EX-99.2 3 l85967aex99-2.txt EXHIBIT 99.2 1 EXHIBIT 99.2 CONFIDENTIAL AND PRIVATE CHIQUITA BRANDS, INC. AND CHIQUITA INTERNATIONAL LIMITED SUMMARY OF PROPOSED TERMS AND CONDITIONS SENIOR SECURED CREDIT FACILITIES JANUARY 15, 2001 I. FACILITIES: $85,000,000 of senior secured credit facilities comprising three credit facilities (each a "Facility" and together the "Facilities") allocated as follows; ALLOCATIONS: 1. $35,000,000 Formula Accounts Receivable Revolver to be provided by Fleet Capital Corporation ("FCC") as Agent and Lender. 2. $25,000,000 Term Loan to be provided by Fleet National Bank ("Fleet"). 3. $25,000,000 Tranche B Term Loan to be provided by Back Bay Capital Funding, LLC ("Back Bay"). (together referred to as the "Lenders") CO-BORROWERS: 1. Chiquita Brands, Inc. ("Chiquita Brands") and Chiquita International Limited ("CIL"). 2. Chiquita International Limited and Compania Bananera Atlantica Limitada and certain of its Costa Rican affiliates. 2 JANUARY 15, 2001 3. Chiquita International Limited and Compania Bananera Atlantica Limitada and certain of its Costa Rican affiliates. (together referred to as the "Borrowers") MATURITY: The Facilities will mature on July 31, 2002. ADMINISTRATIVE AND COLLATERAL AGENT: Fleet Capital Corporation ("FCC" or "Agent"). PARTICIPANTS: A group of lending institutions acceptable to FCC and Fleet. With respect to the Tranche B Term Loan, a group of lending institutions acceptable to Back Bay. PURPOSE: To provide funds to Chiquita Brands, CIL and the Borrower Group to (i) fund working capital needs, and (ii) fund capital expenditures. II. FORMULA ACCOUNTS RECEIVABLE REVOLVER FACILITY ("REVOLVER") AMOUNT: $35,000,000 CO-BORROWERS: Chiquita Brands and CIL GUARANTORS: Unlimited secured guarantees from the companies DOMESTIC (SECURED) listed below: - Chiquita Brands Company, North America - Chiquita International Trading Company - American Produce Company - Progressive Produce Corporation - Chiriqui Land Company - Compania Frutera de Sevilla - Maritrop Trading Corporation - All other U.S. subsidiaries owned by the Borrower Group, other than the Excluded Subsidiaries. Limited secured guarantees from the companies listed below: INTERNATIONAL (SECURED) - Chiquita Banana Company, B.V. - Chiquita (Canada) Inc. - Chiquita Far East Holdings, B.V. - Chiquita Fresh B.V.B.A -2- 3 JANUARY 15, 2001 - Chiquita Frupac B.V. - Chiquita Tropical Fruit Company B.V. - B.V. v/h Bruigom en Visser - E.C. van Eeuwijk Bananen B.V. - International Banana Ripening Company N.V. - M.M. Holding Ltd. - Processed Fruit Ingredients B.V. - Spiers N.V. - Ter Wal Bananen B.V. The above listed guarantors together are referred to as the "Revolver Secured Guarantors" and as appropriate the "Domestic" or "International Revolver Secured Guarantors". Limited unsecured guarantee from the company listed below: INTERNATIONAL (UNSECURED)- Chiquita Italia, S.p.a. The guarantees from the International Revolver Secured Guarantors and Chiquita Italia will be limited to an amount to be determined and such limits will be established on a commercially reasonable basis in relation to the support and, including but not limited to, the amount of trade financing provided by CIL. Such guarantees are expected to equal at least $40,000,000 in the aggregate. These limited guarantees will be acceptable to the Agent in form, substance and amount. COLLATERAL: PRIMARY REVOLVER COLLATERAL - Perfected first-priority security interests in all assets, both tangible and intangible, excluding real property interests, of Chiquita Brands, CIL and the Domestic Revolver Secured Guarantors. Such collateral will include trade names, trademarks and license rights, including the "Chiquita" brand name, as well as all intercompany notes and debt claims. A materiality standard will be employed regarding perfection of security interests and filings to be established by the Lenders in order to avoid documentation and legal expenses in those jurisdictions where value of the assets available as collateral does not meet an agreed materiality standard. A negative pledge on assets not taken as collateral will be required. -3- 4 JANUARY 15, 2001 - Pledge of 100% of the capital stock of CIL and the Domestic Revolver Secured Guarantors. - Perfected first-priority security interests in all assets, both tangible and intangible, excluding real property interests, of the International Revolver Secured Guarantors to the maximum extent permitted by applicable country laws. The Borrowers will agree to assist the Agent in filing supplemental collateral documents at least on a bi-weekly basis (or more often as determined by the Agent) in order to maintain collateral perfection. A materiality standard will be employed regarding perfection of security interests and filings to be established by the Lenders in order to avoid documentation and legal expenses in those jurisdictions where value of the assets available as collateral does not meet an agreed materiality standard. A negative pledge on assets not taken as collateral will be required. - Pledge of 100% of the capital stock of the International Revolver Secured Guarantors. SECONDARY REVOLVER COLLATERAL: - Cross-collateralized by the collateral securing the Tranche B Term Loan (as defined in Section IV); however, the Revolver lenders will have a second-priority claim on proceeds from the sale of this collateral. - Cross-collateralized by the collateral securing the Term Loan (as defined in Section III); however, the Revolver and Tranche B Term Loan lenders will have a pari-passu second-priority claim on proceeds from the sale of this collateral. - Negative pledge on the capital stock and assets (subject to pre-existing liens and other liens permitted herein) of the Chiquita Fresh European Group subsidiaries that are not International Revolver Secured Guarantors and the Chiquita Fresh Latin American Group (see definitions). Chiquita Brands will not allow the Chiquita Fresh European Group subsidiaries that are not International Revolver Secured Guarantors and the Chiquita Fresh Latin American Group to enter into other agreements that will prohibit the Lenders from obtaining collateral from these companies (subject to other debt and liens permitted herein). -4- 5 JANUARY 15, 2001 USAGE: For revolving advances and for the issuance of letters of