, Boston $2.875 Non-Voting Cumulative Preferred Stock, Series A New York $3.75 Convertible Preferred Stock, Series B New York 10% Senior Notes due June 15, 2009 New York Securities registered pursuant to Section 12(g) of the Act: None Other securities for which reports are submitted pursuant to Section 15(d) of the Act: 9-1/8% Senior Notes due March 1, 2004 9-5/8% Senior Notes due January 15, 2004 10-1/4% Senior Notes due November 1, 2006 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 15, 2001, there were 70,692,492 shares of Common Stock outstanding. The aggregate market value of Common Stock held by non- affiliates at March 15, 2001 was approximately $51 million. Documents Incorporated by Reference Portions of the Chiquita Brands International, Inc. 2000 Annual Report to Shareholders are incorporated by reference in Parts I and II. - ------------------------------------------------------------------------ CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- TABLE OF CONTENTS -----------------
Page ---- Part I - ------ Item 1. Business K-1 Item 2. Properties K-9 Item 3. Legal Proceedings K-10 Item 4. Submission of Matters to a Vote of Security Holders K-10 Executive Officers of the Registrant K-11 Part II - ------- Item 5. Market for Registrant's Common Equity and Related Stockholder Matters K-12 Item 6. Selected Financial Data K-12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations K-12 Item 7A. Quantitative and Qualitative Disclosures About Market Risk K-12 Item 8. Financial Statements and Supplementary Data K-12 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-12 Part III - -------- Item 10. Directors and Executive Officers of the Registrant K-13 Item 11. Executive Compensation K-15 Item 12. Security Ownership of Certain Beneficial Owners and Management K-20 Item 13. Certain Relationships and Related Transactions K-22 Part IV - ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K K-23 Signatures K-24
This Annual Report on Form 10-K includes statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included in this report, in future filings with the Securities and Exchange Commission ("SEC") and in written and verbal statements by the Company and its representatives that address events, developments or financial results that the Company expects, believes or estimates will or may occur in the future are forward-looking statements that are intended to be covered by the safe harbor provisions of that Act. These statements are based on the Company's assumptions and estimates made in light of its experience and analysis of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. They are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chiquita, including its ability to reach agreement with holders of the parent company debt regarding a restructuring of such debt, the terms of any such restructuring, prices at which Chiquita can sell its products, the costs at which it can purchase or grow (and availability of) fresh produce and other raw materials, currency exchange rate fluctuations, natural disasters and unusual weather conditions, operating efficiencies, labor relations, actions of governmental bodies, including actions with regard to the European Union's banana import regime, and other market and competitive conditions. Investors are cautioned that the forward-looking statements speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the Company undertakes no obligation to update any such statements. PART I ------ ITEM 1 - BUSINESS - ----------------- GENERAL ------- Chiquita Brands International, Inc. ("Chiquita" or the "Company") is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods sold under the "Chiquita" and other brand names. The Company has capitalized on its "Chiquita" and other premium brand names by building on its reputation for quality and worldwide leadership position in the marketing, distribution and sourcing of bananas and other fresh produce. In addition, in recent years, the Company has expanded its processed fruit and vegetable operations, primarily through acquisitions of vegetable canning companies. The Company conducts its business through subsidiaries, which operate in two segments. The segments are organized primarily on a product line basis, with each segment offering a variety of different but related products. The Fresh Produce segment includes the sourcing, transportation, distribution and marketing of Chiquita bananas and a wide variety of other fresh fruits and vegetables. The Processed Foods segment consists of the production, distribution and marketing of the Company's private-label and branded canned vegetables, branded fruit juices and beverages, processed bananas and edible- oil based consumer products. No individual customer accounted for more than 10% of the Company's consolidated net sales during any of the last three years. Financial information by business segment and geographic area for the last three years is set forth in Note 14 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders. The Company's operating performance has been adversely affected by a number of factors, resulting in losses in seven of the last nine years. In 1993, the European Union ("EU") implemented a banana quota and licensing regime which has significantly affected the worldwide banana industry and severely burdened Chiquita's operations. Although the Company has significantly reduced operating costs since 1993, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. These factors led to the Company's announcement in January 2001 that it intends to regain its financial health by restructuring the $862 million face amount of publicly-held senior notes and subordinated debentures of Chiquita Brands International, Inc., a parent holding company which does not have business operations of its own. If successful, the restructuring would result in conversion of a significant portion of such debt into common equity, and the equity interests of existing common, preferred and preference shareholders would be diluted. The restructuring plan would likely be presented for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns. Discussions with debt holders are in the preliminary stages, and there can be no assurance that an agreement regarding a financial restructuring will be reached. As part of the restructuring initiative, the Company has discontinued all interest and principal payments on its public debt, including January and March 2001 interest payments on senior note issues and an $87 million principal payment of 7% subordinated debentures at maturity on March 28, 2001. As a result, all such debt is subject to acceleration. Because the proposed restructuring would affect only the debt of the parent holding company, the Company does not believe this restructuring would impact its day-to-day operations with regard to employees, customers, suppliers, distributors and general business. For further discussion of the EU quota, foreign exchange, the proposed parent company debt restructuring and other factors affecting Chiquita's results of operations, liquidity and financial condition, see "Management's Analysis of Operations and Financial Condition" and Note 2 to the Consolidated - K-1 - Financial Statements included in the Company's 2000 Annual Report to Shareholders. Factors that may cause fluctuations in operating results are also discussed below. Fresh Produce - ------------- The Company markets an extensive line of fresh fruits and vegetables sold under the "Chiquita" and other brand names. Chiquita's fresh fruits and vegetables include bananas, berries, citrus, grapes, lettuce, melons, mushrooms, onions, potatoes, stone fruit, tomatoes and a wide variety of other fresh produce. Fresh Produce sales, as a percent of consolidated net sales, amounted to 79% in 2000, 80% in 1999, and 82% in 1998. In 2000, approximately 55% of Fresh Produce sales were in North America and the remainder were in European and other international markets. The core of Chiquita's Fresh Produce operations is the marketing, distribution and sourcing of bananas. Sales of bananas accounted for approximately two-thirds of Fresh Produce net sales in each of the last three years. Chiquita believes it derives competitive benefits in the marketing, distribution and sourcing of fresh produce through: * highly recognized brand names and strong brand management; * a reputation for quality, superior service, and environmental and social responsibility; * strong market positions in North America and Europe, its principal markets; * a modern, cost-efficient transportation system; * an industry leading position in terms of number and geographic diversity of major sources of bananas; * state-of-the-art banana ripening techniques; and * best-demonstrated agricultural practices. These characteristics enhance Chiquita's ability to provide customers with premium quality products on a consistent basis. Distribution and Marketing. Chiquita sells and distributes a variety of quality fruit and vegetable products through a network of fresh produce operations in North America, Europe and the Pacific Rim. Some of these operations involve the sourcing, distribution and marketing of fresh fruits and vegetables while others involve only distribution and marketing. The Company has regional sales organizations to sell to major retail customers and wholesalers. The retail customers include large chain stores with which Chiquita enters into product and service contracts, typically for a one-year term. The Company's operating subsidiary, Chiquita Brands, Inc., owns the "Chiquita" trademark and most of the Company's other trademarks, which are registered in jurisdictions around the world. Approximately 90% of the bananas sold by the Company are sold under the "Chiquita" or "Chiquita Jr." brand name, with the remaining 10% sold under second labels such as "Consul" and "Amigo." Other fresh fruits are also sold under the "Chiquita" and other brand names and include apples, apricots, berries, cherries, grapes, melons, peaches, pears, plums and tomatoes. Fresh vegetables, such as asparagus, beans, broccoli, carrots, celery, cucumbers, lettuce, mushrooms, onions, peppers and potatoes, are sold under the "Premium" and other brand names. - K-2 - Fresh produce is highly perishable and must be brought to market and sold generally within 30 to 60 days after harvest. Some items, such as lettuce and berries, must be sold more quickly, while other items, such as apples and pears, can be held in cold storage for longer periods of time. The selling price received for each type of fruit or vegetable depends on several factors, including: * the availability and quality of the produce item in the market; and * the availability and quality of competing types of produce. For example, although banana production tends to be relatively stable throughout the year, banana pricing is seasonal. This is because bananas compete against other fresh fruit, a major portion of which comes to market beginning in the summer. As a result, banana prices are typically higher during the first half of the year. Adverse weather may restrict the availability of fresh produce and result in increased prices. However, competing producers and distributors may be affected differently, depending upon their ability and the cost to obtain alternate supplies. Bananas are distributed and marketed internationally in a highly competitive environment. While smaller companies, including growers' cooperatives, are a competitive factor, Chiquita's primary competitors are a limited number of other international banana importers and exporters. To compete successfully, Chiquita must be able to source bananas of uniformly high quality and, on a timely basis, transport and distribute them to worldwide markets. Chiquita sells approximately one-fourth of all bananas imported into North America and Europe, its principal markets. As consolidation has increased among domestic and international food retailers, wholesalers and retailers are seeking fewer suppliers of a wide range of fresh produce. Chiquita sources a variety of fresh produce from Central and South America and Mexico for international distribution. It sources certain types of seasonal produce in both the northern and southern hemispheres in order to increase availability throughout the year. For other types of fresh produce, the sourcing and distribution is more regionalized. Typically, in all these markets, no single competitor has a dominant market share. Bananas are one of the few fruits that ripen best off the plant. To control quality, bananas are normally ripened under controlled conditions. Most other types of fresh produce are already ripe when shipped or ripen naturally. In recent years, the Company has increased its sales of "yellow" (ripened) bananas relative to unripened green fruit. The Company currently operates ripening centers in Europe, North America and the Far East. In Europe, the Company owns state-of-the-art pressurized rooms with electronic controls to manage the ripening cycle. In addition, the Company has developed a unique patented ripening technology, used primarily in North America, that enables bananas to be ripened in shipping containers. The Company believes that providing this service benefits customers through improved quality, longer shelf-life, lower inventory levels and minimized investment. The Company has also entered into a number of relationships with major retailers where the Company acts as a technical advisor to the customer or actually operates the customer's ripening facilities. Chiquita also provides retail marketing support services to its customers. These services allow the Company to develop long-term supply relationships with these customers. Because of its reputation for consistent product quality, leadership in category management, the strength of the "Chiquita" brand and its innovative ripening and marketing techniques, Chiquita generally obtains a premium price for its bananas. - K-3 - Logistics. Transportation costs are significant in Chiquita's Fresh Produce business. Fuel oil is an important component of transportation costs. Fresh produce distributed internationally is transported primarily by ocean-going vessels. Chiquita ships its tropical fruit in refrigerated vessels owned or chartered by the Company. All of Chiquita's tropical fruit shipments into the North American and European markets are delivered using pallets or containers. This minimizes damage to the product by eliminating the need to handle individual boxes. Most of the Company's vessels are equipped with controlled atmosphere technology, which improves product quality and facilitates the ripening process. In addition, the Company transports third-party cargo primarily from North America to Latin America in order to reduce net transportation costs. Chiquita owns or controls under long-term lease approximately 75% of its aggregate shipping capacity. The remaining capacity is operated under contractual arrangements having terms of approximately one year. (See also ITEM 2 - PROPERTIES and Notes 5 and 6 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders.) Chiquita operates loading and unloading facilities which it owns or leases in Central and South America and various ports of destination. To transport fresh produce to and from these ports, as well as fresh produce grown near its intended market, Chiquita generally uses common carriers and trucks owned or leased by the Company. Sourcing. Chiquita has a greater number and geographic diversity of major sources of bananas than any of its competitors. During 2000, approximately one-fifth of all bananas sold by Chiquita were sourced from each of Costa Rica and Panama. Bananas are also sourced from numerous other countries. Among these, Colombia, Guatemala and Honduras each produced between 8% and 14% (depending on the country) of the bananas sold by Chiquita during 2000. The most significant cost in the production of bananas is labor, which varies depending on the country of origin. Since bananas are packed in cardboard boxes for shipment, paper cost is also significant. In 2000, approximately half the bananas sourced by Chiquita were produced by subsidiaries and the remainder were purchased under fruit supply arrangements from other growers. Purchasing fruit allows the Company to avoid substantial capital spending associated with the investment, maintenance and financing of additional banana farms. Under some of these fruit supply arrangements, Chiquita furnishes technical assistance to its suppliers to support the production and preparation of bananas for shipment. No single supplier provided more than 10% of the bananas sold by Chiquita in 2000. During the early 1990's, the Company expended significant capital to improve production and logistics efficiency and environmental performance. Since 1991, the Company has invested in and implemented the Better Banana Project, an independent certification program aimed at increasing quality and productivity while also minimizing environmental impact and improving conditions for workers. All of Chiquita's owned banana farms in Latin America have achieved certification under this program from third party environmental groups. The Company is also working with its third party suppliers to achieve compliance with these standards. After the destruction of farms in Honduras and Guatemala caused by Hurricane Mitch in 1998, the Company made substantial investments to rehabilitate certain farms and other production facilities which were destroyed or damaged. This permitted reorganization of these banana facilities to maximize productivity and minimize operating costs. - K-4 - In addition to its extensive production of bananas, Chiquita produces, primarily through joint ventures and other equity investments, apples and grapes in Chile, grapefruit in Florida, and mushrooms and berries in Australia. However, the majority of other fresh produce marketed by Chiquita is purchased from numerous geographically diverse producers and importers. Various arrangements involve formal long-term purchase contracts or informal market trading with unrelated suppliers. Under these arrangements, Chiquita may provide financial assistance. None of these arrangements accounts for more than 5% of the Company's consolidated net sales. Fresh produce is vulnerable to adverse weather conditions including windstorms, floods, drought and temperature extremes, which are quite common but difficult to predict. Fresh produce is also vulnerable to crop disease and pests. These factors may result in lower sales volume and increased costs, but may also restrict supplies and lead to an increase in prices for fresh produce. In addition, production may be affected by political changes in countries where fruits and vegetables are grown. However, competitors may be affected differently, depending upon their ability and the cost to obtain adequate supplies from sources in other geographic areas. Chiquita's overall risk from these factors is reduced by the geographic diversity of its producing locations. Processed Foods - --------------- Chiquita's Processed Foods include: * private-label and branded canned vegetables sold in North America and abroad; * processed bananas and other fruits sold primarily in North America, Europe and the Far East under the "Chiquita" brand; * fruit juices and beverages sold in North America and Europe; and * other consumer products (primarily edible oils) sold in Honduras under the "Clover" and other brand names. Processed Foods sales, as a percent of consolidated net sales, amounted to 21% in 2000, 20% in 1999 and 18% in 1998. Sales of canned vegetables accounted for 83% of Processed Foods net sales in 2000, 80% in 1999 and 81% in 1998. Chiquita's vegetable canning operations are conducted by its subsidiary, Chiquita Processed Foods, L.L.C. ("CPF"). CPF's operations have continued to consolidate productive capacity and integrate four canning operations acquired from September 1997 through April 1999. CPF now operates 15 processing facilities in the upper Midwest and Northwest and markets a full line of over 20 types of processed vegetables, including corn, green beans, peas, pumpkin, root vegetables and other related products, to retail and food service customers throughout the U.S. and in over 40 other countries. Corn is CPF's leading canned vegetable product, accounting for approximately 30% of Processed Foods net sales. CPF is the largest processor of private-label canned vegetables in the U.S. and enjoys the largest share of the U.S. private-label canned vegetable business. Although the canned vegetable market as a whole has remained relatively static in the last five years, the private-label segment has exhibited consistent growth. Given the higher margins on these products relative to brand names, retailers continue to provide these products greater and more visible shelf space and have begun to focus on creating a broad brand image. As the retail segment of the industry has consolidated, retail chains have sought to differentiate their franchises and achieve higher margins, and private-label products have played a role in both of these initiatives. CPF also sells branded products under the "Stokely's," "Festal," "Tendersweet" - K-5 - and other labels. CPF competes directly with a few major producers of both branded and private-label canned vegetables, as well as indirectly with numerous marketers of frozen and fresh vegetable products. Operating results for CPF are dependent on product availability and market prices. Market prices tend to decrease as more product is available and increase when product is scarce. The availability of vegetables for canning is a direct result of planting acreage, weather and growing conditions and crop yields. Favorable growing conditions increase both crop size and crop quality. Prior to each growing season, CPF enters into fixed-price supply agreements with local independent growers to purchase raw vegetables to be processed in its canning facilities. These supply agreements are typically for one year. To ensure the quality and freshness of the vegetables used in its products, CPF: * selects growers located near its canning facilities; * requires growers to use seed selected by CPF; * periodically inspects the crops; and * controls the harvest process and its timing. Following harvest, raw products are transported to the processing facility, where they are sorted, sized, cut or trimmed, washed, inspected and then canned and cooked, providing canned vegetables with a shelf life of three to five years. In addition to visual inspection, CPF increasingly relies on electronic inspection machinery that recognizes and rejects any off- color or blemished product. CPF's high emphasis on quality assurance during the production process also includes the grading and inspection of raw products, inspection of incoming cans, sampling and laboratory testing of products during production and inspection of finished goods on a sample basis prior to shipment. CPF's most important raw material besides raw vegetables is cans for product packaging. Can prices are typically agreed upon in the spring and do not fluctuate over the following pack season. CPF's products are shipped to customers via truck or rail. CPF ships to its customers both directly from its plants and from regional storage and distribution centers. This maximizes customer service and efficiency. Sales of canned vegetables are not highly seasonal, although some products, such as canned pumpkin, have higher sales volume in certain months. Since the availability of vegetables for canning is predominantly seasonal, the production of canned vegetables is also seasonal. As a result, CPF requires a higher level of working capital to meet production requirements during these periods. During 2000, the Company sold California Day-Fresh Foods, Inc., which produced and marketed natural fresh fruit and vegetable juices in the U.S. In Europe, the Company continues to sell "Chiquita" branded fruit juices and beverages, which are manufactured by third parties to Chiquita's specifications. In the United States, several national fruit juice and beverage producers manufacture and sell shelf-stable, refrigerated and frozen juice and beverage products using the "Chiquita" brand name and pay Chiquita a license fee. The Company's juice products compete with a wide variety of beverages in the highly competitive commercial beverages industry. Chiquita's processed banana products include banana puree, frozen banana pieces, sliced bananas and other specialty products. These products are sold to producers of baby food, fruit beverages, baked goods and fruit-based products, and to wholesalers of bakery and dairy food products, including selected - K-6 - licensees such as Beech-Nut and General Mills. Chiquita produces these products in a processing facility in Costa Rica and through an Ecuadorian joint venture. This joint venture produces a broad range of processed fruit products, including passion fruit, pineapples and mangoes. Although Chiquita enjoys the largest share of the worldwide processed banana market, this industry remains highly competitive due to the existence of numerous other producers with available processing capacity, including other banana growers, fruit ingredients companies and large, international food companies. The Company's consumer products operations in Honduras are conducted through a 50%-owned joint venture. The joint venture produces and sells palm- oil based products, including cooking oils, shortening, margarine, soaps, and other products such as tomato pastes and flour, under the "Clover" and other brand names. It competes principally with a number of small local firms and subsidiaries of multinational corporations. RISKS OF INTERNATIONAL OPERATIONS --------------------------------- The Company conducts operations in many foreign countries. Information about the Company's operations by geographic area is in Note 14 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders and is incorporated herein by reference. The Company's foreign operations are subject to a variety of risks inherent in doing business abroad. In 1993, the European Union implemented a quota regime which reduced the volume of bananas imported into the EU from Latin America, Chiquita's primary source of fruit, while granting market access to bananas grown in Caribbean and African sources that far exceeded pre-1993 volumes from those areas. In addition, the new system allocated a majority of the licenses necessary to gain access to the Latin American quota to importers that had marketed less than 5% of those bananas prior to 1993. This quota and licensing regime had the effect of significantly decreasing the Company's overall volume and market share in the EU. Following imposition of this regime, prices within the EU increased and have remained at a higher level than the levels prevailing prior to the quota. Banana prices in other worldwide markets, however, declined as the displaced EU volume entered those markets, and have remained lower than in years prior to the EU quota. The EU quota and licensing regime has been determined to be in violation of a number of international trade obligations by both the World Trade Organization ("WTO") and its predecessor, the General Agreement on Tariffs and Trade ("GATT"). Recently, the EU indicated its intention to implement a "first come, first served" system that would continue to limit access for Latin American bananas. The EU's current implementation target for the new "first come, first served" system is July 1, 2001. See "Management's Analysis of Operations and Financial Condition" included in the Company's 2000 Annual Report to Shareholders for a chronology summarizing key developments and challenges to the quota and licensing regime since it was first implemented. Uncertainties remain as to the outcome of this dispute and its effect on the Company and the banana industry as a whole. If the recently proposed "first come, first served" system is implemented, it would likely result in even further harm to the Company's business. The Company's operations are heavily dependent upon products grown and purchased in Central and South American countries; at the same time, Chiquita's operations are a significant factor in the economies of many of these countries. These activities are subject to risks that are inherent in operating in these countries, including government regulation, currency restrictions and other restraints, risks of expropriation and burdensome taxes. There is also a risk that legal or regulatory requirements will be changed or that administrative policies will change. - K-7 - The Company's operations in some Central and South American countries are dependent upon leases and other agreements with the governments of these countries. Chiquita leases all the land it uses in Panama from the Republic of Panama. There are two leases, one for land on the Caribbean coast and the other for land on the Pacific coast. The leases each have an initial term of 20 years expiring at the end of 2017, with consecutive 12-year extension periods. Either lease can be canceled by Chiquita at any time on three years' prior notice; the Republic of Panama has the right not to renew either lease at the end of the initial term or any extension period, provided that it gives four years' prior notice. The Company's worldwide operations and products are subject to numerous governmental regulations and inspections by environmental, food safety and health authorities, including those relating to the use and disposal of agrichemicals. These regulations directly affect day-to-day operations. The Company believes it is substantially in compliance with applicable regulations. However, actions by regulators in the past have required, and in the future may require, operational modifications or capital improvements at various locations. In addition, if violations occur, regulators can impose fines, penalties and other sanctions, and the Company may be subject to private lawsuits alleging personal injury or property damage. The Company's operations involve transactions in a variety of currencies. Accordingly, its operating results may be significantly affected by fluctuations in currency exchange rates. These fluctuations affect Chiquita's operations because many of its costs are incurred in currencies different from those received from the sale of its products. In addition, there is normally a time lag between the incurrence of production costs and collection of the related sales proceeds. The Company's policy is to exchange local currencies for dollars immediately upon receipt, thus reducing exchange risk. The Company also engages in various hedging activities to further reduce potential losses on cash flows originating in currencies other than the U.S. dollar. Nevertheless, in recent years, operating results have been adversely affected by the continued weakness of major European currencies against the U.S. dollar. For information with respect to currency exchange, see Notes 1 and 8 to the Consolidated Financial Statements and "Management's Analysis of Operations and Financial Condition" included in the Company's 2000 Annual Report to Shareholders. LABOR RELATIONS --------------- The Company employs approximately 30,000 associates. Approximately 23,000 of these associates are employed in Central and South America, including 19,000 workers covered by 35 labor contracts. Contracts covering approximately 9,000 employees are currently being renegotiated or expire in 2001. The number of employees at the Company's vegetable canning subsidiary increases from approximately 1,700 to 4,500 during peak production times. Approximately 500 of these employees are covered by labor contracts. Strikes or other labor-related actions sometimes occur upon expiration of labor contracts or during the term of the contracts. - K-8 - ITEM 2 - PROPERTIES - ------------------- The Company owns approximately 75,000 acres and leases approximately 35,000 acres of improved land, principally in Colombia, Costa Rica, Honduras and Panama. This land is primarily used for the cultivation of bananas and support activities, including the maintenance of floodways. The Company also owns warehouses, power plants, packing stations, irrigation systems and loading and unloading facilities used in connection with its Fresh Produce operations. The Company owns or controls under long-term bareboat charters 16 refrigerated vessels and has 5 additional vessels under time charters, primarily for transporting tropical fruit sold by Chiquita. From time to time, excess capacity may be utilized by transporting cargo for third parties or by chartering or subchartering vessels to other shippers. In addition, the Company enters into spot charters and contracts of affreightment as necessary to supplement its transportation resources. Chiquita also owns or leases other related equipment, including refrigerated container units, used to transport fresh produce. The Company's fleet of shipping vessels was built through a substantial investment program during the late 1980's and early 1990's. These refrigerated transport vessels have economic lives in excess of 25 years. The owned ships are pledged as collateral for related financings. Properties used by the Company's Processed Foods operations include a total of 15 vegetable canning facilities in Idaho, Illinois, Iowa, Michigan, Minnesota, Oregon, Washington and Wisconsin, fruit processing facilities in Costa Rica and Ecuador, and edible oil processing facilities in Honduras. All of these facilities are owned, with the exception of the facilities in Ecuador and Honduras which are owned and operated by joint ventures. In addition, certain machinery and equipment owned by the Company's vegetable canning subsidiary, CPF, is pledged as collateral for CPF's $200 million credit facility. Other operating units of the Company own, lease and operate properties, principally in the United States, Europe, and Central and South America. The Company leases the space for its headquarters in Cincinnati, Ohio. The Company's subsidiary, Chiquita Brands, Inc. ("CBI"), owns directly or indirectly substantially all the business operations and assets of the Company. Substantially all U.S. assets of CBI and its U.S. subsidiaries (other than those subsidiaries, such as CPF, with their own credit facilities) are pledged to secure CBI's $120 million credit facility. The credit facility is also secured by liens on CBI's trademarks, as well as pledges of stock of, or guarantees by, various CBI subsidiaries worldwide. The Company believes its property and equipment are generally well maintained, in good operating condition and adequate for its present needs. The Company typically insures its assets against standard risks with third party insurers, with the exception of banana cultivations. The Company self- insures its banana cultivations because of the high total cost of insurance from third parties and the geographic diversity of its banana sources. For further information with respect to the Company's physical properties, see the descriptions under ITEM 1 - BUSINESS - GENERAL above, and Notes 5 and 6 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders. - K-9 - ITEM 3 - LEGAL PROCEEDINGS - -------------------------- A number of legal actions are pending against the Company. Based on information currently available to the Company and on advice of counsel, management does not believe this litigation will, individually or in the aggregate, have a material adverse effect on the financial statements of the Company. In May 1998, a Cincinnati, Ohio newspaper published accounts describing alleged improper business practices by the Company in certain of its operations in Central and South America. The newspaper reported that one of its sources had previously provided to the SEC information furnished to the newspaper. In June 1998, the newspaper renounced the series of articles as containing untrue accusations and conclusions and creating a false and misleading impression of Chiquita's business practices. In April 1998, the Company was notified that it was the subject of a confidential investigation by the SEC seeking to determine whether the Company has complied with certain provisions of the Securities Exchange Act of 1934 (the "Exchange Act"), including provisions of the Foreign Corrupt Practices Act (the "FCPA"). The investigation seeks to determine whether the Company, with respect to certain operations in Central and South America, has complied with FCPA provisions relating to the making or offering of illegal payments to foreign officials and the maintenance of fair and accurate books, records and accounts and an appropriate system of internal accounting controls and has complied with Exchange Act provisions relating to the making, or filing with the SEC of reports containing, untrue statements of material fact or omissions of material fact. The Company believes that it has not violated the Exchange Act or the FCPA and has cooperated with the investigation. In January 2001, Chiquita filed a lawsuit in the Court of First Instance of the European Court of Justice claiming damages from the European Commission (the EU's executive body) for not carrying out the EU's commitment to reform its banana import regime to comply with 1997 WTO rulings. The lawsuit seeks over $500 million for damages inflicted on Chiquita during the two years since the inception of the amended regime in January 1999. The suit also reserves the right to claim future damages based on the continuing illegality of the regime, including the new "first come, first served" proposal that the EU intends to implement. For further discussion of the EU quota and its evolution and impact on the Company, see ITEM 1 - BUSINESS - RISKS OF INTERNATIONAL OPERATIONS and "Management's Analysis of Operations and Financial Condition" in the Company's 2000 Annual Report to Shareholders. