Severance Agreement - Chiquita Brands International Inc. and Peter Horekens
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.