credit subject to a sub-limit of up to $5,000,000. AVAILABILITY: Limited to the lesser of $35,000,000 ($30,000,000 against the Domestic Borrowing Base Amount and $5,000,000 against the International Borrowing Base Amount once all international collateral is perfected) or the most recently calculated Revolver Borrowing Base Amount as updated by the Borrowers for each successive two-week period, and subject to the Revolver Minimum Excess Availability requirements as defined in the Financial Covenant section below. REVOLVER BORROWING BASE: The Revolver Borrowing Base Amount will equal the sum of (i) the Domestic Borrowing Base Amount, plus (ii) the International Borrowing Base Amount, less (iii) any applicable reserves (e.g. reserves for potential PACA claims and other reserves that the Agent in its reasonable discretion deems appropriate). The Domestic Borrowing Base Amount will equal the product of the Domestic Account Receivable Advance Rate multiplied by the Eligible Domestic Accounts Receivable Amount. The International Borrowing Base Amount will equal the product of the International Account Receivable Advance Rate multiplied by the Eligible International Accounts Receivable Amount. The Domestic Accounts Receivable Advance Rate will be initially set at 85%, except the advance rates against the Packaged Foods receivables and the Processed Foods receivables will be initially set at 70% and 75%, respectively. The International Accounts Receivable Advance Rate will be initially set at 75%. FCC, as Collateral Agent, reserves the right to adjust advance rates and/or eligibility criteria from time to time in its reasonable discretion. PRICING: The Applicable Margins and Commitment Fees for the Revolver are as follows: -5- 6 JANUARY 15, 2001 Adj. Base LIBOR Commitment Rate Rate Fee ---- ---- --- 1.50% 3.50% .50% LETTER OF CREDIT FEES: Fees payable pro rata to the lenders at a rate per annum equal to the Applicable Margin for LIBOR Rate loans, as determined by the pricing grid, times the face amount of each letter of credit, payable in advance; plus a fronting fee of .125% per annum payable to the Agent on the face amount of each issued letter of credit. DEFAULT RATE: 2.00% over the rate otherwise in effect. UNDERWRITING FEES: 2.50% payable at closing. ARRANGEMENT FEE: $100,000 payable at closing. ANNUAL AGENT FEE: $35,000 per annum payable at closing and annually thereafter on each anniversary date of closing. PREPAYMENTS: Loans may be prepaid at any time without penalty, subject to funding breakage costs on LIBOR loans if such prepayment occurs other than at the end of an interest period. Prepayments may be reborrowed subject to compliance with applicable conditions. A prepayment penalty of 2% and 1% (based on average loans outstanding during the 12 months prior to such prepayment) will be required during years 1 and 2, respectively, on voluntary Revolver commitment reductions. If prepayment occurs from the proceeds of a new facility provided, in whole or in part, by Fleet or its affiliates, then such prepayment penalty will not be required. OTHER CONDITIONS: See Section V below. III. TERM LOAN FACILITY ("TERM LOAN") AMOUNT: $25,000,000 -6- 7 JANUARY 15, 2001 CO-BORROWERS: CIL and Compania Bananera Atlantica Limitada and certain of its Costa Rican affiliates. GUARANTORS: - Chiquita Brands, Inc. - Chiquita Far East Holdings, B.V. - M.M. Holding Ltd. - Revolver Secured Guarantors (as defined in Section II). COLLATERAL: - Pledge of 100% of the capital stock of M.M. Holding Ltd. and its 50% ownership interest in Mundimar, Ltd. (subject to M.M. Holding's rights in and to the Mundimar, Ltd. equity interests as defined in the Joint Venture Agreement with Andulsia, S.A.). - Pledge of 100% of the capital stock of Chiquita Far East Holdings which will at all times own all of the capital stock of Chiquita Brands South Pacific which is under the control of Chiquita Brands. Chiquita Far East Holdings will execute a direct pledge of the Chiquita Brands South Pacific shares. - Cross-collateralized by the collateral securing the Revolver and the Tranche B Term Loan (as defined in Sections II and IV); however, the Term Loan lenders will have a junior-priority claim on proceeds from the sale of this collateral. PRICING: Same as the Revolver (as defined in Section II). CLOSING FEES: 1.5% payable at closing. AMORTIZATION: None required. PREPAYMENTS: Allowed at any time without penalty, subject to funding breakage costs on LIBOR loans if such prepayment occurs other than at the end of an interest period. Prepayments may not be reborrowed. OTHER CONDITIONS: See Section V below. IV. TRANCHE B TERM LOAN FACILITY ("TRANCHE B TERM LOAN") AMOUNT: $25,000,000 -7- 8 JANUARY 15, 2001 CO-BORROWERS: CIL and Compania Bananera Atlantica Limitada and certain of its Costa Rican affiliates. GUARANTORS: - Chiquita Brands, Inc. - Revolver Secured Guarantors (as defined in Section II). COLLATERAL: - Pledge of 100% of the equity interests of Friday Holdings, L.L.C. and Chiquita Processed Foods, LLC. - Perfected first-priority security interests in all assets, both tangible and intangible, excluding real property interests, of Friday Holdings, L.L.C. - Pledge of 100% of the capital stock of the Great White Fleet. - Cross-collateralized by the collateral securing the Revolver (as defined in Section II); however, the Tranche B Term Loan lenders will have a second-priority claim on proceeds from the sale of this collateral. - Cross-collateralized by the collateral securing the Term Loan (as defined in Section III); however, the Revolver and Tranche B Term Loan lenders will have a pari-passu second-priority claim on proceeds from the sale of this collateral. PRICING: 13.75% cash interest during year one, payable monthly. The cash interest rate will be adjusted each quarter thereafter and will equal the greater of (i) Fleet's Base Rate + 4.25%, or (ii) 13.75%. In addition, 3.50% per annum accruing, to be added to the principal balance of the Tranche B Term Loan on the first day of each calendar quarter, and payable at maturity. DEFAULT RATE: 3.0% over the rate otherwise in effect. CLOSING/COMMITMENT FEES: 3.75% at closing and 1.60% of the Tranche B Term Loan balance outstanding on the first anniversary of closing. ANNUAL AGENT FEE: $35,000 payable at closing and annually thereafter