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ Not applicable. - K-10 - EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------ Carl H. Lindner (age 81) - Mr. Carl Lindner has been Chairman of the Board and Chief Executive Officer of Chiquita since 1984. He is also Chairman of the Board and Chief Executive Officer of American Financial Group, Inc. ("AFG") which, through its subsidiaries, is engaged primarily in property and casualty insurance businesses and in the sale of annuities, life and health insurance. For more than 40 years, Mr. Lindner has been Chairman of the Board and Chief Executive Officer of American Financial Corporation ("AFC"), which became an AFG subsidiary in 1995. Mr. Lindner also serves as Chairman of the Board of Great American Financial Resources, Inc., which is over 80% owned by AFG. Keith E. Lindner (age 41) - Mr. Keith Lindner has been Chiquita's Vice Chairman of the Board since 1997 and was President and Chief Operating Officer from 1989 to 1997. He has served the Company in various executive capacities since 1984. He is also Co-President and a director of AFG and AFC. Steven G. Warshaw (age 47) - Mr. Warshaw has been Chiquita's President and Chief Operating Officer and a director since 1997. He served as Chief Financial Officer from 1994 to 1998 and as Executive Vice President and Chief Administrative Officer from 1990 to 1997. He has served the Company in various capacities since 1986. Peter A. Horekens (age 52) - Mr. Horekens was appointed President and Chief Operating Officer of the Company's Chiquita Fresh Group - Europe in March 2000. He was President and Chief Operating Officer of the Company's Chiquita Banana Group - Europe from 1997 to 2000. Mr. Horekens had previously been employed by Kellogg Company, a multi-national food company, for several years, most recently as Vice President and Director of Asian Operations. Robert F. Kistinger (age 48) - Mr. Kistinger was appointed President and Chief Operating Officer of the Company's Chiquita Fresh Group in March 2000. He was President and Chief Operating Officer of the Company's Chiquita Banana Group from 1997 to 2000 and Senior Executive Vice President of the Chiquita Banana Group from 1994 to 1997. He has served the Company in various capacities since 1980. Robert W. Olson (age 55) - Mr. Olson has been Senior Vice President, General Counsel and Secretary of the Company since 1996. He joined the Company as Vice President and General Counsel in 1995. James B. Riley (age 49) - Mr. Riley was appointed Senior Vice President and Chief Financial Officer of the Company in January 2001. From May 1999 to his appointment, he was Senior Vice President and Chief Financial Officer of Elliot Company, a global manufacturer of turbomachinery. From autumn 1998 to spring 1999, he was a principal of James Burns Riley & Associates, a consulting firm. Prior to autumn 1998, Mr. Riley was Executive Vice President and Chief Financial Officer of Republic Engineered Steels, Inc., a steel manufacturer. William A. Tsacalis (age 57) - Mr. Tsacalis has been Vice President and Controller of the Company since 1987. He was Controller from 1984 to 1987 and has served the Company in various capacities since 1980. - K-11 - PART II ------- ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED - ----------------------------------------------------------- STOCKHOLDER MATTERS ------------------- The Company's common stock is listed for trading on the New York, Boston and Pacific Stock Exchanges under the symbol "CQB." At March 15, 2001, there were 5,205 common shareholders of record. Price and dividend information for the Company's common stock is in Note 17 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders. Restrictions on the Company's ability to declare and pay dividends, and the Company's suspension of its common, preferred and preference stock dividends are described in "Management's Analysis of Operations and Financial Condition" and Notes 2, 9 and 12 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders. The information in Notes 2, 9, 12 and 17 described above is incorporated herein by reference. ITEM 6 - SELECTED FINANCIAL DATA - ---------------------------------- This information is included in the table entitled "Selected Financial Data" on page 32 of the Company's 2000 Annual Report to Shareholders and is incorporated herein by reference. ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - -------------------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- This information is included under the caption "Management's Analysis of Operations and Financial Condition" included on pages 4 through 9 of the Company's 2000 Annual Report to Shareholders and is incorporated herein by reference. ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - --------------------------------------------------------------------- This information is included under the caption "Management's Analysis of Operations and Financial Condition - Market Risk Management" included on page 8 of the Company's 2000 Annual Report to Shareholders and is incorporated herein by reference. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ------------------------------------------------------ The Consolidated Financial Statements of Chiquita Brands International, Inc. on pages 10 through 31 of the Company's 2000 Annual Report to Shareholders, including "Quarterly Financial Data" in Note 17 to the Consolidated Financial Statements, are incorporated herein by reference. ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ---------------------------------------------------------------------- AND FINANCIAL DISCLOSURE ------------------------ None. - K-12 - PART III -------- The process for the proposed restructuring of the Company's parent company debt described under ITEM 1 - BUSINESS - GENERAL is expected to continue beyond the customary mid-May date for the Annual Meeting of Shareholders. Accordingly, the Board of Directors of the Company has fixed September 12, 2001 as the date for the 2001 Annual Meeting of Shareholders. As a result, the Company has included in this Part III certain information that otherwise would have been contained in a proxy statement for a May Annual Meeting. In addition, the Company has set new deadlines for submitting shareholder proposals for the 2001 Annual Meeting, as follows: * In order for shareholder proposals to be eligible for inclusion in the Company's Proxy Statement to be mailed in August for the September 2001 Annual Meeting, they must be received by the Company before May 16, 2001. * If a shareholder who intends to propose any other matter to be acted upon at the 2001 Annual Meeting does not notify the Company of such intention before June 22, 2001, then the persons named as proxies in the Company's Proxy Statement for the 2001 Annual Meeting will be able to exercise any discretionary authority conferred on them as proxies to vote on such matter even if the matter is not discussed in the Proxy Statement. Proposals should be mailed to the attention of the Corporate Secretary at Chiquita Brands International, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202. ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------- Information relating to the Company's executive officers is included in Part I of this Report. Information About the Directors - -------------------------------
Name, Age, and Committee Current Occupation and Tenure as Director Memberships Employment Background - ------------------ ----------- ---------------------- Carl H. Lindner Executive Mr. Carl Lindner has been Chairman of Age 81 (Chairman) the Board and Chief Executive Officer Director since of Chiquita since 1984. He is also 1976 Chairman of the Board and Chief Executive Officer of American Financial Group, Inc. ("AFG") which, through its subsidiaries, is engaged primarily in property and casualty insurance businesses and in the sale of annuities, life and health insurance. For more than 40 years, Mr. Lindner has been Chairman of the Board and Chief Executive Officer of American Financial Corporation ("AFC"), which became an AFG subsidiary in 1995. Mr. Lindner also serves as Chairman of the Board of Great American Financial Resources, Inc., which is over 80% owned by AFG. Keith E. Lindner Executive Mr. Keith Lindner has been Chiquita's Age 41 Vice Chairman of the Board since 1997 Director since and was President and Chief Operating 1984 Officer from 1989 to 1997. He has served the Company in various executive capacities since 1984. He is also Co-President and a director of AFG and AFC. - K-13 - Rohit Manocha Audit and Mr. Manocha has been a director since Age 41 Compensation January 2001. He has been a partner Director since in Thomas Weisel Partners LLC, a 2001 merchant banking firm, since June 1999. From 1994 to March 1999 he served as a managing director in investment banking with ING Baring Furman Selz. Fred J. Runk Mr. Runk has been Senior Vice Age 58 President and Treasurer of AFG and AFC Director since since 1995. For more than five years 1984 prior to that time, he served as Vice President and Treasurer of AFC. He was a Vice President of Chiquita from 1984 to 1996 and was its Chief Financial Officer from 1984 to 1994. Gregory C. Thomas Audit Mr. Thomas has been a director since Age 53 (Chairman) and November 2000. He has been Chief Director since Compensation Financial Officer of Astrum Digital 2000 Information, Inc., a data gathering and marketing firm since March 2000. From 1990 to 1996 he served as Executive Vice President and Chief Financial Officer of Citicasters Inc. (formerly named Great American Communications Company), an affiliate of AFG, until its sale by AFG in 1996. William W. Verity Audit and Mr. Verity has been a Partner of Age 42 Compensation Pathway Guidance L.L.C., a consulting Director since (Chairman) firm that provides strategic guidance 1994 to senior executives, since October 2000. From 1991 to September 2000 he was Chairman and Chief Executive Officer of ENCOR Holdings, Inc., a developer and manufacturer of plastic molded components. Steven G. Warshaw Executive Mr. Warshaw has been Chiquita's Age 47 President and Chief Operating Officer Director since since 1997. He served as Chief 1997 Financial Officer from 1994 to 1998 and as Executive Vice President and Chief Administrative Officer from 1990 to 1997. He has served the Company in various capacities since 1986.
Carl H. Lindner is Keith E. Lindner's father. Section 16(a) Beneficial Ownership Reporting Compliance - ------------------------------------------------------- Section 16(a) of the Securities Exchange Act of 1934 requires Chiquita's executive officers and directors and persons who own more than 10% of any class of its equity securities to file forms with the SEC and the New York Stock Exchange to report their ownership and any changes in their ownership of Chiquita securities. These persons also must provide Chiquita with copies of these reports when filed. Based on a review of copies of those forms, our records, and written representations from our directors and executive officers that no other reports were required, Chiquita believes that all Section 16(a) filing requirements were complied with during and for 2000, except that during 2000, a Form 4 for Carl H. Lindner reporting four purchases of Chiquita's 7% Convertible Subordinated Debentures during 1997 and 1998 was filed late. - K-14 - ITEM 11 - EXECUTIVE COMPENSATION - --------------------------------- Summary Information - ------------------- The table below summarizes the annual and long-term compensation of Chiquita's Chairman of the Board and Chief Executive Officer, the Vice Chairman of the Board and the four most highly paid other executive officers for 2000 (collectively referred to as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE --------------------------- Long-Term Annual Compensation Compensation --------------------------------------- ---------- Other Securities All Other Annual Underlying Compensation Name and Principal Salary Bonus ($) Compensation Stock on Position in 2000 Year ($) ($) Options(#) ($) - ------------------- ------ --------- ---------- ------------ ---------- --------- Carl H. Lindner 2000 62,500 -0- -0- -0- 2,700 Chairman of the Board 1999 65,000 -0- -0- -0- 3,012 and Chief Executive 1998 115,000 -0- -0- -0- 3,012 Officer Keith E. Lindner 2000 47,500 -0- -0- -0- 6,024 Vice Chairman of the 1999 50,000 -0- -0- -0- 11,892 Board 1998 100,000 -0- -0- -0- 16,036 Steven G. Warshaw 2000 700,000 725,000 -0- -0- 32,487 President and Chief 1999 600,000 -0- -0- 200,000 92,024 Operating Officer 1998 600,000 725,000 -0- 80,000 58,574 Robert F. Kistinger 2000 500,000 425,000 -0- -0- 81,778 President and Chief 1999 450,000 -0- -0- 50,000 102,506 Operating Officer, 1998 450,000 425,000 -0- 50,000 83,521 Chiquita Fresh Group Robert W. Olson 2000 300,000 200,000 618 -0- 80,237 Senior Vice President, 1999 275,000 150,000 914 50,000 47,404 General Counsel and 1998 250,000 260,000 2,806 30,000 39,995 Secretary Peter A. Horekens 2000 256,052 180,440 -0- 15,000 30,781 President and Chief 1999 248,588 -0- -0- 35,000 29,190 Operating Officer, 1998 231,754 261,199 -0- 25,000 29,202 Chiquita Fresh Group- Europe Includes amounts deferred under Chiquita's Capital Accumulation Plan and Deferred Compensation Plan. Bonuses reported for 2000 were awarded in early 2001 based on 2000 performance. Amount of gross-ups to reimburse the Named Executive Officer for taxes resulting from payments by Chiquita of certain expenses. - K-15 - Amounts disclosed for 2000 consist of the following contributions and payments by Chiquita: Contributions to Chiquita Above Market Term Contributions Capital Interest Earned Life to Chiquita Accumulation on Deferred Insurance 401 (k) Plan Plan (a) Compensation (b) Premiums ------------- ------------- ---------------- ---------- Carl H. Lindner $ -- $ -- $ -- $ 2,700 Keith E. Lindner -- -- 6,024 -- Steven G. Warshaw 15,300 10,000 7,007 180 Robert F. Kistinger 16,850 15,000 49,748 180 Robert W. Olson 13,400 49,300 14,963 2,574 Peter A. Horekens (c) -- -- -- -- (a) Due to IRS limitations on the amount which can be deferred under the Chiquita 401(k) Savings and Investment Plan. (b) Assumes the highest rate payable under Chiquita's Deferred Compensation Plan, which has a graduated interest rate based on the length of deferral. (c) Mr. Horekens received benefits totaling a U.S. dollar equivalent of $30,781 in 2000 as follows: health, death and disability insurance, $13,417; and retirement arrangements, $17,364. Includes $15,000 received as Chairman of the Executive Committee. Dollar amounts represent U.S. equivalents of amounts paid in foreign currency.
Compensation of Directors - ------------------------- Board and Committee Fees. Each director who is not an employee of Chiquita receives an annual fee of $40,000 plus $1,500 for each Board meeting attended. Carl H. Lindner does not receive Board fees, but does receive $15,000 per year as Chairman of the Executive Committee. Members of the Audit and Compensation Committees receive $7,500 per committee per year for their services. Messrs. Thomas and Verity each receive an additional $7,500 as Chairmen of the Audit and Compensation Committees, respectively. Deferred Compensation Plan. Each director who is not an employee of Chiquita may defer from 10% to 100% of his Board compensation pursuant to Chiquita's Deferred Compensation Plan for Directors. Amounts may be deferred under this plan for a term of 5 years, 10 years or until death, disability or retirement. No director participated in this Plan during 2000. Stock Option Awards. Under Chiquita's 1998 Stock Option and Incentive Plan, each non-employee director receives a non-qualified stock option grant for 10,000 shares of Chiquita Common Stock on the date he or she is first elected a director and receives an additional stock option grant for 10,000 shares each year thereafter so long as he or she continues to serve on the Board. All options awarded to non-employee directors have an exercise price per share equal to the market price of the Common Stock on the date of grant. The options have a 20-year term and vest over a 10-year period, with 9% of the shares exercisable on the date of grant and an additional 9% exercisable on each anniversary of the grant date, until the tenth anniversary when the remaining 10% become exercisable. - K-16 - Stock Option Grants - ------------------- The following table contains information concerning grants of stock options to the Named Executive Officers in 2000. OPTION GRANTS FOR 2000 ----------------------
Individual Grants -------------------------------------------------------- Number of % of Total Securities Options Exercise or Grant Date Underlying Granted to Base Price Present Options Granted Employees ($/Share) Expiration Value Name (#) for 2000 Date ($) - ----------------- ---------------- ----------- ----------- ---------- ----------- Carl H. Lindner -0- - - - - Keith E. Lindner -0- - - - - Steven G. Warshaw -0- - - - - Robert F. Kistinger -0- - - - - Robert W. Olson -0- - - - - Peter A. Horekens 15,000 1.9% $4.3125 3/1/20 $23,130 This option is exercisable (vested) for 9% of the covered shares on the grant date and, provided that the optionee continues to be employed by Chiquita or one of its subsidiaries, becomes exercisable for an additional 9% on each anniversary of the grant date until December 31, 2009 when the remaining 10% becomes exercisable. Alternatively, provided the optionee continues to be employed, the option will become exercisable, to the extent not previously vested under the 10-year schedule, for 25% of the shares subject to the grant if and when the market price of the Common Stock has equaled or exceeded $7.50 per share for any 45 trading days subsequent to grant; for an additional 25% of the option shares if the Common Stock price equals or exceeds $10.00 per share; and for an additional 25% of the option shares if the Common Stock price equals or exceeds $12.50 per share. In the event of death, disability or retirement, the option becomes fully exercisable by the optionee or his legal representative for one year following the event or until the stated expiration date of the option, whichever occurs first. The option also becomes fully exercisable in the event of a "change-of-control" of Chiquita, as defined in its stock option plans. Represents the market price of a share of Chiquita Common Stock on March 1, 2000, the date of grant (calculated as the average of the high and low sales prices on the New York Stock Exchange). Subject to earlier expiration in the event of a termination of employment. The grant date present value was calculated using the Black-Scholes option pricing model. The assumptions used in the model included: (a) an expected Chiquita stock price volatility of 43%; (b) a risk- free interest rate of 6.7%; (c) a dividend yield of 0%; and (d) an expected option life of 8 years. In addition, the Black-Scholes model output was modified by a discount to reflect the risk of forfeiture (8% per year probability) due to restrictions on exercise of the option in accordance with the 10-year vesting provisions. Whether the assumptions used will prove accurate cannot be known at the date of grant. The actual value, if any, will depend on the market price of the Common Stock on the date of exercise.
- K-17 - Option Exercises, Holdings and Year-End Values - ---------------------------------------------- The following table provides information about stock option exercises during 2000 and reports the year-end value of stock options held by the Named Executive Officers. AGGREGATE OPTION EXERCISES IN 2000 AND 2000 YEAR-END OPTION VALUES ----------------------------------- Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options Unexercised Options at at December 31, 2000 December 31, 2000 (#) ($) ------------------------ ------------------------
Shares Acquired on Value Exercise Realized Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------ ----------- -------- ----------- ------------ ----------- ------------- Carl H. Lindner -0- -0- 18,000 2,000 -0- -0- Keith E. Lindner -0- -0- -0- -0- -0- -0- Steven G. Warshaw -0- -0- 405,250 594,750 -0- -0- Robert F. Kistinger -0- -0- 396,200 256,800 -0- -0- Robert W. Olson -0- -0- 67,500 142,500 -0- -0- Peter A. Horekens -0- -0- 67,050 172,950 -0- -0- Value is calculated as the excess of the market price of the Common Stock over the exercise price of the unexercised options. At December 31, 2000, the market value of Chiquita Common Stock ($1.0625 per share) was below the exercise prices of all then outstanding options.
Retention Arrangements - ---------------------- Chiquita's Board of Directors is concerned that, as can be the case with other public corporations, particularly those with business and financial uncertainties of the kind facing the Company, apprehensions about the possibility of a change of control of the Company may result in the departure or distraction of key executives to the Company's detriment. Accordingly, in order to encourage their retention and continued dedication, the Board has approved severance agreements with a number of key executives including Messrs. Warshaw, Kistinger, Olson and Horekens, that were entered into in 2001. The agreements with these Named Executive Officers (the "COC Agreements") would entitle them to certain benefits in the event that they were involuntarily terminated without cause or resigned for "good reason" within three years after the occurrence of a "change of control" of Chiquita. If such an involuntary termination or resignation for "good reason" occurred within two years after a "change of control," Mr. Warshaw would be entitled to a lump sum severance payment equal to the greater of $4.5 million or 3.0 times the sum of his then current annual salary and annual bonus target ("Annual Compensation"); Mr. Kistinger would be entitled to a payment equal to 3.0 times his Annual Compensation; Mr. Olson, 3.0 times his Annual Compensation; and Mr. Horekens, 2.25 times his Annual Compensation. If such a termination or resignation occurred during the third year after a "change of control," the severance payment for each of these executives would be 1.0 times his Annual Compensation. In each case, these executives would also receive the following severance benefits: (i) pro rata annual bonus for the year employment terminates; (ii) immediate vesting of outstanding stock options, restricted stock awards and employer contributions under the Company's Savings and Investment Plan and Capital Accumulation Plan; (iii) continued medical, life, disability and accident insurance at the Company's expense for a number of years equivalent to the multiple used (3.0 or 2.25) in calculating the executive's severance payment; and (iv) if severance benefits exceeded the maximum amount payable - K-18 - without incurring excise tax under Section 280G of the Internal Revenue Code by 10% or more, the Company's payment of such excise tax plus any additional taxes resulting from such payment (if such benefits exceeded such maximum by less than 10%, the benefits would be reduced to the maximum amount). The definition of "change of control" under the COC Agreements is: A (i) any person or other entity, or any "group" (other than American Financial Group, Inc., each of its subsidiaries and affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person ("Exempt Holders")), acquires or possesses beneficial ownership of 20% or more of Chiquita's voting securities (unless the percentage beneficially owned by such person, entity or group is less than the combined percentage beneficially owned by Exempt Holders) and (ii) in the case of the COC Agreements with Messrs. Kistinger, Olson and Horekens, a "management change" occurs in connection therewith or within twelve months thereafter; B (i) the voting securities of Chiquita outstanding immediately prior to a merger, sale of assets or similar transaction involving Chiquita or any subsidiary do not, immediately after the transaction, represent, directly or indirectly, 50% or more of the total voting power of the voting securities of the surviving or acquiring entity or the parent of the surviving or acquiring entity and (ii) in the case of the COC Agreements with Messrs. Kistinger, Olson and Horekens, a "management change" occurs in connection therewith or within twelve months thereafter; or C at any time, less than a majority of Chiquita's Board of Directors consists of persons (i) who were directors at November 15, 2000 ("Current Directors") or (ii) whose election or nomination as directors was approved by at least 2/3 of the directors then in office who are Current Directors or whose election or nomination was previously so approved (other than in settlement of a proxy contest). Each of Messrs. Kistinger, Olson and Horekens would also be entitled to the benefits of his COC Agreement if, following an event or transaction specified in A(i) or B(i) above, he was terminated without cause or resigned for "good reason" on a date that is not more than six months prior to a "management change" that occurs within one year after such event or transaction. The definition of "management change" under the COC Agreements is: (i) the Chief Executive Officer of the Company (or if the Company has been acquired, the acquiror) is no longer Carl H. Lindner, Keith E. Lindner or Mr. Warshaw, or (ii) less than 50% of the "executive officers" (as defined in Securities Exchange Act rules) of the Company (or such an acquiror) are at any time either (A) persons who were "executive officers" immediately prior to the first public announcement of the event that would, in the absence of a "management change," give rise to a "change of control" or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose designation as an "executive officer" was approved or recommended by one of such three individuals in his capacity as Chief Executive Officer. The definition of "good reason" under the COC Agreements is: (i) a reduction in the executive's annual salary or target bonus opportunity or unreasonable discrimination in other aspects of his compensation; (ii) required relocation outside a 50-mile radius; (iii) material breach of the COC Agreement by the Company; or (iv) in the case of Messrs. Warshaw, Kistinger and Olson, either (A) adverse change in title or material reduction in responsibilities or (B) voluntary resignation for any reason - K-19 - during the four-month period following the end of a six-month transition period after a "change of control," provided the executive has given at least four months' prior notice of such resignation. In order to further encourage his retention, the Board also approved a severance agreement with Mr. Warshaw, entered into in 2001 (his "Pre-COC Agreement"), that would provide him with certain benefits in the event he was involuntarily terminated without cause or resigned for "good reason" prior to the occurrence of a "change of control." His benefits in the event of such termination or resignation would be the same as set forth in his COC Agreement, except that his lump sum severance payment would be equal to 2.5 times his Annual Compensation. The defined terms conform to those described above with respect to his COC Agreement, except that "good reason" for purposes of his Pre-COC Agreement does not include clause (iv)(B) above. Upon the occurrence of a "change of control," Mr. Warshaw's Pre-COC Agreement would be superseded by his COC Agreement. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------------------- The following table lists all the persons who were known to be beneficial owners of five percent or more of Chiquita's outstanding voting securities as of February 28, 2001.
Name and Address of Class of Amount and Nature of Percent of Class on Beneficial Owner Shares Beneficial Ownership February 28, 2001 - ---------------------------- ----------- ----------------------- ------------------- Carl H. Lindner, Common 26,142,246 37.8% Carl H. Lindner III, Stock S. Craig Lindner, Keith E. Lindner and American Financial Group, Inc. and its Subsidiaries ("AFG") One East Fourth Street Cincinnati, Ohio 45202 - ---------------------------- Consolidated Fruit Common 6,585,850 9.5% Corporation Stock (BVI) Ltd. ("CFC") Avenida Federico Boyd No. 431 Panama City, Panama - ----------------------------- Indrizo S.A. Common 5,049,400 7.3% El Oro y La Ria 201 Stock Guayaquil, Ecuador - ------------------------------ Dimensional Fund Advisors, Common 4,529,414 6.5% Inc. Stock 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401 "Beneficial ownership" is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. For example,shares are "beneficially owned" if the person: (a) holds them directly or indirectly (through a broker or other relationship, through a position as a director or trustee, or by contract or understanding), or (b) has or shares the power to vote the shares or sell them, or (c) has the right to acquire the shares within 60 days. Of this amount, as of February 28, 2001, 23,996,295 shares are owned by AFG; 2,128,625 are owned by Carl H. Lindner individually or in a trust for the benefit of his family (including 18,000 shares which Mr. Lindner has the right to acquire pursuant to vested stock options); and 17,326 shares are owned individually by Keith E. Lindner. Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E. Lindner and trusts for their benefit (collectively, the "Lindner Family") are considered to be the beneficial owners of the Chiquita shares owned by AFG. The Lindner Family beneficially owns approximately 44.5% of AFG's common stock and shares with AFG the power to vote and dispose - K-20 - of the Chiquita Common Stock owned by AFG. AFG and the Lindner Family may be deemed to be controlling persons of Chiquita. In a Schedule 13D amendment filed with the SEC on March 13, 2001, CFC reported the following: As of March 12, 2001, CFC beneficially owned 6,585,850 shares (9.89%) of Chiquita Common Stock with full voting and investment power. The total number of shares owned by CFC does not include 67,700 shares owned by the Lewis Navarro family as to which CFC disclaims beneficial ownership. Samuel Lewis Navarro is the President and a director of CFC. In a Schedule 13G filed with the SEC on January 22, 2001, Indrizo S.A. reported that as of January 12, 2001, it beneficially owned 5,049,400 shares (7.58%) of Chiquita Common Stock with full voting and investment power. In a Schedule 13G filed with the SEC on February 2, 2001, Dimensional Fund Advisors, Inc. reported that as of December 31, 2000, it beneficially owned 4,529,414 shares (6.8%) of Chiquita Common Stock with full voting and investment power. Percentage is based on 69,178,595 shares outstanding as of February 28, 2001. Percentage does not reflect 1,513,897 additional shares outstanding as of March 15, 2001 as a result of holders' conversions of preferred stock in accordance with its terms after February 28, 2001.
The following table shows the number of shares of Chiquita stock beneficially owned on February 28, 2001 by each current director, by each named Executive Officer and by all current directors and executive officers as a group. Amount and Nature of Beneficial Ownership -----------------------------------------
$2.875 Non-Voting Cumulative Common Stock Preferred Stock, Series A ----------------------------------- ---------------------------- Shares Percent of Percent of Name of Beneficial Owner Class Shares Class - ------------------------ -------------------- ------------- ---------- ---------------- Peter A. Horekens 77,654 * Robert F. Kistinger 458,796 * Carl H. Lindner 26,124,920 38% Keith E. Lindner 24,013,621 35% Rohit Manocha 900 * Robert W. Olson 95,847 * Fred J. Runk 156,051 * Gregory C. Thomas 900 * William W. Verity 31,600 * Steven G. Warshaw 496,509 * 100 * All current directors and executive officers as a group (12 persons) 27,685,373 39% 100 * - ------------------------- *Less than 1% of outstanding shares. Unless otherwise noted, each person has full voting and investment power over the shares listed. Includes shares that may be acquired through the exercise of stock options within 60 days of February 28, 2001 in the following amounts: Peter A. Horekens, 75,150 shares; Robert F. Kistinger, 426,800 shares; Carl H. Lindner, 18,000 shares; Rohit Manocha, 900 shares; Robert W. Olson, - K-21 - 79,650 shares; Fred J. Runk, 30,600 shares; Gregory C. Thomas, 900 shares; William W. Verity, 30,600 shares; Steven G. Warshaw, 476,800 shares; and all current directors and executive officers as a group, 1,326,470 shares. Includes 23,996,295 shares of Chiquita Common Stock held by AFG and its subsidiaries. On February 28, 2001, Carl H. Lindner beneficially owned 6,942,366 shares (10.5%) of AFG's outstanding common stock (which excludes 4,851,722 shares which are held in various trusts for the benefit of his family over which Carl H. Lindner has no voting or dispositive power); and Keith E. Lindner beneficially owned 6,112,119 shares (9.2%) of AFG's outstanding common stock (which includes 487,363 shares that may be acquired through the exercise of employee stock options but excludes 1,438,774 shares which are held in various trusts for the benefit of the minor children of his brothers, over which Keith E. Lindner has sole voting and dispositive power but no pecuniary interest). Excludes 81,396 shares of Chiquita Common Stock that, as of February 28, 2001, could have been acquired through the conversion of $3,500,000 principal amount of 7% Convertible Subordinated Debentures. The conversion price of the Debentures was $43.00 per share, and the conversion rights expired on March 28, 2001. Percentage is based on 69,178,595 shares outstanding as of February 28, 2001. Percentage does not reflect 1,513,897 additional shares outstanding as of March 15, 2001 as a result of holders' conversions of preferred stock in accordance with its terms after February 28, 2001.
In addition to the AFG common stock owned by Carl H. Lindner and Keith E. Lindner (as described in footnote 3 immediately above), Chiquita's directors and executive officers owned as of February 28, 2001, or had the right to acquire within 60 days after February 28, 2001 through the exercise of stock options, shares of AFG common stock as follows: Robert W. Olson, 43,420 shares; Fred J. Runk, 364,232 shares and Steven G. Warshaw, 612 shares (the ownership of each of these persons represents less than 1% of the outstanding common stock of AFG). All current directors and executive officers of Chiquita as a group owned or had the right to acquire 13,462,749 shares of AFG common stock, which represents 20.2% of AFG's total outstanding shares. Additionally, at the same date, Fred J. Runk owned 6,153 shares of Series J Preferred Stock of American Financial Corporation ("AFC"), a subsidiary of AFG, which represents less than 1% of the outstanding shares of AFC's Series J Preferred Stock. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - --------------------------------------------------------- In 2000, Chiquita received approximately $324,000 from Great American Financial Resources, Inc., an AFG subsidiary, for use of Chiquita's cafeteria. During 2000, Chiquita paid approximately $210,000 to American Money Management Corporation, an AFG subsidiary, for use of its corporate aircraft. Chiquita compensated Thomas Weisel Partners LLP ("Weisel"), a privately held merchant banking firm, for advisory services completed and paid for in mid-2000. Rohit Manocha, a director of Chiquita, is a partner of Weisel. Chiquita believes the terms of the transactions described above were fair to Chiquita and were comparable to those that would apply to unrelated parties. - K-22 - PART IV ------- ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND - ----------------------------------------------------------- REPORTS ON FORM 8-K ------------------- (a) 1. Financial Statements. The following consolidated financial statements of the Company and the Report of Independent Auditors are included in the Company's 2000 Annual Report to Shareholders and are incorporated by reference in Part II, Item 8: Page of Annual Report ------------- Report of Independent Auditors 3 Consolidated Statement of Income for 2000, 1999 and 1998 10 Consolidated Balance Sheet at December 31, 2000 and 1999 11 Consolidated Statement of Shareholders' Equity for 2000,1999 and 1998 12 Consolidated Statement of Cash Flow for 2000, 1999 and 1998 13 Notes to Consolidated Financial Statements 14 2. Financial Statement Schedules. Financial Statement Schedules I - Condensed Financial Information of Registrant and II - Allowance for Doubtful Accounts Receivable are included on pages K-26 through K-28 and page K-29, respectively, of this Annual Report on Form 10-K. All other schedules are not required under the related instructions or are not applicable. 3. Exhibits. See Index of Exhibits (pages K-30 through K-32) for a listing of all exhibits to this Annual Report on Form 10-K. (b) The Company has filed the following reports on Form 8-K since September 30, 2000: 1. January 16, 2001 (filed January 16, 2001) - to report the Company's restructuring initiative for its publicly-held debt, including the cessation of payments on that debt, and the commitment for an $85 million credit facility obtained by its subsidiary, Chiquita Brands, Inc. 2. January 26, 2001 (filed January 31, 2001) - to report that its subsidiary, Chiquita Brands, Inc., had obtained a commitment for a $120 million credit facility to replace the facility announced on January 16, 2001. 3. March 9, 2001 (8-K filed March 14, 2001 and 8-K/A filed March 16, 2001) - to report the consummation of the $120 million credit facility for Chiquita Brands, Inc. with Foothill Capital Corporation and Ableco Finance LLC. - K-23 - SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 29, 2001. CHIQUITA BRANDS INTERNATIONAL, INC. By /s/ Carl H. Lindner ------------------- Carl H. Lindner Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on March 29, 2001: /s/ Carl H. Lindner Chairman of the Board and - ------------------- Chief Executive Officer Carl H. Lindner /s/ Keith E. Lindner Vice Chairman of the Board - -------------------- Keith E. Lindner /s/ Steven G. Warshaw Director, President and - --------------------- Chief Operating Officer Steven G. Warshaw Rohit Manocha* Director - -------------- Rohit Manocha /s/ Fred J. Runk Director - ---------------- Fred J. Runk Gregory C. Thomas* Director - ------------------ Gregory C. Thomas William W. Verity* Director - ------------------ William W. Verity - K-24 - /s/ James B. Riley Senior Vice President and - ------------------ Chief Financial Officer James B. Riley /s/ William A. Tsacalis Vice President and Controller - ----------------------- (Chief Accounting Officer) William A. Tsacalis * By /s/ William A. Tsacalis ----------------------- Attorney-in-Fact** - ------------------- ** By authority of powers of attorney filed with this Annual Report on Form 10-K. - K-25 - CHIQUITA BRANDS INTERNATIONAL, INC. - PARENT COMPANY ONLY --------------------------------------------------------- SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT ---------------------------------------------------------- (In thousands) Condensed Balance Sheet -----------------------
December 31, ------------------------ 2000 1999 ---------- ---------- ASSETS Current assets Cash and equivalents $ 26,715 $ 23,458 Trade receivables, net 29,276 22,513 Other current assets 13,099 30,955 ---------- ---------- Total current assets 69,090 76,926 Investments in and accounts with subsidiaries 1,399,708 1,551,987 Other assets 29,827 31,046 ---------- ---------- Total assets $1,498,625 $1,659,959 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Long-term debt due within one year $ 86,930 $ - Accounts payable and accrued liabilities 38,903 50,470 ---------- ---------- Total current liabilities 125,833 50,470 Long-term debt 772,380 883,815 Other liabilities 17,869 20,388 ---------- ---------- Total liabilities 916,082 954,673 Shareholders' equity 582,543 705,286 ---------- ---------- Total liabilities and shareholders' equity $1,498,625 $1,659,959 ========== ==========
Condensed Statement of Income -----------------------------
2000 1999 1998 --------- --------- --------- Net sales $ 480,467 $ 507,254 $ 503,753 Cost of sales (428,556) (469,491) (469,048) Selling, general and administrative (80,567) (76,212) (66,774) Equity in earnings of subsidiaries 21,070 57,256 85,338 --------- --------- --------- Operating income (loss) (7,586) 18,807 53,269 Interest income 9,799 13,446 1,553 Interest expense (90,080) (82,335) (71,614) Other income, net - - 6,880 --------- --------- --------- Loss before income taxes (87,867) (50,082) (9,912) Income taxes (7,000) (8,300) (8,500) --------- --------- --------- Net loss $ (94,867) $ (58,382) $ (18,412) ========= ========= =========
- K-26 - CHIQUITA BRANDS INTERNATIONAL, INC. - PARENT COMPANY ONLY -------------------------------------------------------- SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT --------------------------------------------------------- (In thousands)
Condensed Statement of Cash Flow -------------------------------- 2000 1999 1998 --------- --------- --------- Cash flow from operations $ 47,320 $ (69,546) $ (4,378) --------- --------- --------- Investing Capital contributions to subsidiaries (8,574) (41,865) - Acquisitions of businesses - - (18,907) Other (92) (5,261) 5,016 --------- --------- --------- Cash flow from investing (8,666) (47,126) (13,891) --------- --------- --------- Financing Debt transactions Issuances of long-term debt - 194,363 - Repayments of long-term debt (22,571) - (4,909) Increase (decrease) in notes and loans payable - (49,000) 49,000 Stock transactions Issuances of common stock - 58 1,483 Dividends (12,826) (30,258) (30,069) --------- --------- --------- Cash flow from financing (35,397) 115,163 15,505 --------- --------- --------- Increase (decrease) in cash and equivalents 3,257 (1,509) (2,764) Balance at beginning of period 23,458 24,967 27,731 --------- ---------- --------- Balance at end of period $ 26,715 $ 23,458 $ 24,967 ========= ========== =========
Notes to Condensed Financial Information ---------------------------------------- 1. These condensed financial statements present the accounts of the Chiquita Brands International, Inc. Parent Company only ("CBII"). For purposes of these condensed financial statements, CBII's investments in its subsidiaries are accounted for by the equity method. 2. For additional information regarding the parent company debt restructuring, long-term debt and equity, see Notes 2, 9 and 12 to the Consolidated Financial Statements included in the Company's 2000 Annual Report to Shareholders. 3. In order to meet lender requirements to obtain a credit facility for Chiquita Brands, Inc., its wholly-owned subsidiary ("CBI"), CBII transferred to CBI, effective January 1, 2001, the North American banana sales function, all assets and liabilities associated with this function, CBII's ownership of Chiquita Processed Foods, L.L.C. and subsidiaries and certain other assets and functions. The following page presents the summarized unaudited pro forma income statement and balance sheet had this transfer been effective for 2000: - K-27 - Chiquita Brands International, Inc. - Parent Company Only --------------------------------------------------------- Condensed Pro Forma Balance Sheet --------------------------------- December 31, 2000 (In thousands)
ASSETS Current assets Cash and equivalents $ - Trade receivables, net - Other current assets 11,410 ----------- Total current assets 11,410 Investments in and accounts with subsidiaries 1,459,961 Other assets 27,254 ----------- Total assets $ 1,498,625 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Long-term debt due within one year $ 86,930 Accounts payable and accrued liabilities 38,903 ----------- Total current liabilities 125,833 Long-term debt 772,380 Other liabilities 17,869 ----------- Total liabilities 916,082 Shareholders' equity 582,543 ----------- Total liabilities and shareholders' equity $ 1,498,625 ===========
Condensed Pro Forma Statement of Income --------------------------------------- Year Ended December 31, 2000
Net sales $ - Cost of sales - Selling, general and administrative (29,452) Equity in earnings of subsidiaries 29,661 ---------- Operating income 209 Interest income 2,004 Interest expense (90,080) Other income, net - ---------- Loss before income taxes (87,867) Income taxes (7,000) ---------- Net loss $ (94,867) ==========
- K-28 - CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- SCHEDULE II - ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE -------------------------------------------------------- (In thousands)
Year Ended December 31, ---------------------------- 2000 1999 1998 -------- -------- -------- Balance at beginning of period $ 12,214 $ 10,603 $ 10,683 -------- -------- -------- Additions: Charged to costs and expenses 3,052 3,418 2,401 -------- -------- -------- Deductions: Write-offs 4,961 1,382 3,011 Other, net (380) 425 (530) -------- -------- -------- 4,581 1,807 2,481 -------- -------- -------- Balance at end of period $ 10,685 $ 12,214 $ 10,603 ======== ======== ========
- K-29 - CHIQUITA BRANDS INTERNATIONAL, INC. ----------------------------------- Index of Exhibits -----------------
Exhibit Number Description - ------ ----------- *3(i) Second Restated Certificate of Incorporation, filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, as amended by: (1) the Certificate of Amendment establishing the terms of the Series B Preferred Stock, filed as Exhibit 3(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; (2) the Second Certificate of Amendment establishing the terms of the Series C Preference Stock, filed as Exhibit 3.1 to Current Report on Form 8-K dated September 15, 1997; (3) the Third Certificate of Amendment increasing the number of authorized shares and changing the title and par value of the common stock, filed as Exhibit 4 to Amendment No. 1 to Form 8-A dated June 18, 1998; and (4) the Fourth Certificate of Amendment reducing the number of shares designated as Series C Preference Stock, filed as Exhibit 5 to Amendment No. 1 to Form 8-A dated June 18, 1998 *3(ii) By-Laws, filed as Exhibit 3-b to Annual Report on Form 10-K for the year ended December 31, 1992 *4-a Indenture dated as of February 15, 1994 between the Company and The Fifth Third Bank, Trustee, relating to the issuance of Senior Debt Securities, filed as Exhibit 4(c) to Registration Statement 333-00789, as amended by: (1) the First Supplemental Indenture dated as of June 15, 1994, filed as Exhibit 99(c) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994; (2) the Second Supplemental Indenture dated as of July 15, 1996, filed as Exhibit 4 to Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; and (3) the Third Supplemental Indenture dated as of June 15, 1999, filed as Exhibit 4.2 to Amendment No. 1 to Form 8-A dated June 23, 1999. The Indenture has been further supplemented by the terms of the following Senior Debt Securities issued to date: (A) the Certificate of the Vice President and Controller of the Company establishing the terms of the 9 1/8% Senior Notes due 2004, filed as Exhibit 3 to Current Report on Form 8-K dated February 8, 1994; (B) the Terms of the 10 1/4% Senior Notes due 2006 approved by the Executive Committee of the Board of Directors of the Company, filed as Exhibit 99.6 to Current Report on Form 8- K dated July 22, 1996; and (C) the Certificate of Actions taken by the President of the Company establishing the terms of the 10% Senior Notes due 2009, filed as Exhibit 4.3 to Amendment No. 1 to Form 8-A dated June 23, 1999. *4-b Indenture dated as of November 30, 1991 between the Company and The Fifth Third Bank, Trsutee, relating to the issuance of Senior Debt Securities, filed as Exhibit 4 to Registration Statement No. 33-43946, as amended by First Supplemental Indenture dated as of June 26, 1998, filed as Exhibit 99.9 to Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, and as supplemented by Certificate of the Executive Vice President and Chief Administrative Officer of the Company establishing the terms of the 9 5/8% Senior Notes due 2004 issued thereunder, filed as Exhibit 3 to Current Report on Form 8-K dated November 27, 1991. The Company has no other outstanding debt issues exceeding 10% of its consolidated total assets. The Company will furnish to the Securities and Exchange Commission, - K-30 - upon request, copies of all agreements and instruments defining the rights of security holders for debt issues not exceeding 10% of consolidated total assets. *10-a Operating contracts dated February 18, 1998 between the Republic of Panama and Chiriqui Land Company consisting of Contract of Operations (Bocas del Toro), Contract of Operations (Armuelles), Amendment and Extension of the Lease Land Contract, and related documents as published in the Republic of Panama Official Gazette No. 23,485, filed as Exhibit 10-b to Annual Report on Form 10-K for the year ended December 31, 1997 *10-b $120,000,000 Credit Agreement dated as of March 7, 2001 among Chiquita Brands, Inc., as Borrower, the Lenders designated therein, and Foothill Capital Corporation, as Arranger and Administrative Agent, filed as Exhibit 10.1 to Current Report on Form 8-K dated March 9, 2001 *10-c Credit Agreement dated as of September 22, 1999 among Chiquita Processed Foods, L.L.C., First Union National Bank, as administrative agent, and the financial institutions which are lenders, relating to CPF's $200 million senior secured credit facility, filed as Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 Executive Compensation Plans ---------------------------- *10-d 1986 Stock Option and Incentive Plan, as Amended and Restated effective May 13, 1998, filed as Exhibit 10- d to Annual Report on Form 10-K for the year ended December 31, 1998 *10-e 1998 Stock Option and Incentive Plan, included as Appendix A to the Company's definitive Proxy Statement filed on Schedule 14A dated April 8, 1998 10-f 1997 Amended and Restated Deferred Compensation Plan (conformed to include amendments effective through January 1, 2001) 10-g 1997 Deferred Compensation Plan for the Board of Directors (conformed to include amendments effective through January 1, 2001) *10-h Chiquita Brands International, Inc. Capital Accumulation Plan, filed as Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 10-i Guaranty, dated March 12, 2001, by Chiquita Brands, Inc. of obligations of Chiquita Brands International, Inc., under its Deferred Compensation and Capital Accumulation Plans 10-j Severance Agreement, dated January 16, 2001, between Chiquita Brands International, Inc. and Steven G. Warshaw, conformed to include amendments made by Amendment to Severance Agreement dated February 14, 2001 10-k Severance Agreement (Prior to Change in Control), dated February 14, 2001, between Chiquita Brands International, Inc. and Steven G. Warshaw 10-l Severance Agreement, dated January 16, 2001, between Chiquita Brands International, Inc. and Robert F. Kistinger, conformed to include amendments made by Amendment to Severance Agreement dated February 14, 2001 - K-31 - 10-m Severance Agreement, dated January 16, 2001, between Chiquita Brands International, Inc. and Robert W. Olson, conformed to include amendments made by Amendment to Severance Agreement dated February 14, 2001 10-n Severance Agreement, dated January 16, 2001, between Chiquita Brands International, Inc. and Peter A. Horekens, conformed to include amendments made by Amendment to Severance Agreement dated February 14, 2001 10-o Severance Agreement, dated January 16, 2001, between Chiquita Brands International, Inc. and William A. Tsacalis, conformed to include amendment made by Amendment to Severance Agreement dated February 14, 2001 10-p Severance Agreement, dated January 22, 2001, between Chiquita Brands International, Inc. and James B. Riley, conformed to include amendments made by Amendment to Severance Agreement dated February 14, 2001 10-q Guaranty, dated March 12, 2001, by Chiquita Brands, Inc. of obligations of Chiquita Brands International, Inc., under severance agreements with a number of key executives, including those listed in Exhibits 10-j through 10-p above 10-r Description of 2001 TCR Retention Program 13 Chiquita Brands International, Inc. 2000 Annual Report to Shareholders (pages 2 through 32) 21 Subsidiaries of Registrant 23 Consent of Independent Auditors 24 Powers of Attorney - ------------------------------- * Incorporated by reference. - K-32 -
EX-10 2 dcamascii2.txt EXHIGIT 10-F EXHIBIT 10F 1997 AMENDED AND RESTATED CHIQUITA BRANDS INTERNATIONAL, INC. DEFERRED COMPENSATION PLAN (CONFORMED TO INCLUDE AMENDMENTS EFFECTIVE THROUGH JANUARY 1, 2001) 1. ESTABLISHMENT AND PURPOSE 1.1 Effective January 1, 1997, Chiquita Brands International, Inc., a New Jersey corporation, adopts this 1997 Amended and Restated Chiquita Brands International, Inc. Deferred Compensation Plan to enable eligible Associates of the Company and certain of its subsidiaries and affiliates to elect deferral of payment of their compensation. 1.2 A Participant's deferral shall be governed by the Plan that was in effect at the time the deferral is made, provided that the Administrator may make certain administrative changes including the timing of payments pursuant to Article 10 and any other amendments permitted by Section 15.4. 2. PLAN OBJECTIVES 2.1 The purpose of this Plan is to allow Participants to achieve the following objectives: (a) Accumulate income for retirement; and (b) Provide opportunity for financial growth. 3. DEFINITIONS When used in this Plan, the following words and phrases shall have the following meanings: 3.1 ACCOUNT means the record maintained for each Participant to which all deferrals, investment indices and distributions are credited and debited for each Plan Year. 3.2 ADMINISTRATOR means the Employee Benefits Committee appointed by the Company's Board of Directors. 3.3 ANNUAL BONUS means the annual lump-sum Total Compensation Review Bonus Award made in addition to a Participant's Base Salary. 3.4 ASSOCIATE means an employee of the Company. 3.5 BASE SALARY means base pay, excluding any bonuses, commissions and other extraordinary payments. 3.6 COMPANY means Chiquita Brands International, Inc. and (unless the context indicates otherwise) its subsidiaries and affiliates which have not adopted a separate deferred compensation plan. 3.7 COMPENSATION means the Base Salary earned for services rendered during a given Plan Year and the Annual Bonus earned but not determinable or paid until the following Plan Year. 3.8 DISABLED AND DISABILITY mean that a Participant, as a result of accident or illness, is physically, mentally or emotionally unable to perform the duties for which the Participant is employed, and in the Administrator's opinion is likely to remain so Disabled for at least one year. The Administrator shall make all determinations as to whether a Participant is Disabled and shall use such evidence, including independent medical reports and data, as the Administrator deems necessary and desirable. 3.9 EXCESS 401(K) DEFERRAL means the excess, if any, of (i) the amount a Qualified Participant elects to defer under the Savings Plan, over (ii) the limitations (as adjusted) on deferrals contained in Sections 401(a)(17) and 402(g) of the Internal Revenue Code of 1986, as amended. 3.10 EXPIRATION DATE means, with respect to each annual deferral under Section 7.1, the earlier of (i) the last day of the year to which a Participant elects to defer Compensation pursuant to Section 8.1, or (ii) the last day of the year during which a Participant dies, becomes Disabled or terminates employment with the Company. 3.11 MATCHING CONTRIBUTIONS means, with respect to each Qualified Participant in a Plan Year, Company contributions to the Plan, in respect of the Participant's contributions under Section 7.1, equal to the difference, if any, between the following two amounts: (i) the total of the Basic Matching Contribution and Discretionary Matching Contribution (the "Contributions") such Participant would have received for such Plan Year under the Savings Plan, up to the 6% limit imposed by the Savings Plan, if such Contributions were determined without respect to cumulative annual Base Salary without applying the limitations on compensation and contributions in Sections 401(a)(17) and 402(g) of the Internal Revenue Code of 1986, as amended, and (ii) the actual Contributions on behalf of such Participant under the Savings Plan for that Plan Year. 3.12 PARTICIPANT means an officer or other highly compensated Associate who is selected or entitled to participate and participates in the Plan for a designated Plan Year. 3.13 PLAN means this 1997 Amended and Restated Chiquita Brands International, Inc. Deferred Compensation Plan, as it may be amended from time to time. 3.14 PLAN YEAR means the calendar year, January 1 through December 31. 3.15 SAVINGS PLAN means the Chiquita Savings and Investment Plan. 3.16 QUALIFIED PARTICIPANT means a Participant whose Base Salary exceeds the limitation on compensation in Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, who elects to defer Excess 401(k) Deferrals under this Plan, and participates in the Savings Plan for the entire year and does not change his or her percentage of compensation contributed to the Savings Plan for the entire Plan Year. 4. ELIGIBILITY 4.1 Officers and other highly compensated Associates of the Company will be eligible to become Participants in the Plan either through annual invitation by the President of the Company or through an employment agreement approved by the President. 5. PARTICIPATION 5.1 A Participant elects to participate in the Plan by delivering to the Administrator, before the beginning of each Plan Year, a properly completed enrollment form. 5.2 The enrollment form shall conform to the terms and conditions of the Plan. 6. DEFERRED COMPENSATION ACCOUNT 6.1 Each Plan Year a deferred compensation Account will be established for each Participant. 6.2 All Compensation deferred by the Participant (including all Excess 401(k) Deferrals), all increases in the value of the Account resulting from the application of the appropriate Interest Index, all other amounts credited to the Account pursuant to this Plan and all distributions from the Account to the Participant or the Participant's beneficiary(ies) or estate shall be reflected in the Account. 6.3 All Accounts shall be maintained by the Administrator. 7. DEFERRAL SOURCES AND MATCHING CONTRIBUTIONS 7.1 At the time of enrollment as provided in Section 5.1, a Participant may elect to defer a percentage of Base Salary and, if the Participant is a Qualified Participant, Excess 401(k) Deferrals, for services rendered in the next Plan Year. In the fourth quarter of each Plan Year, a Participant also may elect to defer a percentage or flat dollar amount of his Annual Bonus that is not yet determined, but that is scheduled to be paid in the following Plan Year. 7.2 Any Base Salary deferral must be at least 10% of Base Salary. Any Annual Bonus deferral must be at least 20% of each Annual Bonus or $10,000, whichever is less. The maximum Base Salary deferral must not exceed 80% of Base Salary and the maximum Annual Bonus deferral must not exceed 85% of Annual Bonus. 7.3 Compensation and Excess 401(k) Deferrals deferred under this Plan shall be credited to the Participant's Account on the date such amounts would have otherwise been paid. 7.4 The deferral sources and amounts elected for a given Plan Year are irrevocable. 7.5 If a Qualified Participant in this Plan has elected to participate in the Savings Plan and has Excess 401(k) Deferrals, the Company will make Matching Contributions for that Participant in accordance with Section 3.11 provided the Participant does not change such Participant's 401(k) contribution rate during the Plan Year. All such Matching Contributions shall be credited to the Participant's Account on the earliest of the last pay day of the respective Plan Year or the Expiration Date. 8. DEFERRAL TERM 8.1 At the time a Participant elects to defer Compensation, the Participant must also elect the term for which such deferral is made (the "Deferral Term"). The Deferral Term for Base Salary or Annual Bonus deferrals must be either five years or ten years or the date on which the Participant dies, becomes Disabled or terminates employment with the Company for any reason. The Deferral Term for all Excess 401(k) Deferrals and Matching Contributions shall always end upon death, Disability or termination of employment for any reason. 8.2 The Deferral Term for deferrals of Base Salary and Annual Bonus are not required to be the same. 8.3 A Deferral Term, once elected, is irrevocable. 8.4 Should a Participant die, become Disabled or the Participant's employment with the Company be terminated for any reason before the end of a Deferral Term of five or ten years, the date of death, Disability or termination of employment will trigger the end of the Deferral Term. 9. INTEREST INDICES 9.1 Amounts deferred under this Plan shall accrue interest from the date which is the midpoint of the calendar quarter in which the deferrals are credited to the Participant's Account until the Expiration Date. Such interest shall be credited to the Account quarterly, at the interest rate specified in the Interest Rate Schedule for the respective Plan Year and Deferral Term elected by the Participant. 10. PAYMENT FORM AND METHOD 10.1 All payments from the Plan shall be made in the form of cash. 10.2 At the time of enrollment for a given Plan Year, a Participant shall elect the method of payment desired upon the Expiration Date of the Deferral Term elected. 10.3 A Participant may choose either a lump sum or an equal annual installment payment method for any deferrals of Compensation earned during any Plan Year prior to 1996. Only lump sum payments will be available (and installment payments will not be available) for any deferrals of Compensation earned on or after January 1, 1996 and before January 1, 1998. A Participant again may choose either a lump sum or an equal annual installment payment method for any deferrals of Compensation and Annual Bonus earned during any Plan Year beginning on or after January 1, 1998. 10.4 The payment method elected may be separate for each Deferral Term and from the various deferral sources, for the respective Plan Years. 10.5 Should a Participant elect annual installments, the Participant must select at the time of enrollment the length of time over which installments are to be received in accordance with Article 12 below. 10.6 The payment method and the installment period elected for deferrals in a given Plan Year are irrevocable. 11. ACCOUNT STATEMENT 11.1 Account statements will be sent periodically (at least annually) to each Participant until the Participant's Account has been completely distributed. 11.2 The appropriate Interest Rate Schedules will be used for crediting the deferrals accrued pursuant to Section 9. 12. ACCOUNT DISTRIBUTION 12.1 Payment will be made (or in the case of installments, begin) as soon as administratively practicable after the Participant's Account is valued pursuant to Section 9 following the Expiration Date. Prior to the commencement of payments from the Participant's Account, the Account will continue to accrue interest and dividends in accordance with the Participant's investment index election through the Expiration Date. For lump sum payments, no interest or credits will accrue after the Expiration Date. For installment payments, interest will accrue at the prime rate after the Expiration Date. All subsequent installments payments will be made on or about the anniversary date of the initial installment payment until the installment payments are completed 12.2 Applicable federal, state, local and foreign taxes will be deducted from the gross amount of the payment. 12.3 Equal annual installments shall be at least $2,000 per deferral type per year. Installment payments will be made annually over a period not to exceed ten years. The Administrator shall have the right to reduce the length of the installment period to that which provides an equal installment of at least $2,000. 12.4 The ongoing process of an equal installment distribution shall be as follows: 12.4.1 The Participant's account shall no longer be valued based on the Graduated Interest Index or the Stock Index. 12.4.2 Interest shall be credited quarterly throughout the distribution period, based on the Prime Rate as announced by the Federal Reserve Bank of Cleveland as of the first day of each calendar quarter, for both Graduated Interest Index and Stock Index balances. 12.4.3 The Administrator may accelerate payment of any amount remaining in the Account to the extent that the amounts being paid are not sufficiently large enough to warrant the administrative expense being incurred. 13. HARDSHIP DISTRIBUTIONS 13.1 Distribution of payments from a Participant's Account prior to the dates set forth in Section 12.1 shall be made only if the Administrator, after consideration of a written application by the Participant, determines that the Participant has sustained financial hardship. For purposes of Section 13, Participant shall also include a terminated Associate receiving severance payments from the Company. 13.2 Any hardship distribution shall be withdrawn from the Participant's Account, starting with the most current Plan Year, continuing in reverse chronological order. 13.3 Applicable federal, state, local and foreign taxes will be deducted from the gross amount of the payment. 14. BENEFICIARY DESIGNATION 14.1 A Participant shall have the right to designate one or more beneficiaries and to change any beneficiary previously designated. 14.2 A Participant shall submit his or her beneficiary designation in writing using the beneficiary designation form. The Participant shall deliver the completed form to the Administrator. 14.3 The most recently dated and filed beneficiary designation shall cancel all prior designations. 14.4 In the event of the Participant's death before or after the commencement of payments from the Account, the amount otherwise payable to the Participant shall be paid to the designated beneficiary(ies) or, if no beneficiary, to the estate, according to the provisions of Section 12, as applicable. 15. GENERAL PROVISIONS 15.1 PARTICIPANT'S RIGHTS UNSECURED. The right of any Participant to receive payments under the provisions of this Plan shall be an unsecured claim against the general assets of the Company. It is not required or intended that the amounts credited to the Participant's Account be segregated on the books of the Company or be held by the Company in trust for a Participant and a Participant shall not have any claim to or against a specific asset or assets of the Company. All credits to an Account are for bookkeeping purposes only. 15.2 NON-ASSIGNABILITY. The right to receive payments shall not be transferrable or assignable by a Participant. Any attempted assignment or alienation of payments shall be void and of no force or effect. 15.3 ADMINISTRATION. The Administrator shall have the authority to adopt rules, regulations and procedures for carrying out this Plan, and shall interpret, construe and implement the provisions of the Plan according to the laws of the State of Ohio. Any such interpretation by the Administrator shall be final, binding and conclusive. 15.4 AMENDMENT AND TERMINATION. The Company expressly reserves the sole and exclusive right to amend, modify, or terminate this Plan at any time by action of the Board of Directors of the Company or, to the extent it has delegated such authority, by action of the Employee Benefits Committee. Any amendment, modification, or termination shall be in writing authorized by the Board of Directors or the Employee Benefits Committee, as the case may be, and signed by an officer of the Company. The Company's right of amendment, modification, or termination shall not require the assent, concurrence, or any other action by any subsidiary or affiliate of the Company even though actions by the Company may relate to persons employed by a subsidiary or affiliate. However, no amendment, modification, or termination of this Plan shall adversely affect any Participant's accrued rights arising from any election to defer Compensation made prior to such amendment, modification or termination of the Plan. 15.5 CONSTRUCTION. The singular shall also include the plural where appropriate. 