on each anniversary date of closing. AMORTIZATION: None required. PREPAYMENT PENALTY: Year 1: 2.0% of the principal amount prepaid Thereafter: None -8- 9 JANUARY 15, 2001 Penalties will not be required on Mandatory Prepayments that are required to be applied to the Tranche B Term Loan as outlined herein. OTHER CONDITIONS: See Section V below. V. OTHER CONDITIONS INTEREST RATES: With respect to the Revolver and the Term Loan, the Borrowers, at their option, may elect to borrow at either I) the Adjusted Base Rate plus the Applicable Margin or ii) the LIBOR Rate plus the Applicable Margin as defined in Section II above. Adjusted Base Rate will be the higher of a) the Agent's Base Rate or b) the Overnight Federal Funds Rate plus .50%. LIBOR Rates (adjusted for reserves) will be available for 1, 2, or 3 month periods of time. Interest on Adjusted Base Rate loans will be payable at the end of each calendar quarter and be based on a 365 day year (and if applicable, 366 days). Interest on LIBOR Rate loans will be payable at the end of each relevant interest period, but in any event at the end of every 90 days, and be based on a 360 day year. FIELD EXAMS: FCC field exams will be conducted on an ongoing basis at regular intervals (not less than three times annually and subject to greater frequency at FCC discretion) to ensure the adequacy of receivable collateral and related reporting and control systems. CASH DOMINION: The Borrowers will establish Dominion accounts (accounts for benefit of FCC as Agent for the lenders) to receive all collections of accounts receivable pledged as collateral. It is anticipated that appropriate Dominion accounts would be established for each legal entity included among Chiquita Brands, CIL and the Revolver Secured Guarantors (Dominion accounts for the International Revolver Secured Guarantors will be completed by 3/15/01). The Agent will endeavor to limit the incremental cost of these accounts whenever possible. -9- 10 JANUARY 15, 2001 COLLATERAL APPRAISALS AND BORROWER INFORMATION: Prior to closing, the Lenders will have obtained an independent appraisal of the fair market value of (i) the "Chiquita" trade names and trademarks, and (ii) the equity interests of Chiquita Processed Foods, LLC. Furthermore, Chiquita Brands will provide Fleet with information, whether from internal or public sources, useful to estimate the fair market value of Chiquita Brand's equity interests in Chiquita Brands South Pacific, Great White Fleet, and M.M. Holding Ltd. (Grupo Jaremar). MANDATORY PREPAYMENTS: The Borrower Group will prepay the Facilities from proceeds of the following: EXCESS CASH FLOW: 50% of Excess Cash Flow. Payments will be based on fiscal year-end Borrower Group financial statements and will be due 120 days after each year-end, with the first payment, if any, due by April 30, 2002. ASSET SALE PROCEEDS: 100% of asset sale proceeds (including proceeds from the sale of equity interests of any Borrower Group subsidiary) in excess of $2,500,000 on an annual basis if such proceeds are not (a) used to repay Indebtedness secured by the assets of the respective Borrower Group subsidiary that sold such assets, and/or (b) so long as no Material Defaults are continuing, reinvested within 6 months in equipment or businesses related to those conducted by the Borrower Group. Notwithstanding the foregoing, assets sold in the ordinary course of business (inventory) will be excluded from this provision. EQUITY PROCEEDS: 100% of the proceeds from any equity offerings received by Chiquita Brands, excluding, however, equity contributions received from CBII. DEBT ISSUANCE PROCEEDS: 100% of proceeds of Indebtedness in excess of $20,000,000 received by CBII. Notwithstanding the foregoing, a mandatory prepayment will not -10- 11 JANUARY 15, 2001 be required if CBII issues Indebtedness to refinance Indebtedness of CBII existing at the closing, so long as such Indebtedness (i) is non-recourse to the Borrower Group, (ii) has a maturity date that is at least one year after the maturity date of the Facilities, and (iii) has other terms and conditions that are acceptable to the Agent (such approval will not be unreasonably withheld). Mandatory prepayments from Excess Cash Flow and Asset Sale Proceeds will be applied to the Facilities as follows: (i) one-third will be applied to reduce loans outstanding under the Revolver but not the Revolver commitment, (ii) one-third will be applied to reduce loans outstanding under the Term Loan (pro rata across all scheduled amortization payments) and reduce the Term Loan commitment, and (iii) one-third will be applied to reduce loans outstanding under the Tranche B Term Loan and reduce the Tranche B Term Loan commitment. If any of the Facilities are repaid, then mandatory prepayments will be applied to the remaining Facilities on an equal basis. Mandatory prepayments from Equity Proceeds and Debt Issuance Proceeds will be applied to the Facilities as follows: (i) one-half will be applied to reduce loans outstanding under the Revolver but not the Revolver commitment, (ii) one-half will be applied to reduce loans outstanding under the Term Loan (pro rata across all scheduled amortization payments) and reduce the Term Loan commitment. Notwithstanding the foregoing, proceeds from the sale of collateral will be applied to the respective Facilities as outlined and required by the collateral priority rights described in Sections II, III, and IV. FINANCIAL COVENANTS: Covenants would selectively address the financial condition and performance of (i) the Borrower Group, and (ii) CBII on a consolidated basis as -11- 12 JANUARY 15, 2001 follows. All covenants will be calculated and based on GAAP as of 12/31/00. BORROWER GROUP: - Minimum EBITDA: Three-month period ending 3/31/01: $50,000,000 Six-month period ending 6/30/01: $90,000,000 Nine-month period ending 9/30/01: $90,000,000 Twelve-month period ending 12/31/01: $77,000,000 Trailing Twelve-Month Periods Ending 3/31/02 and 6/30/02: $77,000,000 - Minimum Fixed Charge Coverage Ratio: Three-month period ending 3/31/01: 2.00x Six-month period ending 6/30/01: 2.00x Nine-month period ending 9/30/01: 1.60x Twelve-month period ending 12/31/01: 1.20x Trailing Twelve-Month Periods Ending 3/31/02 and 6/30/02: 1.20x - Minimum Liquidity i) Revolver Minimum Excess Availability