15.6 EMPLOYMENT RIGHTS. This Plan does not constitute a contract of employment and participation in the Plan will not give any Participant the right to be retained in the employ of the Company. 15.7 ANNUAL BONUS RIGHTS. This Plan does not confer the right for a Participant to receive an Annual Bonus. 15.8 COMPLETE DOCUMENT. This document and the Participant enrollment and designation of beneficiary forms contain all the terms of this Plan and supersede any prior understandings, agreements or representations, written or oral, which may have related to the subject matter hereof in any way. EX-10 3 dcbodamascii5.txt EXHIBIT 10-G EXHIBIT 10G 1997 DEFERRED COMPENSATION PLAN FOR THE BOARD OF DIRECTORS OF CHIQUITA BRANDS INTERNATIONAL, INC. (CONFORMED TO INCLUDE AMENDMENTS EFFECTIVE THROUGH JANUARY 1, 2001) 1. ESTABLISHMENT AND PURPOSE 1.1 Effective January 1, 1997, Chiquita Brands International, Inc., a New Jersey corporation, adopts this Chiquita Brands International, Inc. Deferred Compensation Plan to enable eligible members of the Board of Directors of the Company to elect deferral of payment of their Compensation. 1.2 A Director's deferral shall be governed by the Plan that was in effect at the time the deferral is made, provided that the Administrator may make certain administrative changes including the timing of payments pursuant to Article 10 and any other amendments permitted by Section 15.4. 2. PLAN OBJECTIVES 2.1 The purpose of this Plan is to allow participants to achieve the following objectives: (a) Accumulate income for retirement; and (b) Provide opportunity for financial growth. 3. DEFINITIONS When used in this Plan, the following words and phrases shall have the following meanings: 3.1 ACCOUNT means the record maintained for each Participant to which all deferrals, investment indices and distributions are credited and debited for each Plan Year. 3.2 ADMINISTRATOR means the Employee Benefits Committee appointed by the Company's Board of Directors. 3.3 COMPANY means Chiquita Brands International, Inc. 3.4 COMPENSATION means fees earned for services rendered as a member of the Board of Directors during a given Plan Year. 3.5 DIRECTOR means a member of the Board of Directors of the Company. 3.6 DISABLED AND DISABILITY mean that a Participant, as a result of accident or illness, is physically, mentally or emotionally unable to perform the duties as a member of the Board of Directors, and in the Administrator's opinion is likely to remain so Disabled for at least one year. The Administrator shall make all determinations as to whether a Director is Disabled and shall use such evidence, including independent medical reports and data, as the Administrator deems necessary and desirable. 3.7 EXPIRATION DATE means, with respect to each annual deferral under Section 7.1, the earlier of (i) the last day of the year to which a Participant elects to defer Compensation pursuant to Section 8.1, or (ii) the last day of the year during which a Director dies, becomes Disabled or retires or is otherwise no longer a member of the Board of Directors of the Company. 3.8 PARTICIPANT means a member of the Board of Directors who is entitled to participate and participates in the Plan for a designated Plan Year. 3.9 PLAN means this 1997 Deferred Compensation Plan for the Board of Directors of Chiquita Brands International, Inc., as it may be amended from time to time. 3.10 PLAN YEAR means the calendar year, January 1 through December 31. 4. ELIGIBILITY 4.1 Members of the Board of Directors of the Company who are not also employees of the Company are eligible to participate in the Plan. 5. PARTICIPATION 5.1 A Participant elects to participate in the Plan by delivering to the Administrator, before the beginning of each Plan Year, a properly completed enrollment form. 5.2 The enrollment form shall conform to the terms and conditions of the Plan. 6. DEFERRED COMPENSATION ACCOUNT 6.1 Each Plan Year a deferred compensation Account will be established for each Participant. 6.2 All Compensation deferred by the Participant, all increases in the value of the Account resulting from the application of the appropriate Interest Index, all other amounts credited to the Account pursuant to this Plan and all distributions from the Account to the Participant or the Participant's beneficiary(ies) or estate shall be reflected in the Account. 6.3 All Accounts shall be maintained by the Administrator. 7. DEFERRAL 7.1 At the time of enrollment, a Participant must elect to defer at least 10% of such Participant's Compensation for services rendered in the next Plan Year. 7.2 Compensation deferred under this Plan shall be credited to the Participant's Account on the date such amounts would have otherwise been paid. 7.3 The deferral sources and amounts elected for a given Plan Year are irrevocable. 8. DEFERRAL TERM 8.1 At the time a Participant elects to defer Compensation, the Participant must also elect the term for which such deferral is made (the "Deferral Term"). The Deferral Term must be either a fixed number of years or the date on which the Participant dies, becomes Disabled, or retires or is otherwise no longer a member of the Board of Directors of the Company. 8.2 A Deferral Term that is for a fixed number of years must be in full year increments. 8.3 A Deferral Term, once elected, is irrevocable. 8.4 Should a Participant die, become Disabled or if the Participant retires or otherwise is no longer a member of the Board of Directors of the Company before the end of a Deferral Term that is for a fixed number of years, the date of the death, Disability or retirement or other event will trigger the end of the Deferral Term. 9. INTEREST INDICES 9.1 Amounts deferred under this Plan shall accrue interest from the date which is the midpoint of the calendar quarter in which the deferrals are credited to the Participant's Account until the Expiration Date. Such interest shall be credited to the Account quarterly, at the interest rate specified in the Interest Rate Schedule for the respective Plan Year and Deferral Term elected by the Participant. 10. PAYMENT FORM AND METHOD 10.1 All payments from the Plan shall be made in the form of cash. 10.2 At the time of enrollment for a given Plan Year, a Participant shall elect the method of payment desired upon the Expiration Date of the Deferral Term elected. 10.3 Only lump sum payments will be available (and installment payments will not be available) for any deferrals of Compensation earned on or after January 1, 1997 and before January 1, 1998. A Participant may choose either a lump sum or an equal annual installment payment method for any deferrals of Compensation earned during any Plan Year beginning on or after January 1, 1998. 10.4 The payment method elected may be separate for each Deferral Term for the respective Plan Years. 10.5 Should a Participant elect annual installments, the Participant must select at the time of enrollment the length of time over which installments are to be received in accordance with Article 12 below. 10.6 The payment method and the installment period elected for deferrals in a given Plan Year are irrevocable. 11. ACCOUNT STATEMENT 11.1 Account statements will be sent periodically (at least annually) to each Participant until the Participant's Account has been completely distributed. 11.2 The appropriate Interest Rate Schedules will be used for crediting the deferrals accrued pursuant to Section 9. 12. ACCOUNT DISTRIBUTION 12.1 Payment will be made (or in the case of installments, begin) as soon as administratively practicable after the Participant's Account is valued pursuant to Section 9 following the Expiration Date. Prior to the commencement of payments from the Participant's Account, the Account will continue to accrue interest and dividends in accordance with the Participant's investment index election through the Expiration Date. For lump sum payments, no interest or credits will accrue after the Expiration Date. For installment payments, interest will accrue at the prime rate after the Expiration Date. All subsequent installments payments will be made on or about the anniversary date of the initial installment payment until the installment payments are completed. 12.2 Equal annual installments shall be at least $2,000 per deferral type per year. Installment payments will be made annually over a period not to exceed ten years. The Administrator shall have the right to reduce the length of the installment period to that which provides an equal annual installment of at least $2,000. 12.3 The ongoing process of an equal installment distribution shall be as follows: 12.3.1 The Participant's account shall no longer be valued based on the Graduated Interest Index or the Stock Index. 12.3.2 Interest shall be credited quarterly throughout the distribution period, based on the Prime Rate as announced by the Federal Reserve Bank of Cleveland as of the first day of each calendar quarter, for both Graduated Interest Index and Stock Index balances. 12.3.3 The Administrator may accelerate payment of any amount remaining in the Account to the extent that the amounts being paid are not sufficiently large enough to warrant the administrative expense being incurred. 13. HARDSHIP DISTRIBUTIONS 13.1 Distribution of payments from a Participant's Account prior to the Expiration Date shall be made only if the Administrator, after consideration of a written application by the Participant, determines that the Participant has sustained financial hardship. 13.2 Any hardship distribution shall be withdrawn from the Participant's Account starting with the most current Plan Year, continuing in reverse chronological order. 14. BENEFICIARY DESIGNATION 14.1 A Participant shall have the right to designate one or more beneficiaries and to change any beneficiary previously designated. 14.2 A Participant shall submit his or her beneficiary designation in writing using the beneficiary designation form. The Participant shall deliver the completed form to the Administrator. 14.3 The most recently dated and filed beneficiary designation shall cancel all prior designations. 14.4 In the event of the Participant's death before payment from the Account, the amount otherwise payable to the Participant shall be paid to the designated beneficiary(ies) or, if no beneficiary, to the estate, according to the provisions of Section 12, as applicable. 15. GENERAL PROVISIONS 15.1 PARTICIPANT'S RIGHTS UNSECURED. The right of any Participant to receive payments under the provisions of this Plan shall be an unsecured claim against the general assets of the Company. It is not required or intended that the amounts credited to the Participant's Account be segregated on the books of the Company or be held by the Company in trust for a Participant and a Participant shall not have any claim to or against a specific asset or assets of the Company. All credits to an Account are for bookkeeping purposes only. 15.2 NON-ASSIGNABILITY. The right to receive payments shall not be transferrable or assignable by a Participant. Any attempted assignment or alienation of payments shall be void and of no force or effect. 15.3 ADMINISTRATION. The Administrator shall have the authority to adopt rules, regulations and procedures for carrying out this Plan, and shall interpret, construe and implement the provisions of the Plan according to the laws of the State of Ohio. Any such interpretation by the Administrator shall be final, binding and conclusive. 15.4 AMENDMENT AND TERMINATION. The Company expressly reserves the sole and exclusive right to amend, modify, or terminate this Plan at any time by action of the Board of Directors of the Company or, to the extent it has delegated such authority, by action of the Employee Benefits Committee. Any amendment, modification, or termination shall be in writing authorized by the Board of Directors or the Employee Benefits Committee, as the case may be, and signed by an officer of the Company. However, no amendment, modification, or termination of this Plan shall adversely affect any Participant's accrued rights arising from any election to defer Compensation made prior to such amendment, modification or termination of the Plan. 15.5 CONSTRUCTION. The singular shall also include the plural where appropriate. 15.6 CONTRACT RIGHTS. This Plan does not give any Participant the right to be retained as a member of the Board of Directors of the Company. EX-10 4 iexascii4.txt EXHIBIT 10-I Exhibit 10-I GUARANTY THIS GUARANTY (this "GUARANTY") is made as of March 12, 2001, by Chiquita Brands, Inc., a Delaware corporation ("GUARANTOR"). RECITALS WHEREAS, Guarantor is a wholly-owned subsidiary of Chiquita Brands International, Inc., a New Jersey corporation (the "COMPANY"); WHEREAS, certain executives and other employees of the Company and its subsidiaries are eligible to participate in the Company's Deferred Compensation Plan and its Capital Accumulation Plan (each, a "PLAN" and, collectively, the "PLANS"); WHEREAS, participants in such Plans (each, a "PARTICIPANT") have account balances thereunder consisting of deferred compensation, Company matching contributions and investment income thereon; and the vested portion of such account balances would become payable in full to any Participant who terminated his or her employment; WHEREAS, each present Participant performs, and each future Participant is expected to perform, services that benefit Guarantor and/or one or more of its subsidiaries; Guarantor benefits substantially from the continuing services performed by present Participants, is expected to benefit substantially from the services performed by future Participants and has a substantial interest in encouraging the retention of present and future Participants; and the objective of retaining such Participants would be significantly furthered if Guarantor guaranteed the Company's obligations under the Plans; WHEREAS, Guarantor has agreed to fully and unconditionally guaranty the Company's payments and performance under the Plans on the terms and conditions set forth below. NOW, THEREFORE, Guarantor agrees as follows: 1. GUARANTY. Guarantor hereby fully, unconditionally and irrevocably guarantees to each present and future Participant the punctual payment and performance when due of all obligations of the Company under the Plans (for each Participant, the "OBLIGATIONS"). Without limitation of the foregoing, the Obligations with respect to each Participant shall include all costs and expenses (including reasonable attorney's fees and expenses and reasonable compensation for the time value of money) incurred by such Participant in collecting any amount due such Participant under this Guaranty or in prosecuting any action against the Company, Guarantor or any other guarantor of the Obligations (collectively, the "ENFORCEMENT COSTS"). Guarantor agrees that this Guaranty is a present and continuing guaranty of payment and not of collection, and that such Participant shall not be required to prosecute collection, enforcement or other remedies against the Company before calling on Guarantor for payment and Guarantor shall pay such Obligations to such Participant in full immediately upon demand. Guarantor agrees that one or more successive actions may be brought against Guarantor, as often as such Participant deems advisable, until all of the Obligations are paid and performed in full. 2. WAIVERS. Guarantor unconditionally waives, to the extent permitted by law: 1. all notices which may be required by statute, rule of law or otherwise, now or hereafter in effect, to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of non-payment under either Plan and notice of any failure on the part of any Participant, the Company, Guarantor or any other guarantor of the Obligations to perform or comply with any covenant, agreement, term or condition of either Plan; 2. any right to the enforcement, assertion or exercise against the Company, Guarantor or any other guarantor of the Obligations of any right or remedy conferred under either Plan; 3. any requirement of diligence on the part of any person; 4. any requirement to exhaust any remedies or to mitigate the damages resulting from any failure on the part of the Company, Guarantor or any other guarantor of the Obligations to perform or comply with any covenant, agreement, term or condition of either Plan; and 5. any notice of any sale, transfer or other disposition of any right, title or interest of any Participant under either Plan. 3. REINSTATEMENT. The obligations of Guarantor pursuant to this Guaranty shall continue to be effective or automatically be reinstated, as the case may be, if at any time the Obligations or payment of the Obligations are rescinded, rejected, subordinated, stayed, offset or otherwise must be disgorged or returned by any Participant, in whole or in part, for any reason, including the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company. 4. SUCCESSORS AND ASSIGNS. This Guaranty shall inure to the benefit of each Participant and his or her successors and assigns. This Guaranty shall be binding on Guarantor, its successors and assigns, and shall continue in full force and effect until all of the Obligations are paid and performed in full. 5. NO WAIVER OF RIGHTS. No delay or failure on the part of any Participant to exercise any right, power or privilege under this Guaranty or the respective Plan for any such Participant shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege shall preclude any other or further exercise thereof or the exercise of any other power or right, or be deemed to establish a custom or course of dealing or performance between the parties hereto or thereto. The right and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. No notice to or demand on Guarantor in any case shall entitle Guarantor of any other or further notice or demand in the same, similar or other circumstance. 6. JOINDER. Guarantor agrees that any action to enforce this Guaranty may be brought against Guarantor without any reimbursement or joinder of the Company or any other guarantor of the Obligations in such action. 7. SEVERABILITY. If any provision of this Guaranty is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any court or other governmental authority, this Guaranty shall be construed as not containing such provision and the invalidity of such provision shall not affect the validity of any other provision hereof, and any and all other provisions hereof which otherwise are lawful and valid shall remain in full force and effect. 8. DESCRIPTIVE HEADINGS. The descriptive headings of this Guaranty are inserted for convenience only and do not constitute a part of this Guaranty. 9. GOVERNING LAW. All questions concerning the construction, validity and interpretation of this Guaranty will be governed by the internal law of the State of Ohio (without reference to any principles of conflicts of law). 10. NOTICES. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Guaranty will be in writing and shall be given to Guarantor at the address indicated below: IF TO GUARANTOR: Chiquita Brands, Inc. 250 East 5th Street Cincinnati, OH 45202 Attention: Secretary Facsimile: (513) 784-6691 or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. All such notices shall be effective (a) if given by facsimile, upon confirmation of receipt or (b) if given by any other means, when delivered at the address specified above. * * * * * IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date first above written. CHIQUITA BRANDS, INC. By: /s/Steven G. Warshaw ------------------- Its: Steven G. Warshaw -------------------- Director, President and Chief Operating Officer EX-10 5 jascii.txt EXHIBIT 10-J Exhibit 10-j SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 16, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and Steven G. Warshaw (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, the greater of (x) Four Million Five Hundred Thousand Dollars ($4,500,000) or (y) three (3) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control) or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1) times the sum of such Base Salary plus such target bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next- day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders; (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction; or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, or failures by the Company to act or, in the case of clause (V) below, act by the Executive: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company (including by reason of the Company becoming a subsidiary of another company) or a substantial adverse alteration in the nature or status of the Executive's title or responsibilities from those in effect immediately prior to such Change in Control; (II) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (III) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; (IV) any material breach by the Company of its obligations under this Agreement; or (V) the voluntary termination of the Executive of his employment for any reason during the four-month period commencing on the date which is six months following the occurrence of any Change in Control; provided that the Executive has communicated a Notice of Termination to the Company at least four months prior to the effectiveness of such voluntary termination; provided, however, that, except with respect to clause (V) above, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (T) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (U) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (V) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (W) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/CARL H. LINDNER -------------------------- Name: Carl H. Lindner Title: Chairman of the Board and Chief Executive Officer EXECUTIVE: /S/ STEVEN G. WARSHAW ---------------------- Steven G. Warshaw Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and Steven G. Warshaw ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 6 kascii6.txt EXHIBIT 10-K EXHIBIT K SEVERANCE AGREEMENT (Prior to Change in Control) THIS AGREEMENT, dated February 14, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and Steven G. Warshaw (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its securityholders to foster the continued employment of the Executive in his capacity as President and Chief Operating Officer of the Company; WHEREAS, to promote the objective of encouraging the Executive to remains so employed, the Company has previously entered into a Severance Agreement with the Executive dated January 16, 2001, as amended February 14, 2001, which provides the Executive with financial benefits in the event his employment is terminated without "cause" or resigns for "good reason" following a "change in control" (as such terms are defined therein). WHEREAS, in furtherance of this objective, the Company has determined that it is appropriate to enter into this Agreement, which is intended to provide the Executive with financial benefits in the event his employment is terminated without Cause or he resigns for Good Reason prior to a Change in Control (as such terms are defined herein). NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire immediately prior to the Change of Control. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation and a pro-rata target annual bonus determined in accordance with Section 6.1(D)) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination. 5.2 If the Executive's employment shall be terminated for any reason during the Term, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due; PROVIDED, HOWEVER, that the severance payments and benefits payable under this Agreement are in lieu of any other severance payments or benefits that the Executive would otherwise be entitled to, except as required under law. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination. 6. SEVERANCE PAYMENTS. 6.1 If the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) during the Term of this Agreement, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two and one-half (2.5) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001, less any portion of the 2001 target annual bonus which has been previously paid to the Executive. 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Executive's termination of employment, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable o amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. Notice of Termination due to a Good Reason must be provided by the Executive to the Company within six months of the Executive becoming aware that the basis for such Good Reason exists. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next- day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated prior to a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders; (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction; or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent), of any one of the following acts by the Company, or failures by the Company to act: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company (including by reason of the Company becoming a subsidiary of another company) or a substantial adverse alteration in the nature or status of the Executive's title or responsibilities from those in effect as of the date hereof; (II) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect as of the date hereof as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (III) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment as of the date hereof, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations as of the date hereof; (IV) any material breach by the Company of its obligations under this Agreement. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. The Executive may resign for Good Reason only if such Executive provides Notice of Termination to the Company within six months of the Executive becoming aware that the basis for such Good Reason exists. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (T) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (U) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (V) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (W) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/CARL H. LINDNER ---------------------- Name: Carl H. Lindner Title: Chairman of the Board and Chief Executive Officer EXECUTIVE: /S/ STEVEN G. WARSHAW ---------------------- Steven G. Warshaw Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and Steven G. Warshaw ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 7 lascii.txt EXHIBIT 10-L Exhibit 10-l SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 16, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and Robert F. Kistinger (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason if (a) in connection with Executive's termination of employment by the Company without Cause or by the Executive for Good Reason (other than pursuant to clause (V) of the definition thereof, but otherwise determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and (b) a Management Change occurs in connection with or within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of such Notice of Termination. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, three (3.0) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control), or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the 36-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next- day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) (x) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders, and (y) a Management Change occurs in connection with or within twelve (12) months following the event described in clause (x) of this subparagraph (1); (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) (x) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction, and (y) a Management Change occurs in connection with or within twelve (12) months following the transaction described in clause (x) of this subparagraph (3); or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, failures by the Company to act or, in the case of clause (V) below, act by the Executive: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company (including by reason of the Company becoming a subsidiary of another company) or a substantial adverse alteration in the nature or status of the Executive's title or responsibilities from those in effect immediately prior to such Change in Control; (II) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (III) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; (IV) any material breach by the Company of its obligations under this Agreement; or (V) the voluntary termination of the Executive of his employment for any reason during the four-month period commencing on the date with is six months following the occurrence of any Change in Control; provided that the Executive has communicated a Notice of Termination to the Company at least four months prior to the effectiveness of such voluntary termination. provided, however, that, except with respect to clause (V) above, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Management Change" shall mean that (i) the Chief Executive Officer of the Company (or, if (x) the Company becomes a subsidiary of any other company, the Chief Executive Officer of the Company's ultimate parent company, or (y) if clause (x) does not apply and the Company has been merged or consolidated or has sold all or substantially all of its assets, the Chief Executive Officer of the acquiring or surviving company) is not Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw or (ii) less than 50% of the "executive officers" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company (or such ultimate parent, acquiring or surviving company, as the case may be) are at any time either (A) persons who were "executive officers" of the Company immediately prior to the first public announcement of the event or transaction that, if consummated (together with the occurrence of a Management Change, if applicable), would constitute a Change in Control, or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose election or designation as an "executive officer" in each case was approved or recommended to the Board of Directors by Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw, as the case may be, acting in his capacity as Chief Executive Officer of the Company. (T) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (V) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (W) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (X) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /s/Bryan M. Valentine --------------------- Name: Bryan M. Valentine Title: Vice President, Human Resources EXECUTIVE:/s/Robert F. Kistinger ----------------------- Robert F. Kistinger Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and Robert F. Kistinger ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 8 mascii5.txt EXHIBIT 10-M Exhibit 10-m SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 16, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and Robert W. Olson (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason if (a) in connection with Executive's termination of employment by the Company without Cause or by the Executive for Good Reason (other than pursuant to clause (V) of the definition thereof, but otherwise determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and (b) a Management Change occurs in connection with or within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of such Notice of Termination. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, three (3.0) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control), or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the 36-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next- day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) (x) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders, and (y) a Management Change occurs in connection with or within twelve (12) months following the event described in clause (x) of this subparagraph (1); (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) (x) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction, and (y) a Management Change occurs in connection with or within twelve (12) months following the transaction described in clause (x) of this subparagraph (3); or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, failures by the Company to act or, in the case of clause (V) below, act by the Executive: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company (including by reason of the Company becoming a subsidiary of another company) or a substantial adverse alteration in the nature or status of the Executive's title or responsibilities from those in effect immediately prior to such Change in Control; (II) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (III) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; (IV) any material breach by the Company of its obligations under this Agreement; or (V) the voluntary termination of the Executive of his employment for any reason during the four-month period commencing on the date with is six months following the occurrence of any Change in Control; provided that the Executive has communicated a Notice of Termination to the Company at least four months prior to the effectiveness of such voluntary termination; provided, however, that, except with respect to clause (V) above, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Management Change" shall mean that (i) the Chief Executive Officer of the Company (or, if (x) the Company becomes a subsidiary of any other company, the Chief Executive Officer of the Company's ultimate parent company, or (y) if clause (x) does not apply and the Company has been merged or consolidated or has sold all or substantially all of its assets, the Chief Executive Officer of the acquiring or surviving company) is not Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw or (ii) less than 50% of the "executive officers" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company (or such ultimate parent, acquiring or surviving company, as the case may be) are at any time either (A) persons who were "executive officers" of the Company immediately prior to the first public announcement of the event or transaction that, if consummated (together with the occurrence of a Management Change, if applicable), would constitute a Change in Control, or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose election or designation as an "executive officer" in each case was approved or recommended to the Board of Directors by Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw, as the case may be, acting in his capacity as Chief Executive Officer of the Company. (T) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (V) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (W) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (X) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/ BRYAN M. VALENTINE ---------------------------- Name: Bryan M. Valentine Title: Vice President, Human Resources EXECUTIVE: /S/ ROBERT W. OLSON -------------------- Name: Robert W. Olson Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and Robert W. Olson ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 9 nasci2.txt EXHIBIT 10-N Exhibit 10-n SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 16, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and Peter Horekens (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason if (a) in connection with Executive's termination of employment by the Company without Cause or by the Executive for Good Reason (determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and (b) a Management Change occurs in connection with or within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of such Notice of Termination. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, two and twenty-five hundredths (2.25) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control), or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the 27-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next-day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) (x) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders, and (y) a Management Change occurs in connection with or within twelve (12) months following the event described in clause (x) of this subparagraph (1). (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) (x) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction, and (y) a Management Change occurs in connection with or within twelve (12) months following the transaction described in clause (x) of this subparagraph (3); or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, or failures by the Company to act: (I) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (II) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; or (III) any material breach by the Company of its obligations under this Agreement; provided, however, that, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Management Change" shall mean that (i) the Chief Executive Officer of the Company (or, if (x) the Company becomes a subsidiary of any other company, the Chief Executive Officer of the Company's ultimate parent company, or (y) if clause (x) does not apply and the Company has been merged or consolidated or has sold all or substantially all of its assets, the Chief Executive Officer of the acquiring or surviving company) is not Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw or (ii) less than 50% of the "executive officers" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company (or such ultimate parent, acquiring or surviving company, as the case may be) are at any time either (A) persons who were "executive officers" of the Company immediately prior to the first public announcement of the event or transaction that, if consummated (together with the occurrence of a Management Change, if applicable), would constitute a Change in Control, or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose election or designation as an "executive officer" in each case was approved or recommended to the Board of Directors by Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw, as the case may be, acting in his capacity as Chief Executive Officer of the Company. (T) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (V) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (W) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (X) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/ BRYAN M. VALENTINE --------------------- Name: Bryan M. Valentine Title: Vice President, Human Resources EXECUTIVE:/S/ PETER HOREKENS ----------------- Name: Peter Horekens Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and Peter Horekens ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 10 oascii3.txt EXHIBIT 10-O Exhibit 10-o SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 16, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and William A. Tsacalis (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason if (a) in connection with Executive's termination of employment by the Company without Cause or by the Executive for Good Reason (determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and (b) a Management Change occurs in connection with or within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of such Notice of Termination. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, three (3.0) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control), or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the 36-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next-day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) (x) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders, and (y) a Management Change occurs in connection with or within twelve (12) months following the event described in clause (x) of this subparagraph (1); (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) (x) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction, and (y) a Management Change occurs in connection with or within twelve (12) months following the transaction described in clause (x) of this subparagraph (3); or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, or failures by the Company to act: (I) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (II) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; or (III) any material breach by the Company of its obligations under this Agreement; provided, however, that, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Management Change" shall mean that (i) the Chief Executive Officer of the Company (or, if (x) the Company becomes a subsidiary of any other company, the Chief Executive Officer of the Company's ultimate parent company, or (y) if clause (x) does not apply and the Company has been merged or consolidated or has sold all or substantially all of its assets, the Chief Executive Officer of the acquiring or surviving company) is not Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw or (ii) less than 50% of the "executive officers" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company (or such ultimate parent, acquiring or surviving company, as the case may be) are at any time either (A) persons who were "executive officers" of the Company immediately prior to the first public announcement of the event or transaction that, if consummated (together with the occurrence of a Management Change, if applicable), would constitute a Change in Control, or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose election or designation as an "executive officer" in each case was approved or recommended to the Board of Directors by Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw, as the case may be, acting in his capacity as Chief Executive Officer of the Company. (T) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (V) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (W) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (X) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/ BRYAN M. VALENTINE --------------------------- Name: Bryan M. Valentine Title: Vice President, Human Resources EXECUTIVE: /S/ WILLIAM A. TSACALIS ---------------------------- Name: William A. Tsacalis Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and William A. Tsacalis ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 11 expascii3.txt EXHIBIT 10-P Exhibit 10-p SEVERANCE AGREEMENT CONFORMED TO INCLUDE AMENDMENTS MADE BY AMENDMENT TO SEVERANCE AGREEMENT DATED FEBRUARY 14, 2001 THIS AGREEMENT, dated January 22, 2001, is made by and between Chiquita Brands International, Inc., a New Jersey corporation (the "Company"), and James B. Riley (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. DEFINED TERMS. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. TERM OF AGREEMENT. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2004; PROVIDED, HOWEVER, that if a Change in Control described in Section 6.1 hereof shall have occurred during the Term, the Term shall expire on the third anniversary of such Change in Control; and FURTHER, PROVIDED, HOWEVER, that if an event or transaction described in clause (a) of the second sentence of Section 6.1 hereof shall have occurred during the Term, the Term shall be extended, if necessary, so as to expire not earlier than six months following the occurrence of such event or transaction. 3. COMPANY'S COVENANTS SUMMARIZED. 3.1 In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been a termination of the Executive's employment with the Company during the Term and following a Change in Control described in Section 6.1 hereof. 3.2 This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 3.3 If the Executive materially breaches any of the terms of this Agreement, the Company shall immediately be entitled, in its sole discretion, to terminate its obligations to the Executive under this Agreement. 3.4 If Executive is now, or at any time during the term of this Agreement becomes, employed by a subsidiary of the Company (including an indirect subsidiary of the Company), (a) all references herein to his employment, or termination of employment, by or with the Company shall, except where the context otherwise indicates, be deemed to be references to his employment, or termination of employment, by or with such subsidiary and (b) the Company shall have the right to cause such subsidiary to pay amounts and provide other benefits due to the Executive under this Agreement on the Company's behalf, provided that nothing in this clause (b) shall relieve the Company of its obligation to cause all such amounts to be paid and such benefits to be provided to the Executive when due. The transfer of the Executive to the employ of the Company or any subsidiary of the Company shall not constitute a termination of his employment for purposes of this Agreement. 4. THE EXECUTIVE'S COVENANTS. 4.1 Prior to the occurrence of a Change in Control, unless and until required to be disclosed by the Company pursuant to a filing made under the Federal securities laws, or as otherwise required by law or to enforce the Executive's rights under this Agreement, the Executive shall keep the terms of this Agreement confidential and not discuss them with any person other than the Executive's immediate family members or personal professional advisors. 4.2 The Executive shall execute a release of claims against the Company substantially in the form set forth as Exhibit A hereto, at such time and in such manner as may reasonably be requested by the Company, in connection with the Executive's termination of employment under the terms of this Agreement and as a condition to any payment or other provision of benefits by the Company hereunder. 4.3 Following termination of his employment with the Company, the Executive shall not use or disclose confidential information with respect to the Company or any of its subsidiaries to any person not authorized by the Company to receive such information, and the Executive shall assist the Company, in such manner as may reasonably be requested by the Company, in any litigation in which the Company or any of its subsidiaries is or may become involved. The Executive's obligations under this Section 4.3 shall not be limited by the Term of this Agreement and shall continue in full force following the expiration of this Agreement. 5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS. 5.1 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the Change in Control, together with all compensation and benefits (including without limitation, pay for accrued but unused vacation) payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the Change in Control. 5.2 If the Executive's employment shall be terminated for any reason during the Term and following a Change in Control described in Section 6.1 hereof, the Company shall provide to the Executive the Executive's normal post-termination compensation and benefits (including but not limited to outplacement services and, if the Executive's place of employment was outside the United States, all benefits under the Company's repatriation policy to which the Executive would be entitled if there were approval by all Company departments whose approval is required under such policy) as such payments and benefits become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs, policies and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the Change in Control. 6. SEVERANCE PAYMENTS. 6.1 Subject to Section 6.2 hereof, if (1) a Change in Control occurs on or prior to December 31, 2004, and (2) the Executive's employment is terminated (other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason) and the Date of Termination in connection therewith occurs within three (3) years after such Change in Control then the Company shall pay the Executive the amounts, and provide the Executive the benefits, hereinafter described in this Section 6.1 ("Severance Payments"), together with any payments that may be due under Section 6.2 hereof, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason if (a) in connection with Executive's termination of employment by the Company without Cause or by the Executive for Good Reason (determined by treating the event or transaction hereinafter described as the Change in Control), a Notice of Termination is furnished following an event or transaction described in Section 15(G)(1)(x) or Section 15(G)(3)(x) which occurs on or prior to December 31, 2004, and (b) a Management Change occurs in connection with or within twelve (12) months following such event or transaction and subsequent to, but not more than six (6) months after, the furnishing of such Notice of Termination. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable by the Company or any of its subsidiaries to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to (1) if the Date of Termination occurs on or prior to the second anniversary of the Change in Control, two and twenty-five hundredths (2.25) times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the Change in Control (the "Base Salary"), plus (ii) the target annual bonus established for the Executive under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change in Control), or (2) if the Date of Termination occurs after the second anniversary of the Change in Control, one (1.0) times the sum of such Base Salary plus such target annual bonus. If, notwithstanding the foregoing provision that the lump sum severance is to be in lieu of any severance benefit otherwise payable, the Company or any of its subsidiaries is required by applicable law to pay such a benefit, the Company's obligation to pay such lump sum severance hereunder shall be offset and reduced by the amount of the benefit required to be paid by applicable law. (B) For the 27-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents with life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the Change in Control), at no greater cost to the Executive on an after-tax basis than the cost to the Executive immediately prior to such date or occurrence; PROVIDED, HOWEVER, that the foregoing benefits shall be provided for a period of only twelve (12) months if the Date of Termination occurs after the second anniversary of the Change in Control. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive at no greater cost by a subsequent employer during the applicable period set forth above (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive). If the Severance Payments shall be decreased pursuant to Section 6.2(B) hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any incentive, stock, retirement, savings or other plan to the contrary, as of the Date of Termination, (i) the Executive shall be fully vested in (1) all then outstanding options to acquire stock of the Company (or if such options have been assumed by, or replaced with options for shares of, a parent, surviving or acquiring company, such assumed or replacement options), and all then outstanding restricted shares of stock of the Company (or the stock of any parent, surviving or acquiring company into which such restricted shares have been converted or for which they have been exchanged) held by the Executive, (2) all accrued basic match and incremental match employer contributions under the Company's Capital Appreciation Plan (but not deemed participation match contributions thereunder), and (3) to the extent permissible under the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all amounts credited to his account under the Company's 401(k) Savings and Investment Plan which are attributable to employer contributions; and (ii) all stock options referred to in clause (i) above shall remain exercisable until the earlier of (x) the third anniversary of the Date of Termination or (y) the otherwise applicable expiration date of such option. To the extent that the full vesting of the Executive under clause (i)(3) of the preceding sentence would violate either ERISA or the Code, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount which cannot become fully vested. (D) The Company shall pay to the Executive a lump sum amount, in cash, equal to the Executive's target annual bonus under the bonus plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination (or, if higher, in respect of the fiscal year in which occurs the Change of Control) multiplied by a fraction, the numerator of which is the number of days in such fiscal year through and including the Date of Termination, and the denominator of which is 365. For purposes of this clause (D), the Executive's target annual bonus in respect of 2001 shall be deemed to be 150% of his actual target annual bonus in respect of 2001 (less, if previously paid to the Executive, 60% of his actual target annual bonus in respect of 2001). 6.2 (A) Except as otherwise provided in Section 6.2(B), if the Severance Payments together with any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or otherwise) (all such payments and benefits, excluding the Gross- Up Payment, being hereinafter called "Total Payments") will be subject (in whole or part) to the Excise Tax, then the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount of the Gross- Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and localities of the Executive's residence and employment, as applicable, on the Date of Termination, net of the maximum reduction in federal income tax which could be obtained from deduction of such state and local taxes. (B) If the Total Payments would (but for this Section 6.2(B)) be subject (in whole or part) to the Excise Tax, but the aggregate value of the portion of the Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is less than 330% of the Executive's Base Amount, then subsection (A) of this Section 6.2 shall not apply, and the cash Severance Payments shall be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero), to the extent necessary to cause the Total Payments not to be subject to the Excise Tax. (C) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" within the meaning of section 280G(b)(2) of the Code, unless in the opinion of the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of the Auditor, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are reasonably necessary for the Executive to evaluate the Company's calculations. If the Executive disputes the Company's calculations (in whole or in part), the reasonable opinion of the Auditor with respect to the matter in dispute shall prevail. (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the Gross-Up Payment and the amount of the reduction in the Severance Payments, plus interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A), (2) there is a Final Determination that the Excise Tax is less than the amount taken into account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B), the Executive shall repay to the Company, within five (5) business days following the date of the Final Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. (III) Except as otherwise provided in clause (IV) below, in the event there is a Final Determination that the Excise Tax exceeds the amount taken into account hereunder in determining the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B) but after giving effect to such Final Determination, the Severance Payments should not have been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced pursuant to Section 6.2(B), and (3) interest on such amounts at 120% of the rate provided in section 1274(b)(2) of the Code. (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) and (2) the aggregate value of Total Payments which are considered "parachute payments" within the meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination, but such redetermined value still does not exceed 330% of the Executive's Base Amount, then, within five (5) business days following such Final Determination, (x) the Company shall pay to the Executive the amount (if any) by which the reduced Severance Payments (after taking the Final Determination into account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance Payments (after taking the Final Determination into account), plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b) of the Code. 6.3 The payments provided in subsection (A) and (D) (and to the extent applicable, subsection (C)) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifteenth (15th) day following the Date of Termination, PROVIDED, HOWEVER, that if the amounts of such payments, and the potential limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company or, in the case of payments under Section 6.2 hereof, in accordance with said Section 6.2, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the sixtieth (60th) day after the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. 7.1 NOTICE OF TERMINATION. Any purported termination of the Executive's employment hereunder (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Executive's employment hereunder, including a termination described in the second sentence of Section 6.1 hereof, shall mean the date specified in the Notice of Termination (which, except in the case of a termination for Cause, shall not be less than fifteen (15) days nor more than thirty (30) days, respectively, from the date such Notice of Termination is given). 7.3 DISPUTE CONCERNING TERMINATION. If, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Payments of compensation otherwise receivable pursuant to this Section 7.4 shall be reduced to the extent cash compensation is received by the Executive from a subsequent employer for services rendered during the period described in this Section 7.4 (and any such compensation received by a subsequent employer shall be reported by the Executive to the Company), and benefits otherwise receivable pursuant to this Section 7.4 shall be also be reduced in the manner provided in the penultimate sentence of Section 6.1(B) hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.1 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. NO MITIGATION. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than as expressly provided in Section 6.1(A), 6.1(B) or 7.4 hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. SUCCESSORS; BINDING AGREEMENT. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement within 30 days after a written demand therefor is delivered to the Board by the Executive shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. NOTICES. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given if (a) mailed by registered mail, return receipt requested, postage prepaid, (b) transmitted by hand delivery, (c) sent by next-day or overnight delivery through Federal Express, UPS or another similar nationally recognized delivery service, (d) sent by facsimile or telecopy (provided a copy is contemporaneously mailed by first class mail), addressed in each case if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, Ohio 45202 Attention: Corporate Secretary All such notices shall be deemed to have been received (w) if by certified or registered mail, on the seventh business day after the mailing thereof, (x) if by personal delivery, on the business day after such delivery, (y) if by next-day or overnight delivery, on the business day after such delivery and (z) if by facsimile or telecopy, on the business day following the sending of such facsimile or telecopy. 11. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; PROVIDED, HOWEVER, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. 12. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. SETTLEMENT OF DISPUTES; ARBITRATION. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Employee Benefits Committee of the Company and shall be in writing. Any denial by the Employee Benefits Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Employee Benefits Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Compensation Committee of the Board a decision of the Employee Benefits Committee within sixty (60) days after notification by the Employee Benefits Committee that the Executive's claim has been denied. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Cincinnati, Ohio, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (G) A "Change in Control" shall be deemed to have occurred if: (1) (x) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (x) of subparagraph (3) below), unless such combined voting power of any such Person does not equal or exceed the combined voting power of Exempt Holders, and (y) a Management Change occurs in connection with or within twelve (12) months following the event described in clause (x) of this subparagraph (1); (2) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on November 15, 2000, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on November 15, 2000, or whose appointment, election or nomination for election was previously so approved or recommended; (3) (x) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, or there is consummated a sale of all or substantially all of the assets of the Company or a similar transaction, and the voting securities of the Company outstanding immediately prior to such merger, consolidation, sale or similar transaction do not represent at least 50% of the combined voting power of the securities of the Company, or the surviving or acquiring entity or any parent thereof, outstanding immediately after such merger, consolidation, sale or similar transaction, and (y) a Management Change occurs in connection with or within twelve (12) months following the transaction described in clause (x) of this subparagraph (3); or (4) any other transaction or event that the Board, in its sole judgment, determines to be a Change in Control for purposes of this Agreement. In no event shall the institution or pendency of proceedings involving the Company under any applicable bankruptcy or insolvency laws constitute, by itself, a "Change of Control". (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Chiquita Brands International, Inc., and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (K) "Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties. (L) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (M) "Excise Tax" shall mean the excise tax imposed under section 4999 of the Code. (N) "Executive" shall mean the individual named in the first paragraph of this Agreement. (O) "Exempt Holders" shall mean American Financial Group, Inc., each of its subsidiaries and Affiliates, Carl H. Lindner, his spouse, his children and their spouses and his grandchildren (or the legal representative of any such person) and each trust for the benefit of each such person. (P) "Final Determination" means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Executive (or his estate) and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Executive and the Company concur (such concurrence by the Company to be not unreasonably withheld) or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed or there is no further right of appeal. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) after any Change in Control described in Section 6.1 hereof, of any one of the following acts by the Company, or failures by the Company to act: (I) a reduction by the Company in the Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may thereafter be increased from time to time, or a failure to provide the Executive with participation in any stock option or other equity-based plan in which other employees of the Company (and any parent, surviving or acquiring company) participate on a basis that does not unreasonably discriminate against the Executive as compared to such other employees who have similar levels of responsibility and compensation; (II) the relocation of the Executive's principal place of employment to a location more than 50 miles from the Executive's principal place of employment immediately prior to such Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to such Change in Control; or (III) any material breach by the Company of its obligations under this Agreement; provided, however, that, the Notice of Termination in connection with the foregoing acts or failure to act must be communicated by the Executive to the Company within six months of the Executive becoming aware of such act or failure to act. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. Except as provided above, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (R) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof. (S) "Management Change" shall mean that (i) the Chief Executive Officer of the Company (or, if (x) the Company becomes a subsidiary of any other company, the Chief Executive Officer of the Company's ultimate parent company, or (y) if clause (x) does not apply and the Company has been merged or consolidated or has sold all or substantially all of its assets, the Chief Executive Officer of the acquiring or surviving company) is not Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw or (ii) less than 50% of the "executive officers" (as defined in Rule 16a-1(f) under the Exchange Act) of the Company (or such ultimate parent, acquiring or surviving company, as the case may be) are at any time either (A) persons who were "executive officers" of the Company immediately prior to the first public announcement of the event or transaction that, if consummated (together with the occurrence of a Management Change, if applicable), would constitute a Change in Control, or (B) persons who were employees of the Company or one of its subsidiaries immediately prior to such first public announcement whose election or designation as an "executive officer" in each case was approved or recommended to the Board of Directors by Carl H. Lindner, Keith E. Lindner or Steven G. Warshaw, as the case may be, acting in his capacity as Chief Executive Officer of the Company. (T) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company or (v) the Exempt Holders. (V) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (W) "Term" shall mean the period of time described in Section 2 hereof (including any extension described therein). (X) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHIQUITA BRANDS INTERNATIONAL, INC. By: /S/ BRYAN M. VALENTINE ------------------------------ Name: Bryan M. Valentine Title: Vice President, Human Resources EXECUTIVE:/S/ JAMES B. RILEY ----------------------- Name: James B. Riley Address: [Included in original agreement, not included in filed version] EXHIBIT A GENERAL RELEASE AND WAIVER In exchange for the payments and benefits identified in the Severance Agreement (the "Agreement") between Chiquita Brands International, Inc. (the "Company") and James B. Riley ("Employee"), which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing. This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee's employment with the Company and the termination of that employment pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 ("ERISA"), the Worker Adjustment and Retraining Notification Act ("WARN"), the Fair Labor Standards Act of 1938, as well as all other federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker's Compensation or Unemployment laws or rights arising out of any breach of the Agreement by the Company. [FOR EMPLOYEES AGE 40 OR OLDER] Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination In Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the "Act"). Employee acknowledges and agrees that this waiver of any right or claim under the Act (the "Waiver") is knowing and voluntary, and specifically agrees as follows: (a) that the Agreement and this Waiver are written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Waiver; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this General Release and Waiver. EX-10 12 edg10qa.txt EXHIBIT 10-Q Exhibit 10-q GUARANTY THIS GUARANTY (this "Guaranty") is made as of March 12, 2001, by Chiquita Brands, Inc., a Delaware corporation ("Guarantor"). RECITALS WHEREAS, Guarantor is a wholly-owned subsidiary of Chiquita Brands International, Inc., a New Jersey corporation (the "Company"); WHEREAS, during 2001, the Company has entered into change of control severance agreements and other severance agreements (each, a "CCS Agreement") with the individuals identified on the Schedule of Executives attached hereto (each, an "Executive" and collectively, the "Executives"), each of whom is an employee of the Company or one of its subsidiaries; WHEREAS, each of the Executives performs valuable services that benefit Guarantor and/or one or more of its subsidiaries; Guarantor benefits substantially from the continuing services performed by the Executives and has a substantial interest in encouraging their retention; and the objective of retaining the Executives would be significantly furthered if Guarantor guaranteed the Company's obligations under the CCS Agreements; WHEREAS, Guarantor has agreed to fully and unconditionally guaranty the Company's payments and performance under the CCS Agreements on the terms and conditions set forth below. NOW, THEREFORE, Guarantor agrees as follows: 1. Guaranty. Guarantor hereby fully, unconditionally and irrevocably guarantees to each Executive the punctual payment and performance when due of all obligations of the Company under such Executive's CCS Agreement (for each Executive, the "Obligations"). Without limitation of the foregoing, the Obligations with respect to each Executive shall include all costs and expenses (including reasonable attorney's fees and expenses and reasonable compensation for the time value of money) incurred by such Executive in collecting any amount due such Executive under this Guaranty or in prosecuting any action against the Company, Guarantor or any other guarantor of the Obligations (collectively, the "Enforcement Costs"). Guarantor agrees that this Guaranty is a present and continuing guaranty of payment and not of collection, and that such Executive shall not be required to prosecute collection, enforcement or other remedies against the Company before calling on Guarantor for payment and Guarantor shall pay such Obligations to such Executive in full immediately upon demand. Guarantor agrees that one or more successive actions may be brought against Guarantor, as often as such Executive deems advisable, until all of the Obligations are paid and performed in full. 2. Waivers. Guarantor unconditionally waives, to the extent permitted by law: 1. all notices which may be required by statute, rule of law or otherwise, now or hereafter in effect, to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of non-payment under any of the CCS Agreements and notice of any failure on the part of any Executive, the Company, Guarantor or any other guarantor of the Obligations to perform or comply with any covenant, agreement, term or condition of any of the CCS Agreements; 2. any right to the enforcement, assertion or exercise against the Company, Guarantor or any other guarantor of the Obligations of any right or remedy conferred under the CCS Agreements; 3. any requirement of diligence on the part of any person; 4. any requirement to exhaust any remedies or to mitigate the damages resulting from any failure on the part of the Company, Guarantor or any other guarantor of the Obligations to perform or comply with any covenant, agreement, term or condition of the CCS Agreements; and 5. any notice of any sale, transfer or other disposition of any right, title or interest of any Executive under the CCS Agreements. 3. Reinstatement. The obligations of Guarantor pursuant to this Guaranty shall continue to be effective or automatically be reinstated, as the case may be, if at any time the Obligations or payment of the Obligations are rescinded, rejected, subordinated, stayed, offset or otherwise must be disgorged or returned by any Executive, in whole or in part, for any reason, including the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company. 