During Each Fiscal Year: 1/1 to 2/28 $10,000,000 3/1 to 5/31 $ 5,000,000 6/1 to 12/31 $15,000,000 ii) CBII on a consolidated basis will maintain cash and short-term investments of at least $50,000,000 at all times. - Minimum Net Worth: $950,000,000 at all times, plus intercompany debt that is converted into equity. -12- 13 JANUARY 15, 2001 - Maximum Capital Expenditures: Consolidated capital expenditures of the Borrower Group shall not exceed $18,000,000 in fiscal year 2001 and $30,000,000 in fiscal year 2002, provided, however, capital expenditures funded out of proceeds from the following sources will be excluded from this limitation: (i) Asset Sale Proceeds, Equity Proceeds, and Debt Issuance Proceeds not required to prepay the Facilities as outlined by the Mandatory Prepayment provisions, (ii) proceeds from Sale and Leaseback Transactions permitted hereby, and (iii) insurance claims and refunds. Events of default will also include defaults tied to continuing compliance by CBII of the following financial covenants: CBII CONSOLIDATED BASIS: - Minimum Interest Coverage Ratio: Three-month period ending 3/31/01: 1.50x Six-month period ending 6/30/01: 1.50x Nine-month period ending 9/30/01: 1.25x Twelve-month period ending 12/31/01: 1.20x Trailing Twelve-Month Periods Ending 3/31/02 and 6/30/02: 1.20x - Minimum Net Worth: $500,000,000 at the end of each quarter. NEGATIVE COVENANTS: LIMITATIONS ON DISTRIBUTIONS: The Borrower Group will not allow or permit any Distributions except for the following: 1) Chiquita Brands will be allowed to make Permitted Distributions to CBII. Permitted Distributions will mean cash distributions by Chiquita Brands to CBII for the payment of (i) corporate overhead (maximum annual amount to be determined), (ii) tax payments, but only to the extent CBII is required to make cash tax payments to governmental authorities, (iii) repurchase of capital stock, but only as required by the terms of employee benefit plans (maximum annual amount -13- 14 JANUARY 15, 2001 to be determined), (iv) payment of interest on Indebtedness owed by CBII, such interest not to exceed $92,000,000 per annum. Notwithstanding the foregoing, if a Material Default exists before or after the making of a Permitted Distribution, then the Borrower Group will be allowed to make Permitted Distributions only for items (i) and (iii) above. 2) Chiquita Brands, CIL and the Revolver Secured Guarantors will not be allowed to make Distributions to Borrower Group subsidiaries (Distributions between Chiquita Brands, CIL and the Revolver Secured Guarantors will be allowed) or Non-Borrower Group subsidiaries, other than in the ordinary course of business. 3) The Borrower Group will not be allowed to make Distributions to the Non-Borrower Group other than in the ordinary course of business. LIMITATIONS ON INDEBTEDNESS: 1) The Borrower Group will not incur, assume, or guarantee the payment of any Indebtedness except Indebtedness to the Lenders under the Facilities. Notwithstanding the foregoing, the following Indebtedness may be incurred: i) The Chiquita Fresh European Group's total Indebtedness outstanding, at any time, will not exceed $20,000,000 in the aggregate. ii)The Chiquita Fresh Latin American Group's total Indebtedness outstanding, at any time, will not exceed $40,000,000 in the aggregate. iii)Purchase money Indebtedness (including mortgages, conditional sales contracts, capitalized leases or other deferred -14- 15 JANUARY 15, 2001 purchase price arrangements) in an aggregate amount equal to $10,000,000. iv) Chiquita Frupac Inc.'s $18,000,000 credit facility and other Indebtedness outstanding at the closing (Borrowers will provide a schedule of such other Indebtedness at closing). Notwithstanding the foregoing, the aggregate amount of Indebtedness outstanding under sections i), ii) and iii) above, will not exceed $60,000,000. 2) Great White Fleet will not incur any Indebtedness unless such Indebtedness is non-recourse to the Borrower Group and is permitted by the terms of Great White Fleet's senior secured credit facilities (or any successor facilities). Notwithstanding the foregoing, the Great White Fleet's total Indebtedness outstanding, at any time, will not exceed $250,000,000 in the aggregate. 3) Chiquita Processed Foods will not incur any Indebtedness unless such Indebtedness is non-recourse to the Borrower Group and is permitted by the terms of Chiquita Processed Foods' $200,000,000 senior secured credit facilities (or any successor facilities). Notwithstanding the foregoing, Chiquita Processed Foods' total Indebtedness outstanding, at any time, will not exceed the sum of (i) Indebtedness allowed under the $200,000,000 senior secured credit facilities less mandatory prepayments made, plus (ii) existing Industrial Revenue Bond Indebtedness, plus (iii) $30,000,000 (which will include all intercompany obligations owing to CBII and any of its subsidiaries). LIMITATIONS ON LIENS: The Borrower Group will not allow or permit to exist any Liens except for the following; 1) Liens securing the Facilities. 2) Liens to secure Indebtedness of the Borrower Group (including the Chiquita Fresh -15- 16 JANUARY 15, 2001 European Group, the Chiquita Fresh Latin American Group and Chiquita Frupac, Inc.) permitted herein, including Liens existing at the closing. 3) Purchase money liens (including mortgages, conditional sales contracts, capitalized leases or other deferred purchase price arrangements) on property of the Borrower Group so long as such Indebtedness secured by each such Lien does not exceed the cost of the property related thereto and does not, at any time, exceed an amount equal to $10,000,000. 4) Liens on property of the Borrower Group for taxes, easements, deposits for workers compensation, judgements which are being contested in good faith, performance bonds, mechanics or other like Liens arising in the ordinary course of business. 5) Liens to secure Indebtedness of Great White Fleet, Chiquita Processed Foods and Chiquita Frupac Inc. permitted herein. LIMITATIONS ON ACQUISITIONS AND INVESTMENTS: The Borrower Group will not allow or permit any acquisitions or Investments except for the following: 1) Chiquita Brands, CIL and the Revolver Secured Guarantors will not be allowed to make Investments in Borrower Group subsidiaries (Investments between Chiquita Brands, CIL and the Revolver Secured Guarantors will be allowed) or Non-Borrower Group subsidiaries, other than in the ordinary course of business. 2) The Borrower Group will not make any Investments in an entity which does not become a subsidiary of the Borrower Group, other than Investments which do not exceed $5,000,000, on a cumulative basis over the life of the Facilities, plus cash income, dividends or distributions actually received from such Investments. Notwithstanding the foregoing, advances made to independent growers in the ordinary course of business will be allowed. -16- 17 JANUARY 15, 2001 LIMITATIONS ON AFFILIATE TRANSACTIONS: The Borrower Group will not effect a transaction with any affiliate (other than a Borrower Group subsidiary) unless such transaction is on terms taken as a whole that are no less favorable than if such transaction had been completed with a non-affiliate under similar circumstances. LIMITATIONS ON MERGERS, CONSOLIDATIONS, AND ASSET SALES: The Borrower Group will not become party to any merger or consolidation or sell, lease or otherwise dispose of, its assets except for the following; 1) Chiquita Brands and CIL will not become party to any merger or consolidation. 2) Any Borrower Group subsidiary (other than Chiquita Brands and CIL) may merge or consolidate with, or may sell, lease or otherwise dispose of any of its assets to, any other Borrower Group subsidiary, except that (i) a Revolver Secured Guarantor may not merge or consolidate with a Chiquita Fresh Latin American Group subsidiary unless the Revolver Secured Guarantor is the surviving entity, (ii) a Chiquita Fresh European Group subsidiary may not merge or consolidate with a Chiquita Fresh Latin American Group subsidiary unless the Chiquita Fresh European Group subsidiary is the surviving entity, (iii) Friday Holdings may be merged into Chiquita Brands, and (iv) Chiquita Brands, CIL and a Revolver Secured Guarantor may not sell or lease its assets to a Chiquita Fresh Latin American Group subsidiary, other than in the ordinary course of business (Chiquita Brands will be allowed to sell and/or contribute the capital stock of Keelings (Fruit) Limited to Chiquita Banana Company, B.V.). 3) Any Borrower Group subsidiary (other than Chiquita Brands and CIL) may merge or consolidate with any Non-Borrower Group subsidiary (excluding the Great White Fleet and Chiquita Processed Foods and their subsidiaries) so long as the Borrower Group subsidiary is the surviving entity and, in the case of merger -17- 18 JANUARY 15, 2001 involving a Revolver Secured Guarantor, the lenders receive such Non-Borrower Group subsidiary's assets as collateral to secure the Facilities. 4) The Borrower Group may sell inventory and other assets in the ordinary course of business or assets that are no longer needed or useful to the operations of the Borrower Group, provided, however, that (i) at least 75% of the consideration received must be in the form of cash and equivalents, excluding the sale of "tropical farms" and related assets so long as such sales do not exceed $10,000,000 in the aggregate over the life of the Facilities, (ii) assets sold on a cumulative basis over the life of the Facilities will not have contributed EBITDA, over the period of four fiscal quarters prior to such sale, exceeding 5.0% of the consolidated EBITDA of the Borrower Group for the year-ended December 31, 2000, and (iii) the Borrowers are able to demonstrate pro forma covenant compliance (i.e. compliance with financial covenants as if the sale had actually occurred four-quarters prior to such sale). Notwithstanding the foregoing, the sale of M.M. Holding and/or Mundimar, Ltd. will be excluded from this limitation. 5) The Borrower Group will not sell any assets with an aggregate fair market value of $5,000,000 or more, on a cumulative basis over the life of the Facilities, with the intention of taking back a lease of such assets (a "Sale and Leaseback Transaction"). Notwithstanding the foregoing, the Borrower Group will be allowed to complete Sale and Leaseback Transactions of up to $25,000,000, on a cumulative basis over the life of the Facilities, on containers and other similar equipment and assets. This $25,000,000 limitation will exclude Sale and Leaseback Transactions completed within 3 months after the Borrower Group has acquired title to such containers and other similar equipment and assets. 6) Chiquita Brands, CIL, or any other Borrower Group subsidiary will be allowed to convert into a limited liability company so long as the Agent -18- 19 JANUARY 15, 2001 receives all appropriate documentation (including, if applicable, collateral documentation in form and substance acceptable to the Agent). CHANGE OF CONTROL: 1) A default will occur if any person, other than American Financial Group, Inc. ("AFG") and its affiliates, owns more than 30% of the total voting shares of CBII then outstanding provided that AFG and its affiliates own a lesser percentage of the voting shares than such other person and AFG does not have the right by voting power to elect or designate for election a majority of the board of directors. 2) CBII will at all times own, directly or indirectly, 100% of Chiquita Brands. 3) Chiquita Brands will at all times directly or indirectly own the Domestic Revolver Secured Guarantors and Friday Holdings, LLC or Chiquita Processed Foods, LLC. 4) Chiquita International Trading Company will at all times own, directly or indirectly, CIL, the Chiquita Fresh European Group subsidiaries and the Chiquita Fresh Latin American Group subsidiaries. REPRESENTATIONS AND 1. Usual and customary for transactions WARRANTIES: of this type, including but not limited to, the Borrower Group's representation and warranty that the transactions contemplated by this Proposed Summary of Terms and Conditions will not violate the permitted indebtedness, permitted lien, and use of proceed provisions of CBII's Senior and Subordinated Note indentures. Also, there will be no defaults under the financing arrangements of the Great White Fleet, Chiquita Processed Foods and Chiquita Frupac, Inc. 2. Chiquita Brands, CIL and the Chiquita Fresh Latin American Group subsidiaries will not make any changes to their transfer pricing policies, other than those required by applicable laws, that would cause a material adverse effect on the Borrowers and the Revolver Secured Guarantors. -19- 20 JANUARY 15, 2001 3. Without the consent of the Lenders, the Borrower Group will not make any material changes to the pricing/fees paid to the Great White Fleet for the transportation of products, except as required by law. EVENTS OF DEFAULT: Usual and customary for transactions of this type. Cross-defaulted to any Indebtedness of CBII's subsidiaries equal to or in excess of $2,500,000. FINANCIAL REPORTING: Chiquita Brands will provide FCC with the following: BI-WEEKLY AND QUARTERLY INFORMATION: 1. Minimum weekly domestic borrowing base information and minimum bi-weekly international borrowing base information, in a format to be determined, supported by a summary of accounts receivable aging. FCC, as Collateral Agent, reserves the right to require greater frequency of borrowing base information depending upon Revolver usage. 