4. Successors and Assigns. This Guaranty shall inure to the benefit of each Executive and his or her successors and assigns. This Guaranty shall be binding on Guarantor, its successors and assigns, and shall continue in full force and effect until all of the Obligations are paid and performed in full. 5. Subordination. In consideration of the issuance of the Lender Waiver (as defined herein) and for other good and valuable consideration, Guarantor, for itself and its successors, by guaranteeing the Guaranteed Obligations, and each Executive, for himself/herself and his/her successors and assigns, by his/her acceptance of this Guaranty and the benefits hereof, agree that the following subordination provisions in this Section 3 are for the benefit of the Agent and the holders of the Senior Obligations: (a) The payment of the Guaranteed Obligations (as defined in this Section 5) is and shall be subordinated, to the extent and in the manner provided in this Section 5 to the prior Payment in Full (as defined in this Section 5) of all the Senior Obligations (as defined in this Section 3). (b) Except for Permitted Payments (as defined in this Section 5), no payment or distribution of any kind shall be made by or on behalf of Guarantor on account of any or all of the Guaranteed Obligations, until the date on which the Senior Obligations are Paid in Full. (c) Notwithstanding any provision of this Section 5, if any payment or distribution of assets or other payment by or on behalf of Guarantor, on account of any or all of the Guaranteed Obligations, shall be paid to, or received by, or on behalf of, any Executive at a time when such payment or distribution was prohibited by the provisions of this Section 5, then, unless such payment or distribution is no longer prohibited by this Section 5, such proceeds, payment or distribution shall be received and held in trust by such Executive for the benefit of the holders of the Senior Obligations, and shall promptly be paid or delivered by such Executive to the Agent or, in the event there is no Agent, the holders of the Senior Obligations, to the extent necessary to enable Payment in Full of all Senior Obligations, after giving effect to all concurrent payments and distributions, to or for the holders of such Senior Obligations. (d) Upon any distribution of assets of Guarantor upon any foreclosure, dissolution, winding up, total or partial liquidation or reorganization or similar event or with respect to Guarantor and/or any or all of its assets, whether voluntary or involuntary, in bankruptcy, insolvency, receivership or similar proceeding or upon assignment for the benefit of creditors: (i) the holders of all Senior Obligations shall first be entitled to receive Payment in Full of all Senior Obligations, before any Executive is entitled to receive any payment or distribution for or on account of any or all of the Guaranteed Obligations; and (ii) any payment or distribution of assets of Guarantor of any kind or character, whether in cash, property or securities, to which any Executive would be entitled except for the provisions of this Section 5, shall be paid by the liquidating trustee or agent or other person making such a payment or distribution, directly to the holders of the Senior Obligations of the agent or representative therefor to the extent necessary to make Payment in Full of all Senior Obligations remaining unpaid after giving effect to all concurrent payments and distributions to or for the holders of such Senior Obligations. (e) Except for a Permitted Modification, this Guaranty and any other document or instrument evidencing any Guaranteed Obligations may not be amended, restated, supplemented, extended, refinanced or otherwise modified, without obtaining the prior written consent of the Agent or, in the event there is no Agent, the holders of all of the Senior Obligations. (f) No right of any present or future holders of any Senior Obligations to enforce subordination provisions contained in this Section 5, and no obligation of any Executive hereunder, shall, at any time, in any way be prejudiced or impaired by any act or failure to act on the part of Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by Guarantor with the terms of this Guaranty, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of the Senior Obligations may extend, renew, modify, restate or amend the terms of any of the Senior Obligations or any security therefor, in accordance with the terms of the Senior Credit Agreement (as defined herein), and release, sell or exchange such security and otherwise deal freely with Guarantor. (g) Prior to making any Guarantee Payment, the Guarantor shall provide the Agent, or in the event there is no Agent, the holders of all of the Senior Obligations, with at least ten (10) days written notice of the Guarantor's intention to make such payment, identifying the amount of the Guarantee Payment and the amount of all previous Guarantee Payments and Other Payments made since the date of the Senior Credit Agreement, and the recipient(s) thereof, and a certification with supporting calculations (calculated as of the date of such certification, but after giving effect to the anticipated making of such payment) with respect to the Liquidity Condition and compliance with all financial covenants under the Senior Credit Agreement, that following the making of such Guarantee Payment no Senior Default will exist and all conditions in the Lender Waiver will continue to be satisfied. (h) As used in this Section 5, the following terms shall have the following meanings: (i) "Agent" shall mean the agent or representative for the holders of the Senior Obligations, as identified in the Senior Credit Agreement. (ii) "Deferred Compensation Plans" shall mean the Company's Deferred Compensation Plan and the Company's Capital Accumulation Plan. (iii) "Guaranteed Obligations" shall mean any obligation to the Executive of Guarantor or CBII with respect to the Guaranty or any CCS Agreement. (iv) "Guarantee Payment" shall mean any payment to an Executive with respect to the Guaranteed Obligations, including any indirect payment made to settle or reduce any such Guaranteed Obligation or any distributions made by Guarantor which are earmarked for payment to the Executive with respect to the Company's obligations to such Executive. (v) "Lender Waiver" shall mean that certain Waiver #1 dated as of March 7, 2001 by and among the parties to the Senior Credit Agreement which permits Guarantor to issue this Guaranty and to make Permitted Payments hereunder and which describes the basis for any Permitted Modification hereto. (vi) "Liquidity Condition" shall mean, that for any given date, after deducting the amount of any intended Guarantee Payment and any Other Payment that is to be made simultaneously therewith, there is at least $45 million of "Availability" (as defined in the Senior Credit Agreement) and the total cash and Cash Equivalents (as defined in the Senior Credit Agreement) held by Guarantor and its "Subsidiaries" (as defined in the Senior Credit Agreement) is $90 million. (vii) "Other Payments" shall mean any payments made by Guarantor under the Deferred Compensation Plans, including any indirect payment made to settle or reduce any such Other Payment or any distributions made by Guarantor which are earmarked for payment to an officer or director of the Company with respect to the Company's obligations under a Deferred Compensation Plan. (viii) "Paid in Full" or "Payment in Full" shall mean, with respect to any Senior Obligations, the receipt of cash in an amount equal to the amount of all such Senior Obligations and the termination of the financing arrangements between Guarantor or any subsidiary or affiliate thereof and the holders of the Senior Obligations (including the termination or cash collateralization, if applicable, of all letters of credit issued under or pursuant to the Senior Credit Agreement) but shall not include any payment in connection with a refinancing, refunding or replacement of any such Senior Obligations. (ix) Permitted Modification shall mean any amendment, restatement, supplement, extension, refinancing or other modification of this Guaranty, including the addition of any Executive to the Schedule of Executives, which is made in writing by Guarantor in accordance with the procedures established in the Lender Waiver. (x) "Permitted Payments" shall mean payments of cash by Guarantor which are made at a time when all of the following conditions are satisfied: (A) no Senior Default has occurred and is continuing or would occur as a result of such payment, (B) any notice required by Section 5(g) shall have been given at least ten (10) days prior to the making of such payment, and (C) the Liquidity Condition shall have been satisfied on the date of such payment as well as on the date of the Section 5(g) notice. (xi) "Senior Credit Agreement" shall mean that certain Credit Agreement, dated as of March 7, 2001, among Guarantor, the Lenders (as defined therein) and Foothill Capital Corporation, as Agent (as defined therein), as the same may be amended, restated, modified, replaced, refinanced or supplemented from time to time. (xii) "Senior Credit Documents" shall mean the Senior Credit Agreement, and all other Credit Documents (under and as defined in the Senior Credit Agreement). (xiii) "Senior Default" shall mean an event, occurrence or circumstance which constitutes, or with the giving of notice, lapse of time or both would constitute, an Event of Default (as defined in the Senior Credit Agreement). (xiv) "Senior Obligations" shall mean all principal, interest, fees, indemnities and other amounts owing by, and obligations and liabilities of, Guarantor or any subsidiary or affiliate thereof, as borrower, guarantor or otherwise, under or pursuant to the Senior Credit Documents and all interest which has accrued, or would have accrued, under the Senior Credit Documents after the occurrence of an bankruptcy or insolvency event with respect to Guarantor, whether or not such interest is allowed as a claim against Guarantor and all other indebtedness of Guarantor for borrowed money. 6. No Waiver of Rights. No delay or failure on the part of any Executive to exercise any right, power or privilege under this Guaranty or the respective CCS Agreement for any such Executive shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege shall preclude any other or further exercise thereof or the exercise of any other power or right, or be deemed to establish a custom or course of dealing or performance between the parties hereto or thereto. The right and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. No notice to or demand on Guarantor in any case shall entitle Guarantor of any other or further notice or demand in the same, similar or other circumstance. 7. Joinder. Guarantor agrees that any action to enforce this Guaranty may be brought against Guarantor without any reimbursement or joinder of the Company or any other guarantor of the Obligations in such action. 8. Severability. If any provision of this Guaranty is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any court or other governmental authority, this Guaranty shall be construed as not containing such provision and the invalidity of such provision shall not affect the validity of any other provision hereof, and any and all other provisions hereof which otherwise are lawful and valid shall remain in full force and effect. 9. Descriptive Headings. The descriptive headings of this Guaranty are inserted for convenience only and do not constitute a part of this Guaranty. 10. Governing Law. All questions concerning the construction, validity and interpretation of this Guaranty will be governed by the internal law of the State of Ohio (without reference to any principles of conflicts of law). 11. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Guaranty will be in writing and shall be given to Guarantor at the address indicated below: If to Guarantor: Chiquita Brands, Inc. 250 East 5th Street Cincinnati, OH 45202 Attention: Secretary Facsimile: (513) 784-6691 or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. All such notices shall be effective (a) if given by facsimile, upon confirmation of receipt or (b) if given by any other means, when delivered at the address specified above. * * * * * IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date first above written. CHIQUITA BRANDS, INC. By: /s/ Steven G. Warshaw -------------------------- Its: Steven G. Warshaw ------------------------- President and Chief Operating Officer EX-10 13 exhibitrb.txt EXHIBIT 10-R Exhibit 10-r DESCRIPTION OF 2001 TCR RETENTION PROGRAM In order to encourage employee retention during a period in which the Company is facing business and financial uncertainties, including those related to the proposed restructuring of parent company debt announced on January 16, 2001, the Board of Directors of the Company has approved the following retention program which is not formalized in a written plan: Each employee of the Company and its subsidiaries (including executive officers) who is eligible for a bonus under the Company's Total Compensation Review ("TCR") program for 2001 and remains an employee through June 30, 2001 will receive in July 2001 a payment equal to 60% of his or her "target" annual bonus for 2001. The amount of this payment will be deducted from the TCR bonus for 2001 otherwise payable to such employee in February 2002. EX-13 14 edgex13n.txt EXHIBIT 13 - ANNUAL REPORT EXHIBIT 13 ---------- Statement of Management Responsibility - -------------------------------------- The financial information presented in this Annual Report is the responsibility of Chiquita Brands International, Inc. management, which believes that it presents fairly the Company's consolidated financial position and results of operations in accordance with generally accepted accounting principles. The Company's system of internal accounting controls, which is supported by formal financial and administrative policies, is designed to provide reasonable assurance that the financial records are reliable for preparation of financial statements and that assets are safeguarded against losses from unauthorized use or disposition. Management reviews, modifies and improves these systems and controls as changes occur in business conditions and operations. The Company's worldwide internal audit function reviews the adequacy and effectiveness of controls and compliance with policies. The Audit Committee of the Board of Directors, all of whose members are independent directors, reviews the Company's financial statements, accounting policies and internal controls. In performing its reviews, the Committee meets periodically with the independent auditors, management and internal auditors to discuss these matters. The Company engages Ernst & Young, an independent auditing firm, to audit its financial statements and express an opinion thereon. The scope of the audit is set by Ernst & Young, which has full and free access to all Company records and personnel in conducting its audits. Representatives of Ernst & Young are free to meet with the Audit Committee, with or without members of management present, to discuss their audit work and any other matters they believe should be brought to the attention of the Committee. - 2 - Report of Ernst & Young, Independent Auditors - --------------------------------------------- The Board of Directors and Shareholders of Chiquita Brands International, Inc. We have audited the accompanying consolidated balance sheets of Chiquita Brands International, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity and cash flow for each of the three years in the period ended December 31, 2000. These financial statements, appearing on pages 10 through 31, 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 auditing standards generally accepted in the United States. 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 fairly present, in all material respects, the consolidated financial position of Chiquita Brands International, Inc. at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flow for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that Chiquita Brands International, Inc. will continue as a going concern. The Company announced an initiative on January 16, 2001 to restructure publicly-held debt issued by Chiquita Brands International, Inc., the parent holding company. In connection with this restructuring initiative, the Company suspended all principal and interest payments on this debt, including the January 2001 interest payment on the 9 5/8% senior notes due 2004. The failure to make this interest payment constitutes an event of default that permits the holders of such notes to accelerate their maturity. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These matters and management's plans are more fully discussed in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Ernst & Young LLP Cincinnati, Ohio February 15, 2001, except for Notes 2 and 9, for which the date is March 15, 2001 - 3 - MANAGEMENT'S ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION OPERATIONS - ---------- This analysis of operations presents and addresses Chiquita's operating results on the basis used by the Company to evaluate its business segments, and should be read in conjunction with the segment information presented in Note 14 to the Consolidated Financial Statements.
(In thousands) 2000 1999 1998 - --------------------------------------------------------------- Net sales Fresh Produce $1,787,334 $2,044,788 $2,243,284 Processed Foods 466,436 511,011 477,077 ---------- ---------- ---------- Total net sales $2,253,770 $2,555,799 $2,720,361 ========== ========== ========== Segment operating income Fresh Produce $ 16,886 $ 23,129 $ 126,685 Processed Foods 30,540 27,909 25,524 Unusual items (20,060) (9,000) (73,600) ---------- ---------- ---------- Total operating income $ 27,366 $ 42,038 $ 78,609 ========== ========== ==========
Fresh Produce segment operating income in 2000 declined from 1999. Operating results were adversely affected by the strongest dollar in relation to major European currencies in the last 14 years (mitigated in part by the Company's foreign currency hedging program), higher fuel costs and lower banana volume in North America. The negative effects of these items were mostly offset by the Company's substantial improvements in production and logistics costs and benefits from its workforce reduction program announced in the third quarter of 1999. Operating results for the Company's Processed Foods business segment in 2000 improved from the prior year as the Company continued to consolidate productive capacity in its canning operations. Operating results of the Company's Fresh Produce business were significantly lower in 1999 as compared to 1998 primarily as a result of lower banana pricing, particularly in Europe due to the overallocation of European Union banana import licenses early in the year and weakness in demand from Eastern Europe and Russia. Operating income for the Company's Processed Foods business improved in 1999 as compared to 1998 primarily as a result of higher pricing for canned vegetables. Unusual items include the following: * In 2000, $20 million of fourth quarter charges associated with the write-downs of production and sourcing assets in the Fresh Produce operations. Also, in the second quarter, the Company incurred charges and write-offs relating primarily to banana production assets, including the curtailment announced in June 2000 of additional Hurricane Mitch farm rehabilitation. These second quarter charges were offset by a $15 million gain on the sale of California Day-Fresh Foods, Inc., a processor and distributor of natural fresh fruit and vegetable juices. * In 1999, $9 million of charges associated with a workforce reduction program that streamlined certain corporate and staff functions in the U.S., Central America and Europe. These charges included severance, benefits extensions and outplacement services provided by this program. * In 1998, $74 million of charges, net of insurance recoveries, as a result of significant damage in Honduras and Guatemala caused by Hurricane Mitch, including write- downs of banana cultivations and farm infrastructure assets, and costs for employee benefits and humanitarian aid. Net sales in 2000 decreased from the prior year in Fresh Produce primarily as a result of the stronger dollar, lower banana volume in North America and non-core trading markets, and the deconsolidation of the Company's Australian operations. Processed Foods net sales decreased in 2000 primarily as a result of the sale of California Day-Fresh Foods, Inc. In 1999, Fresh Produce net sales decreased from the prior year primarily as - 4 - a result of lower banana pricing. Interest income for 1999 includes $10 million related to refunds that resulted from audits of the Company's federal income tax returns for 1989 through 1991. Interest expense has increased since 1998 as a result of higher average outstanding debt balances. "Other income, net" in 1998 includes a gain from a cash settlement in excess of $10 million of claims against a newspaper, offset partially by the write-off of a non- operating investment. Income taxes consist principally of foreign income taxes currently paid or payable. No tax benefit was recorded for unrealized U.S. net operating loss carryforwards or other available tax credits. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- As discussed in "European Union Regulatory Developments" below, in 1993 the European Union ("EU") implemented a discriminatory quota and licensing regime governing the importation of bananas into the EU that violates the EU's international trade obligations. This regime significantly decreased the Company's banana volume sold into Europe and resulted in significantly decreased operating results for the Company as compared to years prior to implementation of the regime. Although the Company has made significant improvements in production and logistics costs, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. These factors led to the Company's announcement in January 2001 that it intends to regain its financial health by restructuring the $862 million face amount of publicly- held senior notes and subordinated debentures of Chiquita Brands International, Inc. ("CBII"), which is a parent holding company without business operations of its own. If successful, the restructuring would result in conversion of a significant portion of such debt into common equity, and the equity interests of existing common, preferred and preference shareholders would be diluted. The Company does not believe this restructuring would impact its day-to-day operations with regard to employees, customers, suppliers, distributors and general business, or affect payments of liabilities by the Company's operating subsidiaries, which would continue to be serviced by cash flow from the Fresh Produce and Processed Foods business segments. The Company has retained The Blackstone Group as its financial advisor and has begun discussions regarding the proposed restructuring with holders of the parent company's publicly-held debt. If an agreement with such holders is reached, the resulting restructuring plan would likely be presented for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns. Discussions with debt holders are in the preliminary stages, and there can be no assurance that an agreement regarding a financial restructuring will be reached. As part of the restructuring initiative, the Company has discontinued all interest and principal payments on its public debt, including a January 2001 interest payment on the 9 5/8% senior notes due 2004. The failure to make this interest payment constitutes an event of default that permits the 9 5/8% senior note holders to accelerate maturity of the entire $250 million face amount. The other parent company debt holders are entitled to accelerate their respective obligations: 1) upon acceleration by the 9 5/8% senior note holders if such acceleration is not rescinded within 10 days or 2) upon the non-payment of $87 million principal amount of 7% subordinated debentures at maturity on March 28, 2001. Under these circumstances, it is anticipated that the Company's $775 million face amount of parent company public debt which is classified as long-term at December 31, 2000 would be classified as current liabilities in the March 31, 2001 balance sheet. The Company discontinued payment of dividends on common stock for all of 2000 and, in the fourth quarter of 2000, suspended payment of dividends on its preferred and preference stock. In March 2001, the Company's operating subsidiary, Chiquita Brands, Inc. ("CBI"), obtained a three-year secured bank credit facility for up to $120 million to replace CBII's expiring bank revolving credit agreement. The new facility consists of a term loan of $75 million and a revolving credit facility of $45 million. A portion of the proceeds of the term loan has been used to repay $50 million of bank loans of certain Costa Rican farm - 5 - subsidiaries. Under the revolving credit facility, $35 million is available for seasonal working capital needs and other corporate purposes, and the remaining $10 million is available with the lenders' consent. The new facility contains covenants which limit the distribution of cash from CBI to CBII, the parent holding company, to $95 million per year for payment of CBII overhead, amounts necessary for payment of income taxes, and a cumulative amount of up to $22 million for restructuring costs. At March 15, 2001, the term loan amount of $75 million was outstanding, but no amounts were drawn under the $45 million revolving facility. At March 15, 2001, approximately $40 million was available to subsidiaries for working capital purposes under other committed lines of credit. Capital expenditures were $55 million in 2000, including $20 million to rehabilitate banana farms in Honduras and Guatemala which were destroyed or damaged by Hurricane Mitch in late 1998. The Company announced in June 2000 that it has curtailed plans for further rehabilitation of farms damaged by Hurricane Mitch. Capital expenditures were $152 million in 1999 and $118 million in 1998. The 1999 amount includes $74 million for the rehabilitation of banana farms in Honduras and Guatemala which were destroyed or damaged by Hurricane Mitch. The 1998 amount includes $40 million for expansion of Chiquita's vegetable canning operations and for farm rehabilitation in the Company's western Panama division following a two-month strike. Operating cash flow was $(1) million in 2000, $(6) million in 1999 and $91 million in 1998. These amounts include cash payments relating to interest expense on parent company debt of $89 million in 2000, $79 million in 1999 and $70 million in 1998. Operating cash flow excluding payments relating to parent company interest expense was $88 million in 2000, $73 million in 1999 and $161 million in 1998. Given the suspension of interest and principal payments on the publicly-held debt, the suspension of dividends on common, preferred and preference stock, and the $120 million credit facility, the Company believes that the cash flow generated by operating subsidiaries will provide sufficient cash reserves and liquidity. In June 1999, the Company issued $200 million principal amount of 10% senior notes due 2009 for net proceeds of $195 million. The Company used most of these proceeds to repay debt of subsidiaries and to repay borrowings under its parent company revolving line of credit. In September 1999, Chiquita Processed Foods, L.L.C. ("CPF"), the Company's vegetable canning subsidiary, entered into a five-year $200 million senior secured credit facility. The facility includes a $135 million revolving credit line and a $65 million facility for term loans, and replaced CPF's previous $85 million revolving credit facility. EUROPEAN UNION REGULATORY DEVELOPMENTS - -------------------------------------- In 1993, the EU implemented a quota regime which reduced the volume of bananas imported into the EU from Latin America, Chiquita's primary source of fruit, while granting market access to bananas grown in Caribbean and African sources that far exceeded pre-1993 volumes from those areas. In addition, the new system allocated a majority of the licenses necessary to gain access to the Latin American quota to importers that had marketed less than 5% of those bananas prior to 1993. This quota and licensing regime had the effect of significantly decreasing the Company's overall volume and market share in the EU. Following imposition of this regime, prices within the EU increased and have remained at a higher level than the levels prevailing prior to the quota. Banana prices in other worldwide markets, however, declined as the displaced EU volume entered those markets, and have remained lower than in years prior to the EU quota. The EU quota and licensing regime has been determined to be in violation of a number of international trade obligations by both the World Trade Organization ("WTO") and its predecessor, the General Agreement on Tariffs and Trade ("GATT"). The following chronology summarizes key developments: 1992, 1993 In two separate rulings, GATT panels find the EU banana policies to be illegal. 1994 Chiquita makes a filing with the Office of the U.S. Trade Representative ("USTR") under Section 301 of the U.S. Trade Act of 1974 (the "Trade Act") charging that the EU quota and licensing regime is unreasonable, discriminatory, and a burden and restriction on U.S. commerce. - 6 - 1995 The USTR determines that the EU regime violates the Trade Act. Subsequently, the United States, Guatemala, Honduras and Mexico commence a challenge against the regime using the procedures of the newly created WTO. 1996 Ecuador, the world's largest exporter of bananas, joins these countries in the WTO action. 1997 A WTO panel rules that the EU banana regime violates numerous international trade obligations to the detriment of Latin American supplying countries and U.S. marketing firms such as Chiquita. The WTO Appellate Body upholds the panel's ruling. 1998 The EU adopts a revised quota and licensing regime for implementation in January 1999 that purports to comply with the 1997 WTO rulings. The five governments that filed the WTO complaint, joined by Panama, which became a WTO member after the initial complaint was filed, oppose the revised EU regime for not complying with the WTO rulings. 1999 A WTO arbitration panel rules that the revised EU banana import regime continues the same discrimination against the United States and Latin America which previous WTO rulings found to be in violation of the EU's international trade obligations. The WTO arbitrators conclude that the United States is being harmed in the amount of approximately $190 million annually and is entitled to suspend EU trade concessions in that amount. Accordingly, the United States imposes duties (100% of value) on selected EU products accounting for $190 million of annual exports to the United States. 2000 The President of the United States signs into law a measure intended to increase pressure on the EU to make its banana regime consistent with WTO rulings. Referred to as "carousel retaliation," this measure requires the USTR to change the list of imported goods subject to retaliatory sanctions every six months. The USTR is still considering how to implement that requirement. In December, the EU indicates its intention to implement a "first come, first served" system that would continue to limit access for Latin American bananas and involve the "pre- allocation" of licenses on a pro rata basis to all importers whose requested volumes for particular time periods meet applicable criteria. The EU's current implementation target is July 1, 2001. The United States and Latin American producing countries oppose the new "first come, first served" plan and inform the EU of their view that the new plan is not WTO-consistent. 2001 In January, Chiquita files a lawsuit in the Court of First Instance of the European Court of Justice claiming damages from the European Commission (the EU's executive body) for not carrying out the EU's commitment to reform its banana import regime to comply with 1997 WTO rulings. The lawsuit seeks over $500 million for damages inflicted on Chiquita during the two years since the inception of the amended regime in January 1999. The suit also reserves the right to claim future damages based on the continuing illegality of the regime, including the new "first come, first served" proposal that the EU intends to implement. Uncertainties remain as to the outcome of this dispute and its effect on the Company and the banana industry as a whole. If the proposed "first come, first served" system is implemented, it would likely result in even further harm to the Company's business. - 7 - EU COMMON CURRENCY - ------------------ In 1999, most of the European Union member countries began implementation of the EU common currency (the "euro") by accepting the euro as legal tender in addition to their respective national currencies. After July 1, 2002, the euro will be the sole legal tender for these countries. The Company's affected customers continue to be invoiced in their traditionally invoiced currencies. The Company is currently addressing euro-related issues and their impact on information systems, currency exchange rate risk and other areas. Although the Company is not able to predict the full implications of the euro implementation on its European operations, the implementation has not had, and the Company does not believe it will have, a material adverse effect on its financial statements. MARKET RISK MANAGEMENT - ---------------------- Chiquita's products are distributed in more than 60 countries. Its international sales are made primarily in U.S. dollars and major European currencies (see "EU Common Currency"). The Company reduces currency exchange risk from sales originating in currencies other than the dollar by exchanging local currencies for dollars promptly upon receipt. The Company further reduces its exposure to exchange rate fluctuations by purchasing foreign currency option contracts (principally euro contracts) to hedge sales denominated in foreign currencies. Chiquita's interest rate risk arises primarily from its debt. The Company reduces its exposure to interest rate fluctuations on its long-term variable rate debt by entering into interest rate swap agreements to fix the amount of interest payments. The Company's transportation costs are exposed to the risk of rising fuel prices. To reduce this risk, the Company enters into fuel oil swap agreements that fix the purchase price of fuel oil. The foreign currency option contracts, interest rate swap agreements and fuel oil swap agreements are derivative financial instruments that change in value in the opposite direction of the underlying transactions being hedged. Chiquita uses a value at risk ("VAR") model to estimate the potential loss the Company could incur as a result of adverse changes in foreign currency exchange, interest rates and fuel oil prices, based on a 95% confidence level, over a given period of time. The VAR calculations do not consider the potential effect of favorable changes in these rates or the offsetting increase in the dollar realization of an underlying foreign currency sale. Therefore, the VAR calculations are not intended to represent actual losses the Company expects to incur. As of December 31, 2000 and 1999 and for the year ended December 31, 2000, the Company estimates that the fair value of foreign currency option contracts would decline by less than $3 million over a one-day period due to an adverse change in foreign currency exchange rates. However, the Company expects that any decline in the fair value of these contracts would typically be offset by an increase in the dollar realization of the underlying sales denominated in foreign currencies. As of December 31, 2000 and 1999 and for the year ended December 31, 2000, the Company estimates that the combined adverse change in fair value of its debt and interest rate swaps would be less than $3 million over a one-day period due to an unfavorable change in interest rates. As of December 31, 2000 and 1999 and for the year ended December 31, 2000, the Company estimates that the fair value of fuel oil swaps would decline by less than $1 million over a one-day period due to an adverse change in fuel oil prices. However, the Company expects that any decline in the fair value of these contracts would be offset by a decrease in the cost of underlying fuel purchases. (See Note 8 to the Consolidated Financial Statements for additional discussion of the Company's hedging activities. Also, see Note 1 to the Consolidated Financial Statements regarding the Company's planned adoption of Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended.) - 8 - ******* This Annual Report contains certain information that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These statements reflect management's current views and estimates of future economic circumstances, industry conditions and Company performance. They are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Chiquita. The assumptions, risks and uncertainties include the Company's ability to reach agreement with holders of the parent company debt regarding a restructuring of such debt, the terms of any such restructuring, product pricing, cost to purchase or grow (and availability of) fresh produce and other raw materials, currency exchange rate fluctuations, natural disasters and unusual weather conditions, operating efficiencies, labor relations, actions of governmental bodies, including actions with regard to the EU's banana import regime, and other market and competitive conditions. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and the Company undertakes no obligation to update any such statements. - 9 -
Chiquita Brands International, Inc. CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts) 2000 1999 1998 - -------------------------------------------------------------- Net sales $2,253,770 $2,555,799 $2,720,361 ---------- ---------- ---------- Operating expenses Cost of sales 1,863,818 2,094,406 2,206,047 Selling, general and administrative 271,650 328,467 343,227 Depreciation 90,936 90,888 92,478 ---------- ---------- ---------- 2,226,404 2,513,761 2,641,752 ---------- ---------- ---------- Operating income 27,366 42,038 78,609 Interest income 12,289 19,574 12,866 Interest expense (127,815) (112,033) (108,757) Other income, net 293 339 7,370 ---------- ---------- ---------- Loss before income taxes (87,867) (50,082) (9,912) Income taxes (7,000) (8,300) (8,500) ---------- ---------- ---------- Net loss $ (94,867) $ (58,382) $ (18,412) Less dividends on preferred and preference stock: Paid (12,826) (17,102) (17,102) In arrears (4,276) - - ---------- ---------- ---------- Net loss attributed to common shares $ (111,969) $ (75,484) $ (35,514) ========== ========== ========== Net loss per common share - basic and diluted $ (1.68) $ (1.15) $ (.55) ========== ========== ========== See Notes to Consolidated Financial Statements.