2. Internally prepared monthly financial statements for certain of the material Borrower Group subsidiaries in a form already generated by Chiquita's internal accounting systems. 3. Internally prepared quarterly consolidated balance sheet, income statement, and cash flow statement for the Borrower Group, due within 90 days after the end of the quarter. 4. Internally prepared quarterly consolidating balance sheet, income statement, and cash flow statement, which reconciles the Borrower Group to the Chiquita Brands consolidated statements, due within 90 days after the end of the quarter (120 days after the quarter ended December 31). The consolidating schedules will separately present the financial condition and results of the Borrower Group (broken down between the "Marketing/Distribution" group and the "Tropical Growing" group), Great White Fleet, Chiquita Processed Foods, Produce Ventures, and consolidated Chiquita Brands. -20- 21 JANUARY 15, 2001 5. Internally prepared quarterly consolidated balance sheet, income statement, and cash flow statement for the Great White Fleet and Chiquita Processed Foods, in a form as provided to the lenders of these companies and due on the same dates due to the lenders of these companies. 6. Quarterly financial covenant compliance certificates. 7. CBII will furnish CBII's quarterly consolidated financial statements as provided to the SEC for public reporting purposes. ANNUAL INFORMATION 1. Annual audited consolidated balance sheet, income statement, and cash flow statement for the Borrower Group, due within 180 days after year-end. 2. Annual unaudited consolidated and consolidating balance sheet, income statement, and cash flow statement, which reconciles the Borrower Group to the Chiquita Brands consolidated statements, due within 120 after year-end. These statements will be subject to normal year-end audit adjustments. The consolidating schedules will separately present the financial condition and results of the Borrower Group (broken down between the "Marketing/Distribution" group and the "Tropical Growing" group), Great White Fleet, Chiquita Processed Foods, Produce Ventures, and consolidated Chiquita Brands. 3. In addition to the audit report, consolidating balance sheet, income statement, and cash flow statement, which reconciles the Borrower Group to the Chiquita Brands consolidated statements accompanied by an auditor's inclusion letter. The consolidating schedules will separately present the financial condition and results of the Borrower Group (broken down between the "Marketing/Distribution" group and the "Tropical Growing" group), Great White Fleet, Chiquita Processed Foods, Produce Ventures, and consolidated Chiquita Brands. -21- 22 JANUARY 15, 2001 4. Annual consolidated balance sheet, income statement, and cash flow statement for the Great White Fleet (unaudited) and Chiquita Processed Foods (audited), in a form as provided to the lenders of these companies and due on the same dates due to the lenders of these companies. 5. Annual financial covenant compliance certificates. 6. CBII will furnish CBII's annual audited consolidated financial statements as provided to the SEC for public reporting purposes as well as the annual report provided to shareholders. 7. A forecast for the following year, by month, detailing cash flow, loan usage, and excess availability for the Borrower Group, due by December 31 of the preceding year. 8. A forecast for the following year, by quarter, detailing profit and loss, balance sheet, cash flow, and pro forma covenant compliance for the Borrower Group, due by December 31 of the preceding year. 9. A forecast for the following year, by quarter, detailing profit and loss, balance sheet, cash flow, and pro forma covenant compliance for CBII, due by December 31 of the preceding year. 10. The Agent will reserve the right to inspect the books and records of the Borrower Group at any time. CONDITIONS PRECEDENT: Usual and customary in the context of the proposed transaction, including but not limited to, the following: 1. SATISFACTORY FINANCIAL PROJECTIONS: The Borrowers will provide projections, satisfactory to the Lenders which demonstrates the Borrower Group's ability to service the proposed Facilities and remain in compliance with financial covenants. 2. NO MATERIAL ADVERSE CHANGE/MINIMUM EBITDA: There will be no material adverse change in the financial condition, operations, assets or prospects of the Borrower Group and -22- 23 JANUARY 15, 2001 the collateral between the 9/30/00 financial statements and the closing. The Borrower Group will be required to maintain a minimum EBITDA level of $78,000,000 as of 9/30/00. 3. COMPLETION OF DUE DILIGENCE: Due diligence would include but not be limited to: (i) receipt of copies of all tax sharing agreements and other written agreements between CBII and its subsidiaries, (ii) detailed schedule of all debt and other claims of CBII against any of its subsidiaries, and (iii) confirmation from CBII's auditors that material Borrower Group companies (i.e. Chiquita Brands, CIL, Chiquita Banana Company, B.V., and Chiquita Brands Company, North America) were included among those entities tested for audit purposes in the fiscal year 1999 audit report. 4. OTHER DOCUMENTATION: Execution and delivery of such instruments, documents, certificates, legal opinions (both from domestic and Bermuda legal counsel), collateral documents and filings, inter-creditor agreement between the Lenders, and other such documents as may be reasonably requested to effect the closing of the proposed Facilities. Receipt of licenses and good standing certificates with all applicable regulatory agencies indicating satisfactory results as determined by the Lenders in their sole discretion. 5. OTHER INDEBTEDNESS: The following Indebtedness will be repaid and terminated prior to or at the closing of the Facilities: i) CBII's $110,000,000 Revolver with Fleet National Bank as Agent. ii) Compania Bananera Atlantica Limitada's $50,000,000 Term Loan with Fleet as Agent. The Borrowers will provide evidence satisfactory to the Lenders that Chiquita Frupac Inc's $18,000,000 revolver provided by First Union will be in place at closing and that no events of default will occur under this facility as a result of -23- 24 JANUARY 15, 2001 the financing arrangements contemplated herein. 6. INTERCOMPANY DEBT OBLIGATIONS: i) Obligations of the Borrower Group owing to CBII or any Non-Borrower Group subsidiary will be converted into equity, excluding however, a portion of such intercompany debt obligations in an amount acceptable to the Lenders. Any obligations that are not converted into equity will have a maturity date of at least ten years, will be non-cash interest (paid-in-kind until maturity), and will be deeply subordinated on terms acceptable to the Lenders. ii) All claims of every kind (including PACA claims) by CIL or its subsidiaries against Chiquita Brands or its U.S. subsidiaries will be deeply subordinated on terms acceptable to the Lenders. iii) All claims of every kind (including PACA claims) by Compania Bananera Atlantica Limitada and certain of its Costa Rican affiliates against Chiquita Brands and its U.S. subsidiaries or CIL will be deeply subordinated on terms acceptable to the Lenders. 7. MINIMUM BORROWER GROUP LIQUIDITY: At closing, the Borrower Group will maintain minimum liquidity of at least $25,000,000. Minimum liquidity will mean the sum of (i) excess availability (based on the Revolver Borrowing Base Amount defined by FCC under the Revolver) plus (ii) unencumbered cash and short-term investments on a consolidated basis in excess of $20,000,000. 8. AFFILIATE SALES CONTRACTS: All sales contracts between Chiquita Brands and its subsidiaries with Chiquita Brands and any of its subsidiaries that are subject to the benefits of the PACA Trust will be required to have payment terms of 31 days or more and include appropriate waivers/language necessary to effect the exclusion of all underlying sales transactions from qualifying for treatment under PACA Trust regulations. -24- 25 JANUARY 15, 2001 9. LICENSE AGREEMENT: Chiquita Brands and CBII will enter into a license agreement that will restrict CBII's use of any of the "Chiquita" brands and trade names and marks and will allow Chiquita Brands, upon the occurrence of certain triggering events (to be defined), to prohibit CBII from using the "Chiquita" brands and trade names and marks. ASSIGNMENTS AND PARTICIPATIONS: Usual and customary for transactions of this type. SYNDICATION ISSUES: FCC will manage, in consultation with the Borrowers, all aspects of the syndication of the Revolver, including the selection of lenders, the determination of when FCC will approach potential lenders, and the final allocations among the lenders. The Borrowers agree to assist FCC actively in achieving a timely syndication that is reasonably satisfactory to FCC, such assistance to include, among other things, (i) direct contact during the syndication between the Borrower's senior officers, representatives and advisors, on the one hand, and prospective lenders, on the other hand, at such times and places as FCC may reasonably request, (ii) providing to FCC all financial and other information available to the Borrowers with respect to the Borrower Group and the transactions contemplated herein that FCC may reasonably request, including but not limited to financial projections relating to the foregoing, and (iii) assistance in the preparation of a confidential information memorandum and other marketing materials to be used in connection with the syndication. The Lenders will be entitled to change the pricing (interest rates and fees), structure, terms or the amount of the Facilities if the Lenders determine that such changes are advisable in order to ensure a successful syndication or an optimal credit structure for the Facilities, so long -25- 26 JANUARY 15, 2001 as the aggregate amount of the Facilities will not be less than $85,000,000. The Borrowers agree that, during the syndication of the Facilities, the Borrower Group will not permit any offering, placement or arrangement of any competing issues of debt securities or commercial bank facilities of any of the Borrower Group subsidiaries that will have a material impact on FCC's ability to syndicate the Facilities. INDEMNIFICATION: The Borrowers agree to indemnify and hold the Lenders, FCC and the other lenders and their respective shareholders, directors, agents, officers, subsidiaries and affiliates harmless from and against any and all damages, losses, settlement payments, obligations, liabilities, claims, actions or causes of action, and reasonable costs and expenses incurred, suffered, sustained or required to be paid by an indemnified party by reason of or resulting from the transactions contemplated hereby except to the extent resulting from the gross negligence or willful misconduct of the indemnified party. In all such litigation, or the preparation therefor, the Lenders, FCC and the other lenders shall be entitled to select their own counsel and, in addition to the foregoing indemnity, the Borrowers agree to pay promptly the reasonable fees and expenses of such counsel. EXPENSES: Borrowers will pay all fees and expenses incurred by the Lenders and FCC in connection with the preparation and execution of the Facilities. These will include but not be limited to legal, syndication, examination of books and records, appraisals on the equity interests of Chiquita Processed Foods and the "Chiquita" brand name, and direct out-of-pocket expenses. GOVERNING LAW: State of New York DEPOSIT: The Lenders acknowledge that the Borrowers have already remitted to (i) the Lenders work fee -26- 27 