- 10 -
Chiquita Brands International, Inc. CONSOLIDATED BALANCE SHEET December 31, (In thousands, except share amounts) 2000 1999 - ----------------------------------------------------------------- ASSETS Current assets Cash and equivalents $ 96,924 $ 97,863 Trade receivables, less allowances of $10,685 and $12,214, respectively 191,476 209,741 Other receivables, net 105,018 151,457 Inventories 428,260 421,806 Other current assets 24,835 22,000 --------- ---------- Total current assets 846,513 902,867 Property, plant and equipment, net 1,071,341 1,177,823 Investments and other assets 334,573 333,257 Intangibles, net 164,363 182,180 ---------- ---------- Total assets $2,416,790 $2,596,127 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes and loans payable $ 109,274 $ 89,519 Long-term debt due within one year (Note 2) 180,615 40,235 Accounts payable 194,367 217,327 Accrued liabilities 128,614 141,341 ---------- ---------- Total current liabilities 612,870 488,422 Long-term debt of parent company (Note 2) 772,380 883,815 Long-term debt of subsidiaries 287,695 343,186 Other liabilities 161,302 175,418 ---------- ---------- Total liabilities 1,834,247 1,890,841 ---------- ---------- Shareholders' equity Preferred and preference stock 253,475 253,475 Common stock, $.01 par value (66,705,622 and 65,921,791 shares outstanding, respectively) 667 659 Capital surplus 766,217 761,079 Accumulated deficit (411,300) (303,607) Accumulated other comprehensive loss (26,516) (6,320) ---------- ---------- Total shareholders' equity 582,543 705,286 ---------- ---------- Total liabilities and shareholders' equity $2,416,790 $2,596,127 ========== ========== See Notes to Consolidated Financial Statements.
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Chiquita Brands International, Inc. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Preferred Accumulated Total and other com- share- preference Common Capital Accumulated prehensive holders' (In thousands) stock stock surplus deficit income (loss) equity - ------------------------------------------------------------------------------------------------ DECEMBER 31, 1997 $ 253,239 $ 20,389 $ 676,352 $ (166,486) $ (3,408) $ 780,086 --------- Net loss - - - (18,412) - (18,412) Unrealized translation gain - - - - 2,566 2,566 --------- Comprehensive loss (15,846) --------- Reduction in par value of common stock - (19,777) 19,777 - - - Share issuances Option exercises - 1 1,482 - - 1,483 Acquisitions of businesses 236 41 58,049 - - 58,326 Dividends Common stock - - - (12,970) - (12,970) Preferred and preference stock - - - (17,099) - (17,099) --------- --------- --------- ----------- --------- -------- DECEMBER 31, 1998 253,475 654 755,660 (214,967) (842) 793,980 -------- Net loss - - - (58,382) - (58,382) Unrealized translation loss - - - - (5,478) (5,478) -------- Comprehensive loss (63,860) -------- Share issuances Option exercises - 1 57 - - 58 Other - 4 5,362 - - 5,366 Dividends Common stock - - - (13,156) - (13,156) Preferred and preference stock - - - (17,102) - (17,102) -------- --------- --------- ---------- --------- -------- DECEMBER 31, 1999 253,475 659 761,079 (303,607) (6,320) 705,286 -------- Net loss - - - (94,867) - (94,867) Unrealized translation loss - - - - (12,979) (12,979) Change in minimum pension liability - - - - (7,217) (7,217) -------- Comprehensive loss (115,063) -------- Share issuances - 8 5,138 - - 5,146 Dividends paid on preferred and preference stock - - - (12,826) - (12,826) --------- --------- --------- --------- --------- --------- DECEMBER 31, 2000 $ 253,475 $ 667 $ 766,217 $(411,300) $ (26,516) $ 582,543 ========= ========= ========= ========= ========= ========= See Notes to Consolidated Financial Statements.
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Chiquita Brands International, Inc. CONSOLIDATED STATEMENT OF CASH FLOW (In thousands) 2000 1999 1998 - --------------------------------------------------------------------------- CASH PROVIDED (USED) BY: OPERATIONS Net loss $ (94,867) $ (58,382) $ (18,412) Depreciation and amortization 97,505 97,304 99,138 Write-downs of fresh produce production and sourcing assets (in 1998, net of expected insurance recoveries) 28,037 - 43,400 Collection of tax refund 21,685 - - Gain on sale of non-core business (14,710) - - Changes in current assets and liabilities Trade receivables 5,325 (4,222) (19,089) Other receivables (5,567) (6,085) (23,052) Inventories (17,804) (16,789) 3,556 Other current assets (3,857) 1,877 10,408 Accounts payable and accrued liabilities (17,581) (15,095) (15,359) Other 1,281 (4,651) 10,620 ---------- ---------- --------- CASH FLOW FROM OPERATIONS (553) (6,043) 91,210 ---------- ---------- --------- INVESTING Capital expenditures (54,632) (152,080) (118,250) Hurricane Mitch insurance proceeds 32,500 32,500 - Acquisitions of businesses - (21,619) (26,199) Long-term investments (3,601) (11,531) (4,563) Proceeds from sales of property, plant and equipment 15,244 14,903 2,371 Proceeds from sale of non-core business 26,251 - 18,249 Refundable deposits for container equipment - 9,745 (9,745) Other (5,943) 4,266 7,096 --------- --------- --------- CASH FLOW FROM INVESTING 9,819 (123,816) (131,041) --------- --------- --------- FINANCING Debt transactions Issuances of long-term debt 81,085 284,327 78,858 Repayments of long-term debt (100,085) (68,389) (108,627) Increase (decrease) in notes and loans payable 21,621 (46,922) 61,390 Stock transactions Issuances of common stock - 58 1,483 Dividends (12,826) (30,258) (30,069) --------- --------- --------- CASH FLOW FROM FINANCING (10,205) 138,816 3,035 --------- --------- --------- Increase (decrease) in cash and equivalents (939) 8,957 (36,796) Balance at beginning of year 97,863 88,906 125,702 --------- --------- --------- Balance at end of year $ 96,924 $ 97,863 $ 88,906 ========= ========= ========= See Notes to Consolidated Financial Statements.
- 13 - Chiquita Brands International, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies - --------------------------------------------------- American Financial Group, Inc. and its subsidiaries owned approximately 36% of the outstanding common stock of Chiquita Brands International, Inc. ("Chiquita" or the "Company") as of December 31, 2000. CONSOLIDATION - The consolidated financial statements include the accounts of the Company and controlled majority-owned subsidiaries. Intercompany balances and transactions have been eliminated. Investments representing minority interests are accounted for by the equity method when Chiquita has the ability to exercise significant influence in the investees' operations; otherwise, they are accounted for at cost. USE OF ESTIMATES - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. CASH AND EQUIVALENTS - Cash and equivalents include cash and highly liquid investments with a maturity when purchased of three months or less. INVENTORIES - Inventories are valued at the lower of cost or market. Cost for growing crops and certain fresh produce inventories is determined principally on the "last-in, first- out" (LIFO) basis. Cost for other inventory categories is determined on the "first-in, first-out" (FIFO) or average cost basis. PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost and, except for land, are depreciated on a straight-line basis over their estimated useful lives. INTANGIBLES - Intangibles consist primarily of goodwill and trademarks which are amortized over not more than 40 years. Accumulated amortization was $63 million and $60 million at December 31, 2000 and 1999, respectively. The carrying value of intangibles is evaluated periodically in relation to the operating performance and future undiscounted cash flows of the underlying businesses. REVENUE RECOGNITION - Revenue is recognized on sales of products when the customer receives title to the goods, generally upon delivery. INCOME TAXES - Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax bases of assets and liabilities. Deferred taxes are not provided on the undistributed earnings of subsidiaries operating outside the U.S. that have been or are intended to be permanently reinvested. EARNINGS PER SHARE - Basic earnings per share is calculated on the basis of the weighted average number of shares of common stock outstanding during the year reduced by nonvested restricted shares. The assumed conversions to common stock of the Company's 7% convertible subordinated debentures, preferred and preference stock, stock options and other stock awards are excluded from diluted earnings per share computations for periods in which these items, on an individual basis, have an anti-dilutive effect. FOREIGN EXCHANGE - Chiquita generally utilizes the U.S. dollar as its functional currency. Net foreign exchange gains (losses) of $2 million in 2000, $(5) million in 1999 and $6 million in 1998 are included in income. The Company enters into foreign currency option contracts to hedge transactions denominated in foreign currencies. These option contracts are specifically designated as hedges and limit losses from currency risk associated with the hedged transactions. The Company does not enter into option contracts for speculative purposes. Amounts paid for options and any gains realized thereon are deferred until the hedged transaction occurs. - 14 - NEW ACCOUNTING PRONOUNCEMENTS - In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard, as amended, must be implemented for the Company's 2001 fiscal year and requires the recognition of all derivatives on the balance sheet at fair value, and recognition of the resulting gains or losses as adjustments to net income or other comprehensive income. Adoption of SFAS No. 133 on January 1, 2001 will result in a cumulative effect of an accounting change, affecting net income by less than $1 million and reducing other comprehensive income by approximately $7 million. The adoption of this standard would increase the likelihood of volatility in earnings and other comprehensive income, the extent of which is dependent upon the amount of derivatives outstanding and the timing and size of foreign exchange and other market rate fluctuations. Note 2 - Parent Company Debt Restructuring - ------------------------------------------ In 1993, the European Union ("EU") implemented a discriminatory quota and licensing regime governing the importation of bananas into the EU that violates the EU's international trade obligations. This regime significantly decreased the Company's banana volume sold into Europe and resulted in significantly decreased operating results for the Company as compared to years prior to implementation of the regime. Although the Company has made significant improvements in production and logistics costs, the deterioration of operating results caused by this regime has been further exacerbated in recent years by the continued weakness of major European currencies against the U.S. dollar. These factors led to the Company's announcement in January 2001 that it intends to regain its financial health by restructuring the $862 million face amount of publicly- held senior notes and subordinated debentures of Chiquita Brands International, Inc. ("CBII"), which is a parent holding company without business operations of its own. If successful, the restructuring would result in conversion of a significant portion of such debt into common equity, and the equity interests of existing common, preferred and preference shareholders would be diluted. The Company does not believe this restructuring would impact its day-to-day operations with regard to employees, customers, suppliers, distributors and general business, or affect payments of liabilities by the Company's operating subsidiaries, which would continue to be serviced by cash flow from the Fresh Produce and Processed Foods business segments. The Company has retained The Blackstone Group as its financial advisor and has begun discussions regarding the proposed restructuring with holders of the parent company's publicly-held debt. If an agreement with such holders is reached, the resulting restructuring plan would likely be presented for judicial approval under Chapter 11 of the U.S. Bankruptcy Code, which provides for companies to reorganize and continue to operate as going concerns. Discussions with debt holders are in the preliminary stages, and there can be no assurance that an agreement regarding a financial restructuring will be reached. As part of the restructuring initiative, the Company has discontinued all interest and principal payments on its public debt, including a January 2001 interest payment on the 9 5/8% senior notes due 2004. The failure to make this interest payment constitutes an event of default that permits the 9 5/8% senior note holders to accelerate maturity of the entire $250 million face amount. The other parent company debt holders are entitled to accelerate their respective obligations: 1) upon acceleration by the 9 5/8% senior note holders if such acceleration is not rescinded within 10 days or 2) upon the non-payment of $87 million principal amount of 7% subordinated debentures at maturity on March 28, 2001. Under these circumstances, it is anticipated that the Company's $775 million face amount of parent company public debt which is classified as long-term at December 31, 2000 would be classified as current liabilities in the March 31, 2001 balance sheet. The following - 15 - summarized pro forma balance sheet presents the reclassification of parent company public debt as current liabilities had these circumstances existed at December 31, 2000:
December 31, 2000 ------------------------ (In thousands) Actual Pro forma - ------------------------------------------------------------- Total current assets $ 846,513 $ 846,513 Long-term assets 1,570,277 1,570,277 ---------- ---------- Total assets $2,416,790 $2,416,790 ========== ========== Total current liabilities $ 612,870 $1,385,250 Long-term debt of parent company 772,380 - Long-term debt of subsidiaries 287,695 287,695 Other liabilities 161,302 161,302 ---------- ---------- Total liabilities 1,834,247 1,834,247 Total shareholders' equity 582,543 582,543 ---------- ---------- Total liabilities and shareholders' equity $2,416,790 $2,416,790 ========== ==========
In March 2001, the Company's operating subsidiary, Chiquita Brands, Inc. ("CBI"), obtained a three-year secured bank credit facility for up to $120 million to replace CBII's expiring bank revolving credit agreement. The new facility consists of a term loan of $75 million and a revolving credit facility of $45 million. A portion of the proceeds of the term loan has been used to repay $50 million of bank loans of certain Costa Rican farm subsidiaries. Under the revolving credit facility, $35 million is available for seasonal working capital needs and other corporate purposes, and the remaining $10 million is available with the lenders' consent. The new facility contains covenants which limit the distribution of cash from CBI to CBII, the parent holding company, to $95 million per year for payment of CBII overhead, amounts necessary for payment of income taxes, and a cumulative amount of up to $22 million for restructuring costs. At March 15, 2001, the term loan amount of $75 million was outstanding, but no amounts were drawn under the $45 million revolving facility. The accompanying consolidated financial statements do not reflect any adjustments that could result from the Company's restructuring plan.
Note 3 - Earnings Per Share - --------------------------- Basic and diluted earnings per share are calculated as follows: (In thousands, except per share amounts) 2000 1999 1998 - ---------------------------------------------------------------------- Net loss $ (94,867) $ (58,382) $ (18,412) Dividends on preferred and preference stock: Paid (12,826) (17,102) (17,102) In arrears (4,276) - - --------- --------- -------- Net loss attributed to common shares $(111,969) $ (75,484) $ (35,514) ========= ========= ========= Weighted average common shares outstanding 66,498 65,768 64,734 Nonvested restricted shares - - (71) --------- --------- --------- Shares used to calculate basic and diluted earnings per share 66,498 65,768 64,663 ========= ========= ========= Basic and diluted net loss per common share $ (1.68) $ (1.15) $ (.55) ========= ========= =========
- 16 - The assumed conversions to common stock of the Company's preferred stock, preference stock and 7% convertible subordinated debentures and the assumed exercise of outstanding stock options and other stock awards would have an anti-dilutive effect on diluted earnings per share and, therefore, have not been included in the above calculations. For additional information regarding the 7% convertible subordinated debentures, stock options and other stock awards, and preferred and preference stock, see Notes 9, 11 and 12.
Note 4 - Inventories - -------------------- Inventories consist of the following: December 31, (In thousands) 2000 1999 - ----------------------------------------------------------------- Fresh produce $ 31,199 $ 39,762 Processed food products 241,787 215,365 Growing crops 97,620 104,699 Materials, supplies and other 57,654 61,980 -------- -------- $428,260 $421,806 ======== ========
The carrying value of inventories valued by the LIFO method was $106 million at December 31, 2000 and $112 million at December 31, 1999. If these inventories were stated at current costs, total inventories would have been approximately $26 million and $30 million higher than reported at December 31, 2000 and 1999, respectively.
Note 5 - Property, Plant and Equipment - -------------------------------------- Property, plant and equipment consist of the following: Weighted average December 31, depreciable (In thousands) 2000 1999 lives - -------------------------------------------------------------------- Land $ 69,429 $ 102,935 Buildings and improvements 250,533 257,204 25 years Machinery and equipment 416,294 473,335 10 years Ships and containers 682,268 680,224 24 years Cultivations 322,282 304,232 29 years Other 66,631 74,799 16 years ---------- ---------- 1,807,437 1,892,729 Accumulated depreciation (736,096) (714,906) ---------- ---------- $1,071,341 $1,177,823 ========== ==========
- 17 -
Note 6 - Leases - --------------- Total rental expense consists of the following: (In thousands) 2000 1999 1998 - ------------------------------------------------------------------------ Gross rentals Ships and containers $ 64,403 $ 96,101 $ 94,047 Other 35,767 36,937 36,854 -------- -------- -------- 100,170 133,038 130,901 Less sublease rentals (1,016) (16,095) (21,269) -------- -------- -------- $ 99,154 $116,943 $109,632 ======== ======== ========
Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 2000 are as follows:
Ships and (In thousands) containers Other Total - ------------------------------------------------------------- 2001 $ 26,178 $ 19,178 $ 45,356 2002 22,131 16,507 38,638 2003 17,418 14,313 31,731 2004 14,421 12,142 26,563 2005 12,092 7,832 19,924 Later years 14,182 9,563 23,745
Portions of the minimum rental payments for ships constitute reimbursement for ship operating costs paid by the lessor. Note 7 - Equity Method Investments - ---------------------------------- The Company has investments in a number of affiliates which are accounted for by the equity method. These affiliates are primarily engaged in the distribution of fresh produce. Chiquita's share of the earnings (losses) of these affiliates was $(9) million in 2000, $5 million in 1999 and $8 million in 1998, and its investment in these companies totaled $119 million at December 31, 2000 and $121 million at December 31, 1999. The Company's share of undistributed earnings of these affiliates totaled $25 million at December 31, 2000 and $28 million at December 31, 1999. The excess of the carrying value of Chiquita's investment over its share of the fair value of the investees' net assets at the date of acquisition is being amortized over periods ranging from 10 to 40 years ($33 million and $34 million, net of accumulated amortization, at December 31, 2000 and 1999, respectively). Summarized unaudited financial information of these affiliates follows:
(In thousands) 2000 1999 1998 - ---------------------------------------------------------------- Revenue $ 998,868 $ 978,180 $ 707,358 Gross profit 141,438 109,608 104,836 Net earnings (losses) (9,751) 16,016 22,289 Current assets 212,254 205,270 Total assets 504,931 382,815 Current liabilities 241,758 164,596 Total liabilities 301,719 205,226
- 18 - Note 8 - Financial Instruments - ------------------------------ At December 31, 2000, the Company had euro-denominated option contracts which ensure conversion of approximately (euro) 300 million of sales in 2001 at average rates not lower than 0.88 dollars per euro and approximately (euro) 20 million of sales in 2002 at average rates not lower than 0.85 dollars per euro. The Company also has fuel oil swap agreements maturing in 2001 which fix the purchase price on approximately 150,000 metric tons of fuel oil. The carrying values and estimated fair values of the Company's debt, fuel oil swap agreements and foreign currency option contracts are summarized below:
December 31, 2000 December 31, 1999 ----------------------- ---------------------- Carrying Estimated Carrying Estimated (In thousands) value fair value value fair value - ----------------------------------------------------- ---------------------- Parent company debt $(859,310) $ (270,000) $(883,815) $(645,000) Subsidiary debt (490,654) (493,000) (472,940) (475,000) Fuel oil swap agreements - (3,500) - - Foreign currency option contracts 8,841 3,500 2,980 8,400
Fair values for the Company's publicly traded debt and foreign currency option contracts are based on quoted market prices. Fair value for other debt is estimated based on the current rates offered to the Company for debt of similar maturities. The fair values of fuel oil swap agreements are estimated based on the cost to terminate the agreements. The Company is exposed to credit risk in the event of nonperformance by counterparties. However, because the Company's hedging activities are transacted only with highly rated institutions, Chiquita does not anticipate nonperformance by any of these counterparties. The amount of any credit exposure is limited to unrealized gains on these agreements. - 19 -
Note 9 - Debt - ------------- Long-term debt consists of the following: December 31, (In thousands) 2000 1999 - ------------------------------------------------------------------------ PARENT COMPANY 9 1/8% senior notes, due 2004 $ 175,000 $ 175,000 9 5/8% senior notes, due 2004 248,246 247,771 10% senior notes, due 2009 200,000 200,000 10 1/4% senior notes, due 2006 149,134 149,034 7% subordinated debentures, due 2001 86,930 112,010 Less current maturities (86,930) - --------- --------- Long-term debt of parent company $ 772,380 $ 883,815 ========= ========= SUBSIDIARIES Loans secured by ships and containers, due in installments from 2001 to 2009 - average effective interest rate of 8.8% (8.6% in 1999) $ 192,087 $ 193,954 Loan to Costa Rican farm subsidiaries, due 2001 - variable interest rate of 10.6% (9.2% in 1999) 50,000 55,000 Loan secured by vegetable canning assets, due in installments from 2001 to 2004 - variable interest rate of 8.4% (7.9% in 1999) 42,857 50,000 Long-term portion of revolving credit facility secured by vegetable canning assets, due 2004 - variable interest rate of 8.9% (7.7% in 1999) 35,000 35,000 Foreign currency loans maturing through 2008 - average interest rate of 13% (6% in 1999) 6,065 10,774 Other loans maturing through 2012 - average interest rate of 10% (8% in 1999) 55,371 38,693 Less current maturities (93,685) (40,235) --------- --------- Long-term debt of subsidiaries $ 287,695 $ 343,186 ========= =========
Maturities on long-term debt during the next five years are as follows:
Parent (In thousands) Company Subsidiaries Total - -------------------------------------------------------------- 2001 $ 86,930 $ 93,685 $180,615 2002 - 44,603 44,603 2003 - 34,776 34,776 2004 425,000 84,609 509,609 2005 - 66,685 66,685
- 20 - In January 2001, the Company announced an initiative to restructure the parent company debt of CBII. If successful, the restructuring would result in the conversion of a significant portion of Chiquita's outstanding parent company debt into common equity. As part of this initiative, the Company has discontinued all interest and principal payments on its parent company debt (see Note 2). In March 2001, the Company's operating subsidiary, CBI, obtained a three-year secured bank credit facility for up to $120 million to replace CBII's expiring bank revolving credit agreement. The new facility consists of a term loan of $75 million and a revolving credit facility of $45 million. A portion of the proceeds of the term loan has been used to repay $50 million of bank loans of certain Costa Rican farm subsidiaries. Under the revolving credit facility, $35 million is available for seasonal working capital needs and other corporate purposes, and the remaining $10 million is available with the lenders' consent. Substantially all U.S. assets of the Company (except for those of subsidiaries, such as Chiquita Processed Foods, L.L.C. ("CPF"), with their own credit facilities) are pledged to secure the CBI credit facility. The CBI credit facility is also secured by liens on CBI's trademarks and pledges of stock or guarantees by various CBI subsidiaries worldwide. The new facility contains covenants which limit the distribution of cash from CBI to CBII, the parent holding company, to $95 million per year for payment of CBII overhead, amounts necessary for payment of income taxes, and a cumulative amount of up to $22 million for restructuring costs. The facility also has covenants that require CBI to maintain certain financial ratios related to debt coverage and income, and that limit capital expenditures and investments. Interest on amounts outstanding under the facility is based on the bank corporate base rate plus 5%, subject to a minimum of 14% per annum. An annual facility fee of 2% of the total credit facility is also payable. At March 15,2001, the term loan amount of $75 million was outstanding, but no amounts were drawn under the $45 million revolving facility. CPF, the Company's vegetable canning subsidiary, has a $200 million senior secured credit facility. The facility includes a $135 million revolving credit line and a $65 million facility for term loans. At December 31, 2000, $116 million of borrowings were outstanding under the revolving credit line, of which $35 million is classified as long-term debt, and a $43 million term loan was outstanding. Interest under the facility is based on, at the Company's option, either the bank corporate base rate or prevailing interbank Eurodollar offering rates. An annual fee of up to 1/2% is payable on the unused portion of the facility. This facility contains covenants that limit capital expenditures and the payment of dividends by CPF and require CPF to maintain certain financial ratios related to net worth and debt coverage. The Company maintains various other lines of credit with domestic and foreign banks for borrowing funds on a short- term basis. The average interest rates for all short-term notes and loans payable outstanding were 9.3% and 7.5% at December 31, 2000 and 1999, respectively. Cash payments relating to interest expense were $124 million in 2000 and $105 million in 1999 and 1998. The 10% senior notes are callable beginning in 2004 at a price of 105% of face value declining to face value in 2007. The 10 1/4% senior notes are callable beginning in November 2001 at a price of 105 1/8% of face value declining to face value in 2004. The 7% subordinated debentures are callable at face value and convertible into common stock at $43 per share. - 21 - Note 10 - Pension and Severance Benefits - ---------------------------------------- The Company and its subsidiaries have several defined benefit and contribution pension plans covering approximately 5,100 domestic and foreign employees. Approximately 22,000 employees are covered by Central and South American severance plans. Pension plans covering eligible salaried employees and Central and South American severance plans for all employees call for benefits to be based upon years of service and compensation rates. Pension and severance expense consists of the following:
Foreign Plans ------------------------------------ (In thousands) 2000 1999 1998 - ---------------------------------------------------------------------- Defined benefit and severance plans: Service cost $ 3,552 $ 3,768 $ 5,070 Interest on projected benefit obligation 4,585 5,122 6,070 Expected return on plan assets (162) (139) (136) Recognized actuarial loss 1,057 368 757 Amortization of prior service cost and transition obligation 525 525 1,556 -------- -------- -------- 9,557 9,644 13,317 Curtailment loss - - 14,061 Settlement loss 1,000 - 4,666 -------- -------- -------- 10,557 9,644 32,044 Defined contribution plans 561 604 768 -------- -------- -------- Total pension and severance expense $ 11,118 $ 10,248 $ 32,812 ======== ======== ========
Domestic Plans ---------------------------------- (In thousands) 2000 1999 1998 - ---------------------------------------------------------------------- Defined benefit and severance plans: Service cost $ 1,357 $ 1,084 $ 1,057 Interest on projected benefit obligation 3,511 3,034 2,838 Expected return on plan assets (3,655) (3,424) (2,697) Recognized actuarial loss 567 317 365 Amortization of prior service cost and transition obligation 131 109 91 -------- -------- -------- 1,911 1,120 1,654 Curtailment gain (2,021) - - -------- --------- -------- (110) 1,120 1,654 Defined contribution plans 4,675 4,786 3,726 -------- -------- -------- Total pension and severance expense $ 4,565 $ 5,906 $ 5,380 ======== ======== ========
As a result of Hurricane Mitch, the Company recognized curtailment and settlement losses in 1998 related to Central American employee benefit plans. The Company's pension and severance benefit obligations relate primarily to Central and South American benefits which, in accordance with local government regulations, are generally not funded until benefits are paid. Domestic pension plans are funded in accordance with the requirements of the Employee Retirement Income Security Act. Plan assets consist primarily of corporate debt securities, U.S. Government and agency obligations and collective trust funds. - 22 - Financial information with respect to the Company's foreign and domestic defined benefit pension and severance plans is as follows:
Foreign Plans Domestic Plans -------------------- ------------------- (In thousands) 2000 1999 2000 1999 - ------------------------------------------------------------------------------- Fair value of plan assets at beginning of year $ 3,598 $ 3,028 $ 45,448 $ 41,653 Actual return on plan assets 87 111 4,441 3,756 Employer contributions 13,513 21,596 2,453 2,679 Benefits paid (12,990) (21,137) (2,828) (2,794) Other - - 153 154 -------- -------- -------- -------- Fair value of plan assets at end of year $ 4,208 $ 3,598 $ 49,667 $ 45,448 ======== ======== ======== ======== Projected benefit obligation at beginning of year $ 48,024 $ 64,856 $ 43,248 $ 43,414 Service and interest cost 8,137 8,890 4,868 4,118 Actuarial (gain) loss 6,088 (4,585) 1,849 (1,624) Benefits paid (12,990) (21,137) (2,796) (2,794) Curtailment gain - - (2,021) - Other - - 139 134 -------- -------- -------- -------- Projected benefit obligation at end of year $ 49,259 $ 48,024 $ 45,287 $ 43,248 ======== ======== ======== ======== Plan assets in excess of (less than) projected benefit obligation $(45,051) $(44,426) $ 4,380 $ 2,200 Unrecognized actuarial loss 10,210 4,925 3,910 3,334 Unrecognized prior service cost 923 1,077 385 285 Unrecognized transition obligation (asset) (200) 172 360 436 Adjustment required to recognize minimum pension and severance liability (1,419) - (5,806) (826) -------- -------- -------- ------- (35,537) (38,252) 3,229 5,429 Prepaid pension asset - - 9,132 6,423 -------- -------- -------- ------- Accrued pension and severance liability $(35,537) $(38,252) $ (5,903) $ (994) ======== ======== ======== =======
Included in the table above are plans whose benefit obligation exceeds plan assets. These plans are primarily foreign pension and severance plans that are generally not required to be funded until benefits are paid. The accumulated benefit obligation, projected benefit obligation and fair value of assets of plans for which benefits exceed assets were $62 million, $76 million and $27 million, respectively, as of December 31, 2000 and $59 million, $70 million and $21 million, respectively, as of December 31, 1999. The projected benefit obligations of Central and South American pension and severance plans in 2000 and 1999 were determined using discount rates of approximately 9 1/4%. The assumed long-term rate of compensation increase was 6% for both years. The projected benefit obligations of the Company's domestic pension plans were determined using a discount rate of approximately 7 3/4% in 2000 and 7 1/2% in 1999. The assumed long-term rate of compensation increase was 6% in 2000 and 5 1/2% in 1999 and the assumed long-term rate of return on plan assets was approximately 8% for both years. - 23 - Note 11 - Stock Options - ----------------------- Under its non-qualified stock option and incentive plans, the Company may grant up to an aggregate of 25 million shares of common stock in the form of stock options, stock appreciation rights and stock awards. Under these plans, options have been granted to directors, officers and other key employees to purchase shares of the Company's common stock at the fair market value at the date of grant. The options generally vest over ten years and may be exercised over a period not in excess of 20 years. A summary of the Company's stock option activity and related information follows:
2000 1999 1998 -------------------- ----------------- ----------------- Weighted Weighted Weighted average average average (In thousands, except exercise exercise exercise per share amounts) Shares price Shares price Shares price - ------------------------------------------- ----------------- ----------------- Under option at beginning of year 10,997 $12.34 9,479 $13.32 8,403 $13.44 Options granted 3,679 4.45 2,875 8.90 1,858 12.92 Options exercised - - (6) 10.31 (123) 12.06 Options canceled or expired (2,068) 10.67 (1,351) 11.92 (659) 13.86 ------ ------ ------ ------ ------ ------ Under option at end of year 12,608 $10.31 10,997 $12.34 9,479 $13.32 ====== ====== ====== ====== ====== ====== Options exercisable at end of year 5,516 $12.15 4,926 $12.71 3,705 $13.30 ====== ====== ====== ====== ====== ====== Shares available for future grants 7,918 9,482 11,041 ====== ====== ======
Options outstanding as of December 31, 2000 have a weighted average remaining contractual life of 16 years and have exercise prices ranging from $1.59 to $34.44. The following table summarizes further information on the range of exercise prices:
Options Options Outstanding Exercisable ------------------------------------- --------------------- Weighted Weighted Weighted average average average (In thousands, except exercise remaining exercise per share amounts) Shares price life Shares price - ---------------------------------------------------------------- --------------------- Range of Exercise Prices $ 1.59 - $ 5.00 3,327 $ 4.45 19 years 405 $4.45 5.00 - 10.00 2,109 8.81 16 years 738 8.20 10.00 - 15.00 6,359 12.71 15 years 3,843 12.49 15.00 - 34.44 813 19.40 13 years 530 21.08
Under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. SFAS No. 123, "Accounting for Stock-Based Compensation," requires disclosure of the estimated fair value of stock options granted after 1994 and pro forma financial information assuming compensation expense was recorded using these fair values. The estimated weighted average fair value per option share granted is $2.65 for 2000, $3.66 for 1999 and $5.24 for 1998 based on market prices at the date of grant using a Black-Scholes option pricing model with the following assumptions: weighted average risk-free interest rates of 6.6% for 2000, 5.0% for 1999 and 5.6% for 1998; dividend yield of 0% for 2000 and 1.5% for 1999 and 1998; volatility factor for the Company's common stock price of 43% for 2000, 37% for 1999 and 33% for 1998; and a weighted average expected life of eight years for options not forfeited. The estimated pro forma compensation expense based on these option fair values would be approximately $4 million ($.07 per share) in 2000, $5 million ($.07 per share) in 1999 and $4 million ($.06 per share) in 1998. Because SFAS No. 123 applies only to options granted after 1994, the effect of applying this standard to current year pro forma information is not necessarily indicative of the effect in future years. - 24 - Note 12 - Shareholders' Equity - ------------------------------ At December 31, 2000, 200 million shares of common stock were authorized, including unissued shares reserved for the following purposes:
Issuance under stock option and employee benefit plans 23 million Conversion of 7% subordinated debentures 2 million Conversion of preferred and preference stock 26 million
The Company discontinued payment of dividends on common stock for all of 2000. At December 31, 2000, three series of preferred and preference stock are outstanding, each series having the number of shares outstanding as set forth in the table below. The Board of Directors has the authority to fix the terms of 4,825,000 additional shares of Non-Voting Cumulative Preferred Stock and 3,915,629 additional shares of Cumulative Preference Stock. Each share of the outstanding series of preferred and preference stock has a liquidation preference of $50.00, and has an annual dividend rate and is convertible at the holder's option into a number of shares of Chiquita common stock as follows:
Annual Holders' Shares dividend conversion outstanding rate rate - --------------------------------------------------------------------- $2.875 Non-Voting Cumulative Preferred Stock, Series A 2,875,000 $2.875 2.6316 $3.75 Convertible Preferred Stock, Series B 2,300,000 3.750 3.3333 $2.50 Convertible Preference Stock, Series C 84,371 2.500 2.9220 - ---------------------------------------------------------------------
The Series A and Series B shares are non-voting. The Series C shares have one vote per share, voting with the common stock. If the Company fails to pay quarterly dividends on Series A, B and C shares for six quarters, the holders of such shares, voting as a class, have the right to elect two directors in addition to the regular directors. In the fourth quarter of 2000, the Company suspended payment of dividends on its preferred and preference stock, and accordingly, the Company has one quarter of accumulated and unpaid dividends at December 31, 2000. After February 14, 2001, each Series A share is convertible at the Company's option into a number of shares of common stock (not exceeding 10 shares) having a total market value of $50.00. Through September 9, 2001, each Series B share is convertible at the Company's option into a number of shares of common stock (not exceeding 10 shares) having a total market value of $50.75 ($50.00 if converted on or after September 10, 2001). However, prior to September 10, 2003, this conversion is permitted only if the market value of Chiquita common stock exceeds $7.00 per share when notice of the conversion is given. Each Series C share is convertible at the Company's option into a number of shares of common stock (not exceeding 10 shares) having a total market value of $51.50 ($50.75 if converted on or after June 30, 2001 and $50.00 if converted on or after June 30, 2002). Upon any conversion, whether at the option of the holder, at the option of the Company or otherwise, the Company must also pay an amount equal to accumulated and unpaid dividends, which may be paid in shares of common stock. In 1998, the Company's shareholders approved a change of title and par value of the Company's Capital Stock, $.33 par value, to Common Stock, $.01 par value. In 1997, Chiquita issued 4,585,210 shares of common stock and 79,659 shares of $2.50 Convertible Preference Stock, Series C to the former owners of acquired canning companies. In 1998, Chiquita issued 182,735 common shares and 4,712 shares of Series C preference stock as final payment for the 1997 acquisitions and issued 2,966,533 common shares in connection with the 1998 acquisition of another canning company. In 1998, Chiquita also issued 873,710 common shares to acquire a fresh mushroom business. (See Note 16.) - 25 -
Note 13 - Income Taxes - ---------------------- Income taxes consist of the following: (In thousands) U.S. Federal U.S. State Foreign Total - ------------------------------------------------------------------------- 2000 Current tax expense $ 175 $ 1,199 $ 5,108 $ 6,482 Deferred tax expense - - 518 518 ------- ------- ------- ------- $ 175 $ 1,199 $ 5,626 $ 7,000 ======= ======= ======= ======= 1999 Current tax expense $ 235 $ 1,161 $ 6,144 $ 7,540 Deferred tax expense - - 760 760 ------- ------- ------- ------- $ 235 $ 1,161 $ 6,904 $ 8,300 ======= ======= ======= ======= 1998 Current tax expense $ 369 $ 1,100 $ 8,006 $ 9,475 Deferred tax benefit - - (975) (975) ------- ------- ------- ------- $ 369 $ 1,100 $ 7,031 $ 8,500 ======= ======= ======= =======
Income tax expense differs from income taxes computed at the U.S. federal statutory rate for the following reasons:
(In thousands) 2000 1999 1998 - ----------------------------------------------------------------- Income tax benefit computed at U.S. federal statutory rate $ (30,753) $ (17,529) $ (3,469) State income taxes, net of federal benefit 779 755 715 U.S. losses for which no tax benefit has been recognized - - 20,734 Foreign tax differential 35,958 25,056 (8,816) Goodwill amortization 1,678 1,651 1,850 Other (662) (1,633) (2,514) -------- -------- -------- Income tax expense $ 7,000 $ 8,300 $ 8,500 ======== ======== ========
- 26 - Losses before income taxes consist of the following:
(In thousands) 2000 1999 1998 - --------------------------------------------------------------------- Subject to tax in: United States $ (3,829) $ 6,230 $(51,326) Foreign jurisdictions (84,038) (56,312) 41,414 -------- -------- -------- $(87,867) $(50,082) $ (9,912) ======== ======== ========
The components of deferred income taxes included on the balance sheet are as follows:
December 31, ---------------------- (In thousands) 2000 1999 - --------------------------------------------------------------------- Deferred tax benefits Employee benefits $ 17,123 $ 26,434 Accrued expenses 21,991 27,055 Other 11,430 20,651 -------- -------- 50,544 74,140 -------- -------- Deferred tax liabilities Depreciation and amortization (17,578) (32,470) Growing crops (16,942) (18,983) Long-term debt - (2,525) Other (8,860) (14,385) -------- -------- (43,380) (68,363) -------- -------- 7,164 5,777 Valuation allowance (7,164) (8,142) -------- -------- Net deferred tax liability $ - $ (2,365) ======== ========
Net deferred taxes do not reflect the benefit that would be available to the Company from the use of its U.S. operating loss carryforwards of $251 million, capital loss carryforwards of $6 million and alternative minimum tax credits of $6 million. The operating loss carryforwards expire from 2007 through 2020 and the capital loss carryforwards expire from 2001 through 2002. Undistributed earnings of foreign subsidiaries which have been, or are intended to be, permanently reinvested in operating assets, if remitted, are expected to result in little or no tax by operation of relevant statutes and the carryforward attributes described above. Cash payments for income taxes were $6 million in 2000, $9 million in 1999 and $7 million in 1998. Additionally, the Company received $22 million of refunds in 2000 related to audits of the Company's federal income tax returns for 1989 through 1991. - 27 - Note 14 - Segment Information - ----------------------------- The Company conducts business in two business segments, organized primarily on a product line basis, with each segment offering a variety of different but related products. The Fresh Produce segment includes the sourcing, transportation, distribution and marketing of Chiquita bananas and a wide variety of other fresh fruits and vegetables. The Processed Foods segment consists of the production, distribution and marketing of the Company's private-label and branded canned vegetables, branded fruit juices and beverages, processed bananas and edible oil based consumer products. The Company evaluates the performance of its business segments based on operating income before unusual items. Intercompany transactions between segments are eliminated. Financial information for each segment follows:
Fresh Processed (In thousands) Produce Foods Consolidated - ---------------------------------------------------------------------------- 2000 Net sales $1,787,334 $ 466,436 $2,253,770 Segment operating income (1) 16,886 30,540 47,426 Depreciation and amortization 79,445 18,060 97,505 Income (loss) from equity investments (10,346) 983 (9,363) Total assets 1,895,287 521,503 2,416,790 Net operating assets (2) 1,400,400 435,183 1,835,583 Investment in equity affiliates 99,738 19,647 119,385 Expenditures for long-lived assets 53,246 14,442 67,688 1999 Net sales $2,044,788 $ 511,011 $2,555,799 Segment operating income (1) 23,129 27,909 51,038 Depreciation and amortization 78,363 18,941 97,304 Income from equity investments 4,161 1,246 5,407 Total assets 2,079,903 516,224 2,596,127 Net operating assets (2) 1,533,397 430,781 1,964,178 Investment in equity affiliates 103,527 17,306 120,833 Expenditures for long-lived assets 148,490 42,207 190,697 1998 Net sales $2,243,284 $ 477,077 $2,720,361 Segment operating income (1) 126,685 25,524 152,209 Depreciation and amortization 82,722 16,416 99,138 Income from equity investments 6,515 1,221 7,736 Total assets 2,055,854 453,279 2,509,133 Net operating assets (2) 1,512,185 364,774 1,876,959 Investment in equity affiliates 91,170 11,910 103,080 Expenditures for long-lived assets 116,042 36,018 152,060
(1) Segment operating income excludes the following unusual items: in 2000, $20 million of fourth quarter charges and write-downs of production and sourcing assets in the Company's Fresh Produce operations. Also, in the second quarter, the Company incurred charges and write-offs relating primarily to banana production assets, including the curtailment announced in June 2000 of additional Hurricane Mitch farm rehabilitation. These second quarter charges were offset by a $15 million gain on the sale of California Day-Fresh Foods, Inc., a processor and distributor of natural fresh fruit and vegetable juices; in 1999, $9 million of charges resulting from a workforce reduction program; in 1998, write-downs and costs totaling $74 million, net of the minimum expected insurance recoveries, resulting from significant damage in Honduras and Guatemala caused by Hurricane Mitch. (2) Net operating assets consist of total assets less (i) cash and equivalents and (ii) total liabilities other than debt. - 28 - Financial information by geographic area is as follows:
(In thousands) 2000 1999 1998 - --------------------------------------------------------------------- Net sales United States $ 1,452,481 $ 1,552,320 $ 1,558,973 Central and South America 9,764 8,124 47,336 Europe and other international 791,525 995,355 1,114,052 ----------- ----------- ----------- $ 2,253,770 $ 2,555,799 $ 2,720,361 =========== =========== =========== Long-lived assets United States $ 401,973 $ 427,542 $ 410,068 Central and South America 514,889 532,504 507,641 Europe and other international 230,483 285,082 278,527 Shipping operations 422,932 448,132 472,663 ----------- ----------- ----------- $ 1,570,277 $ 1,693,260 $ 1,668,899 ============ =========== ===========
The Company's products are sold throughout the world and its principal production and processing operations are conducted in Central and South America and the United States. Chiquita's earnings are heavily dependent upon products grown and purchased in Central and South America. These activities, a significant factor in the economies of the countries where Chiquita produces bananas and related products, are subject to the risks that are inherent in operating in such foreign countries, including government regulation, currency restrictions and other restraints, risk of expropriation and burdensome taxes. Certain of these operations are substantially dependent upon leases and other agreements with these governments. The Company is also subject to a variety of government regulations in certain countries where it markets bananas and other products, including import quotas and tariffs, currency exchange controls and taxes. Note 15 - Litigation - -------------------- A number of legal actions are pending against the Company. Based on information currently available to the Company and advice of counsel, management does not believe such litigation will, individually or in the aggregate, have a material adverse effect on the financial statements of the Company. - 29 - Note 16 - Acquisitions and Divestitures - --------------------------------------- In June 2000, the Company's Australian fresh produce subsidiary, Chiquita Brands South Pacific Limited, issued additional shares in conjunction with two business acquisitions. The Company's voting interest is now below 50% and, as a result, the investment is no longer consolidated but is accounted for under the equity method. Also in June 2000, the Company sold California Day-Fresh Foods, Inc., which produced and marketed natural fresh fruit and vegetable juices in the United States. Proceeds consisted of $16 million in cash and $9 million in short- term notes which were collected in October 2000. In April 1999, CPF acquired certain canning assets of Agripac, Inc. The purchase price of approximately $20 million was funded with borrowings under CPF's revolving credit facility. In early 1998, Chiquita acquired Stokely USA, Inc., previously a publicly-owned vegetable canning business. In connection with the acquisition, Chiquita issued $11 million of common stock (.8 million shares) in exchange for all outstanding Stokely shares, and issued $33 million of common stock (2.2 million shares) and paid $18 million of cash to retire corresponding amounts of Stokely debt. Also during 1998, the Company acquired Campbell Soup Company's Australian fresh mushroom business. In connection with this acquisition, Chiquita issued $12 million (.9 million shares) of common stock and paid $5 million of cash in exchange for all of the outstanding capital stock of this business. Each of these transactions was accounted for as a purchase. The assets acquired and liabilities assumed in the 1999 acquisition of the canning assets of Agripac, Inc. and the 1998 acquisitions of Stokely and the Australian fresh mushroom business are summarized below:
(In thousands) 1999 1998 - ------------------------------------------------------------------- Trade receivables $ - $ 13,728 Inventories 18,524 62,020 Property, plant and equipment 7,426 49,936 Intangibles - 44,479 Accounts payable and accrued liabilities (4,429) (48,101) Debt (1,110) (36,414) Other, net (917) (2,351) -------- -------- Net assets acquired $ 19,494 $ 83,297 ======== ========
In December 1998, the Company sold its Central American plastic products operations for $18 million in cash, which approximated carrying value. - 30 - Note 17 - Quarterly Financial Data (Unaudited) - --------------------------------------------- The following quarterly financial data are unaudited, but in the opinion of management include all necessary adjustments for a fair presentation of the interim results, which are subject to significant seasonal variations.
2000 (In thousands, except per share amounts) March 31 June 30 Sep. 30 Dec. 31 - ---------------------------------------------------------------------- Net sales $ 658,053 $ 601,465 $ 465,773 $ 528,479 Cost of sales (498,005) (462,283) (408,771) (494,759) Operating income (loss) 67,788 44,045 (23,786) (60,681) Net income (loss) 34,990 12,754 (53,713) (88,898) Basic earnings (loss) per share .46 .13 (.87) (1.40) Diluted earnings (loss) per share .43 .13 (.87) (1.40) Dividends per common share - - - - Common stock market price High 5.63 5.19 3.88 3.19 Low 4.00 3.63 3.00 0.88
1999 (In thousands, except per share amounts) March 31 June 30 Sep. 30 Dec. 31 - ---------------------------------------------------------------------- Net sales $ 693,002 $ 676,857 $ 567,238 $ 618,702 Cost of sales (514,775) (536,049) (483,922) (559,660) Operating income (loss) 77,224 36,171 (20,306) (51,051) Net income (loss) 48,708 7,324 (36,654) (77,760) Basic earnings (loss) per share .68 .05 (.62) (1.25) Diluted earnings (loss) per share .60 .05 (.62) (1.25) Dividends per common share .05 .05 .05 .05 Common stock market price High 11.75 10.81 8.50 6.00 Low 8.31 7.69 5.50 3.38
Operating income in the second quarter of 2000 includes charges and write-offs relating primarily to banana production assets. This includes the curtailment announced in June 2000 of additional Hurricane Mitch farm rehabilitation. These charges were offset by a $15 million gain on the sale of California Day-Fresh Foods, Inc., a processor and distributor of natural fresh fruit and vegetable juices. Operating income in the fourth quarter of 2000 includes $20 million of charges and write-downs of production and sourcing assets in the Company's Fresh Produce operations. The operating losses in the third and fourth quarters of 1999 include charges of $6 million and $3 million, respectively, from a workforce reduction program. Per share results include the dilutive effect of assumed conversion of preferred and preference stock, convertible debentures and options into common stock during the period presented. The effects of assumed conversions are determined independently for each respective quarter and year and may not be dilutive during every period due to variations in operating results. Therefore, the sum of quarterly per share results will not necessarily equal the per share results for the full year. - 31 -
Chiquita Brands International, Inc. SELECTED FINANCIAL DATA (In thousands, except per share amounts) 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------------------- FINANCIAL CONDITION Working capital* $ 233,643 $ 414,445 $ 308,805 $ 300,348 $ 379,977 Capital expenditures 54,632 152,080 118,250 76,248 74,641 Total assets 2,416,790 2,596,127 2,509,133 2,401,613 2,466,934 Capitalization Short-term debt* 289,889 129,754 169,279 152,564 135,089 Long-term debt* 1,060,075 1,227,001 1,002,606 961,972 1,079,251 Shareholders' equity 582,543 705,286 793,980 780,086 724,253 OPERATIONS Net sales $2,253,770 $2,555,799 $2,720,361 $2,433,726 $2,435,248 Operating income* 27,366 42,038 78,609 100,166 84,336 Income (loss) before extraordinary items (94,867) (58,382) (18,412) 343 (27,728) Extraordinary loss from debt extinguishment - - - - (22,838) Net income (loss)* (94,867) (58,382) (18,412) 343 (50,566) SHARE DATA Shares used to calculate diluted loss per common share 66,498 65,768 64,663 57,025 55,195 Diluted loss per common share: - Before extraordinary items $ (1.68) $ (1.15) $ (.55) $ (.29) $ (.72) - Extraordinary items - - - - (.41) - Net income (loss) (1.68) (1.15) (.55) (.29) (1.13) Dividends per common share - .20 .20 .20 .20 Market price per common share: High 5.63 11.75 16.00 18.00 16.38 Low 0.88 3.38 9.50 12.75 11.50 End of year 1.00 4.75 9.56 16.31 12.75
* See Management's Analysis of Operations and Financial Condition and Notes to Consolidated Financial Statements for a discussion of parent company debt restructuring and for a discussion of significant items included in operating income in 2000, 1999 and 1998. - 32 - EX-21 15 edgex21b.txt EXHIBIT 21 - SUBSIDIARIES EXHIBIT 21 ---------- CHIQUITA BRANDS INTERNATIONAL, INC. --------------------------------- SUBSIDIARIES ------------ As of March 29, 2001, the major subsidiaries of the Company, the jurisdiction in which organized and the percent of voting securities owned by the immediate parent corporation were as follows:
Percent of Voting Securities Organized Owned by Under Laws of Immediate Parent -------------- ---------------- Chiquita Brands, Inc. Delaware 100% American Produce Company Delaware 100% Chiquita Banana Company B.V. Netherlands 100% Chiquita Finland Oy Finland 100% Chiquita Italia, S.p.A. Italy 100% Chiquita Tropical Fruit Company B.V. Netherlands 100% Chiquita Brands Company, North America Delaware 100% CB Containers, Inc. Delaware 100% OV Containers, Inc. Delaware 100% Chiquita Citrus Packers, Inc. Delaware 80% Chiquita Compagnie des Bananes France 100% Chiquita Frupac Inc. Delaware 100% Chiquita Gulf Citrus, Inc. Delaware 100% Chiquita International Trading Company Delaware 100% Chiquita Far East Holdings B.V. Netherlands 100% Chiquita International Limited Bermuda 100% Compania Bananera Atlantica Limitada Costa Rica 100% Great White Fleet Ltd. Bermuda 100% BVS Ltd. Bermuda 100% CDV Ltd. Bermuda 100% CDY Ltd. Bermuda 100% CRH Shipping Ltd. Bermuda 100% Danfund Ltd. Bermuda 100% Danop Ltd. Bermuda 100% DSF Ltd. Bermuda 100% GPH Ltd. Bermuda 100% Great White Fleet (US) Ltd. Bermuda 100% NCV Ltd. Bermuda 100% Norvel Ltd. Bermuda 100% Tela Railroad Company Ltd. Bermuda 100% M.M. Holding Ltd. Bermuda 100%
(Continued) EXHIBIT 21 (cont.) ------------------ CHIQUITA BRANDS INTERNATIONAL, INC. ---------------------------------- SUBSIDIARIES ------------
Percent of Voting Securities Organized Owned by Under Laws of Immediate Parent ------------- ---------------- Chiquita Tropical Products Company Delaware 100% Chiriqui Land Company Delaware 100% Compania Agricola del Guayas Delaware 100% Compania Agricola de Rio Tinto Delaware 100% Compania Mundimar, S.A. Costa Rica 100% Friday Holdings, L.L.C. Delaware 100% Chiquita Processed Foods, L.L.C. Delaware 100% Maritrop Trading L.L.C. Delaware 100% Progressive Produce Corporation Ohio 100%
The names of approximately 200 subsidiaries have been omitted. In the aggregate these subsidiaries, after excluding approximately 100 foreign subsidiaries whose immediate parents are listed above and which are involved in fresh foods operations, do not constitute a significant subsidiary. The consolidated financial statements include the accounts of the Company and controlled majority-owned subsidiaries. EX-23 16 edgex23a.txt EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 ---------- CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report on Form 10-K of Chiquita Brands International, Inc. of our report dated February 15, 2001 (except for Notes 2 and 9, for which the date is March 15, 2001), included in the 2000 Annual Report to Shareholders of Chiquita Brands International, Inc. Our audits also included the financial statement schedules of Chiquita Brands International, Inc. listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the following Registration Statements and related prospectuses of Chiquita Brands International, Inc. of our report dated February 15, 2001 (except for Notes 2 and 9, for which the date is March 15, 2001), with respect to the consolidated financial statements and schedules of Chiquita Brands International, Inc. incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2000. Registration Form No. Description S-3 33-58424 Dividend Reinvestment Plan 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 333-39671 333-93517 S-8 33-14254 1986 Stock Option and Incentive Plan 33-38284 33-41069 33-53993 S-8 333-59085 1998 Stock Option and Incentive Plan S-8 33-38147 Associate Stock Purchase Plan S-8 333-59063 1997 Amended and Restated Deferred Compensation Plan /s/ ERNST & YOUNG LLP Cincinnati, Ohio March 29, 2001 EX-24 17 edgex24e.txt POWER OF ATTORNEY EXHIBIT 24 ---------- POWER OF ATTORNEY We, the undersigned officers and directors of Chiquita Brands International, Inc. (the Company), hereby severally constitute and appoint William A. Tsacalis and Robert W. Olson, and each of them singly, our true and lawful attorneys and agents with full power to them and each of them to do any and all acts and things in connection with the preparation and filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2000 (the Report) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission thereunder including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name of the Company and the names of the undersigned directors and officers in the capacities indicated below the Report, any and all amendments and supplements thereto and any and all other instruments and documents which said attorneys and agents or any of them may deem necessary or advisable in connection therewith. Signature Title Date - ------------------- Chairman of the Board and (Carl H. Lindner) Chief Executive Officer March , 2001 - -------------------- Director, Vice Chairman of (Keith E. Lindner) the Board March , 2001 - --------------------- Director, President and (Steven G. Warshaw) Chief Operating Officer March , 2001 - --------------------- Director March , 2001 (Fred J. Runk) /s/ Gregory C. Thomas - --------------------- Director March 23, 2001 (Gregory C. Thomas) /s/ Rohit Manocha - --------------------- Director March 27, 2001 (Rohit Manocha) /s/ William W. Verity - --------------------- Director March 27, 2001 (William W. Verity) -----END PRIVACY-ENHANCED MESSAGE-----