JANUARY 15, 2001 deposits totaling $366,667 ($150,000 in December, 2000 to FCC and $216,667 to the Lenders in November, 2000), (ii) Bingham Dana $220,000 for legal expenses, and (iii) FCC $80,000 in July, 2000 and $33,333 in November, 2000 for due diligence and other related expenses. The work fees paid under (i) above will be credited against all closing fees outlined herein at closing of the Facilities in accordance with the terms of the Letter of Agreement, dated as of January 15, 2001 (as amended and in effect from time to time, the "FEE LETTER"), by and among Chiquita Brands, CIL and the Lenders. Upon the terms and subject to the conditions contained in PARAGRAPH 2(a) of the Fee Letter, the Lenders may be obligated to refund the work fees under (i) above. If, for any reason, the Facilities do not close, Bingham Dana will return to the Borrowers any unused funds under (ii) above. Amounts paid under (iii) above are not refundable. VI. DEFINITIONS "ADJUSTED EBITDA" will mean the sum of consolidated Borrower Group EBITDA plus actual cash Distributions and Investments received from Non-Borrower Group subsidiaries (i.e. Great White Fleet, Chiquita Processed Foods, Produce Ventures etc.), plus cash interest income. "BORROWER GROUP" will include Chiquita Brands, CIL, the Domestic Revolver Secured Guarantors, the Chiquita Fresh European Group, the Chiquita Fresh Latin American Group, Chiquita Frupac, Inc., and other Chiquita Brands subsidiaries excluding the Great White Fleet and its subsidiaries, Chiquita Processed Foods and its subsidiaries, Produce Ventures and its subsidiaries, and M.M. Holding Ltd./ Mundimar. "CHIQUITA FRESH LATIN AMERICAN GROUP" will mean the following companies and their subsidiaries: - Chile Group: Blue Fish Holdings Establishment / CILPAC Establishment and their subsidiaries -27- 28 JANUARY 15, 2001 (excluding Heaton Holdings, Ltd. and its subsidiaries) - Costa Rica Group: Conexpro Inc. Establishment and its subsidiaries - Colombia Group: Antioquia Establishment/Bijzondere Benedenwindse Beleggingen Establis/Uraba Establishment/Tairona Establishment/Quindio Establishment and their subsidiaries - Guatemala Group: Banacorp, S.A./Compania Agricola San Nicolas, S.A. and their subsidiaries - Honduras Group: Catellia Ltd./Tropical Traders Ltd./Compania - Agricola San Nicolas, S.A. and their subsidiaries - Other: Financiera Agro-Exportaciones Limitada/Financiera - Financiera Agro-Exportaciones Limitada Agricola Ltd./Chiquita International Services Group N.V./Banexpro Ltd./Brundicorpi S.A. and their subsidiaries "CHIQUITA FRESH EUROPEAN GROUP" will mean the following companies and their subsidiaries: - Chiquita Banana Company, B.V. - Chiquita (Canada) Inc. - Chiquita Compagnie des Bananes - Chiquita CR, S.r.o. - Chiquita Finland Oy - Chiquita Fresh B.V.B.A - Chiquita Frupac B.V. - Chiquita Italia, S.p.A. - Chiquita Packaged Goods Distributing S.r.l. - Chiquita Tropical Fruit Company B.V. - B.V. v/h Bruigom en Visser - Banafruta-Comercio de Bananas, LDA - E.C. van Eeuwijk Bananen B.V. - International Banana Ripening Company N.V. - Processed Fruit Ingredients B.V. - Spiers N.V. - Ter Wal Bananen B.V. "DISTRIBUTIONS" will mean (i) the declaration or payment of any dividend on any shares of capital stock, other than dividends payable solely in shares of common stock, (ii) the purchase or -28- 29 JANUARY 15, 2001 other retirement of any class of capital stock, (iii) any other distribution on or in respect of any class of capital stock, and (iv) any payment of principal or interest or premium on, or any purchase or other retirement of, any indebtedness required to be subordinated to the Facilities, including intercompany debt obligations of the Borrower Group to any affiliates. "EXCESS CASH FLOW" will mean the sum of (i) Adjusted EBITDA, minus capital expenditures (excluding capital expenditures funded by Asset Sale Proceeds, Equity Proceeds, Debt Issuance Proceeds, Sale and Leaseback Transactions, and insurance claims and refunds not required to prepay the Facilities as detailed herein), minus cash taxes, plus or minus changes to working capital, minus (ii) Fixed Charges plus $2,500,000. "EXCLUDED SUBSIDIARIES" will mean Chiquita Processed Foods and its subsidiaries, Chiquita Frupac, Inc. and its subsidiaries, Produce Ventures, Inc. and its subsidiaries, and Chiquita Citrus Packers, Inc. and its subsidiaries. "FIXED CHARGES" will mean the sum of cash interest, plus scheduled principal payments, including payments on capital leases (excluding mandatory and voluntary prepayments), plus actual cash Distributions and Investments made by the Borrower Group to CBII and Non-Borrower Group subsidiaries as permitted herein. "FIXED CHARGE COVERAGE RATIO" will mean the sum of (i) Adjusted EBITDA, minus capital expenditures (excluding capital expenditures funded by Asset Sale Proceeds, Equity Proceeds, Debt Issuance Proceeds, Sale and Leaseback Transactions, and insurance claims and refunds not required to prepay the Facilities as detailed herein), minus cash taxes, divided by (ii) Fixed Charges. -29- 30 JANUARY 15, 2001 "INDEBTEDNESS" will mean indebtedness for borrowed money evidenced by notes, bonds, debentures and any other similar instruments, letters of credit, capital lease obligations, all obligations for the deferred purchase price of property, guarantees of other Indebtedness, and net exposure under SWAPS and other derivative products. "INTEREST COVERAGE RATIO" will mean EBITDA to Net Cash Interest Expense (cash interest expense less cash interest income). "INVESTMENTS" will mean (i) any loan, advance or extension of credit (including guarantees), (ii) any capital contribution or purchase of capital stock or other securities evidencing ownership interests, and (iii) any acquisition of property or assets other than upon full payment in cash at fair market value. "MATERIAL DEFAULT" will be defined as payment defaults, financial covenant defaults, certain negative covenant defaults (to be determined), cross-payment defaults, cross-acceleration to other Indebtedness for borrowed money, and bankruptcy events. "NET WORTH" will mean total shareholders' equity as reported on the Company's financial statements. "NON-BORROWER GROUP" will mean CBII and all of its subsidiaries and affiliates that are not part of the Borrower Group. -30-